Bryan Caplan  

My First Look at Strictly Confidential

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Leamer on the Current Recessio... Price Discrimination Explains....
As soon as I saw that the Mises Institute had published Strictly Confidential: The Private Volker Fund Memos of Murray N. Rothbard, I took out my credit card.  Rothbard's at the top of my list of thinkers who proverbially, "may inspire or outrage, but never bore."  To read the off-the-record writings of a man already prone to speak his mind is a wish come true. 

The book doesn't disappoint on either inspiration or outrage.  The best so far (from "Note on the Infant-Industry Argument"):
The high degree of tariff protection in the greater part of the history of the United States, has made this preeminent industrial country a favorite "proof" of the infant-industry argument.

Ironically, it is the United States that provides the most striking illustrations of the fallaciousness of the infant-industry doctrine.  Within its vast borders, the United States offers an example of one of the world's largest free-trade areas.  The frequent regional shifts in American industries provide numerous examples of birth and growth of infant industries, and decline of old, established industries.  One of the most striking examples is that of the cotton textile industry.

...[C]otton textiles were manufactured almost exclusively in New England from 1812 to 1880.  During that period, there were practically no textile plants in the cotton-growing areas of the South.  In 1880, the cotton textile industry began to grow rapidly in the South... despite absence of special protection.  By 1925, half of the country's cotton textile production occurred in the South... [A]t present, the South produces approximately three-fourths of the country's cotton textiles, and the New England areas less than one-fourth.
The worst so far (from "Critique of Frank S. Meyer's Memorandum"):
Let us note that in no democratic country, where free speech and free elections have prevailed, has the Communist movement turned toward either violent revolution or guerrilla warfare; that the latter has occurred only in dictatorial countries - Cuba, China, Vietnam, etc., - where peaceful methods were not open to the Communist party.
To refute this absurd claim, we need go no further than Lenin's original October Revolution.  This was a coup d'etat not against the czar - overthrown in the earlier February Revolution - but against Russia's first democratic government!  And even if you quibble about the Provisional Government's democratic credentials, the Bolsheviks allowed one last election after their coup - and came in a distant second.  They turned to massive violence nonetheless.


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COMMENTS (5 to date)
Ted writes:

I think that's a pathetic argument against infant industry protection. The infant industry argument is all about established competition. Nobody was really established in the early days of the republic, so the infant industry argument isn't refuted. I don't find the infant industry argument convincing, but Rothbard's argument does nothing to refute it.

Kurt writes:

In the second quote, Rothbard is clearly referring to societies with consolidated democracy, that is, free speech and free elections have become tradition. To suggest that post-Tsarist Russia had an embedded democratic culture is a farce.

Lode Cossaer writes:

Bryan,

I was going to argue along similar lines as Kurt above. A 'democratic' country that only was democratic for 8 months might have the formal institutions - but definitely lack the informal ones. (Else countries like Congo might be considered democratic too.)

If the freedomhouse index already existed in 1919; how high would Russia in 1919 score?

Can you give us another counter example within more established democracies?

Bryan Caplan writes:

Kurt: I think Rothbard's clear enough what he means: countries where "free speech and free elections have prevailed." If he meant "for a long time," or "having an embedded democratic culture" he would have said it.

Lode: Germany 1918 is an even clearer case. After the Kaiser's abdication, Germany's long-established parliamentary institutions took over, and the Communists tried violent coups anyway.

Bryan Caplan writes:

Oh, and there's also the failed 1923 Communist putsch in Germany. Even the Great Soviet Encyclopedia (!) contradicts Rothbard:

http://encyclopedia2.thefreedictionary.com/Hamburg+Uprising+of+1923

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