Reflections on watching George C. Scott in Dicken's “A Christmas Carol”

(Revised and expanded version of earlier 2007 and 2004 post. The 2004 post was quoted in December 17 Toronto Star article "The Politics of Ebenezer Scrooge": www.thestar.com/Ideas/article/158007)

Family, Work, Community
Did Ebenezer Scrooge Dream a Better Life for Himself?
Reflections on watching George C. Scott in Dicken's “A Christmas Carol”
by Gregory Rehmke

Consider Charles Dicken's Ebenezer Scrooge, as brought to life by George C. Scott in the television movie from the 1990s. George C. Scott plays Scrooge as a competent businessman who finds both Christmas and philanthropy a waste of time and money. His eyes are opened through a series of nightmarish dreams. The book and various movie versions are offered today as indictments of greed and business, as well as celebrations of the joys of family, Christmas, and giving to those less fortunate.

Viewers can look at this classic story through a pro-market lenses and see different lessons than do the majority who misunderstand capitalism and the role of markets and prices. And we can write our own last chapter to the story that lets Scrooge live a happier life without compromising his business principles.

I would argue that a better, though less dramatic, interpretation of the story is simply that people—especially successful businesspeople—can get too wrapped up in their work, and lose touch with the rest of their lives. Engagement in civil society brings many unexpected and hard-to-quantify pleasures. Philanthropy can be satisfying to the giver as well as helpful to the receiver. And even the most anti-business take on "A Christmas Carol" still must admit it is Scrooge's private philanthropy, not the state, that in the end helps the poor.

The story begins with Scrooge successful in business but having let his personal and social world fade. He long ago let his love relationship drift away and deep down regrets it. After a difficult childhood, he gradually gained a kind of comfort in solitude and emotional isolation. As is usual in novels and movies, nothing positive is said or implied about his work. No glimmer of understanding that he must be providing a valuable service in order to stay in business and make profits. But we can agree that focused businessmen like Scrooge can lose track of their family and social lives and find themselves years later wealthy but alone.

Second, the story features an interesting, if subtle, attack on government welfare. Scrooge is asked to donate to a relief fund. He answers that he pays taxes for just such purposes. Why don't the homeless go to existing poor houses or to prisons he asks? The private-relief fund-raisers ask him if he has ever seen the government relief houses. Scrooge answers no, he hasn't. He is responding reasonably and so are they. (Should we expect a socially-responsible Scrooge of today to donate to innovative private charities, or to agitate for repair of failing government welfare programs?)

Tax-supported relief houses give the emotionally-distant Scrooge an excuse not to take personal responsibility for the poor. He has already paid, he claims, through his taxes. He uses government-funded welfare agencies as an excuse to avoid supporting private relief agencies. With no state-run poor houses in England, he might still have said: "Bah, Humbug!" and been tempted to “free-ride” on donations of others. That is, he might free-ride (an economics term) by relying on others to donate to help beggars. Scrooge would benefit from beggar-free streets without spending a dime on donations (he is greedy in the story, after all).

Few of us enjoy seeing and dealing with homeless people begging on the street. Scrooge could well have been drawn into private relief just to keep beggars out of his way. Still a selfish motive, but one that would require helping others in order to help himself. He could have invested in enterprises that create job-expanding opportunities that help the unfortunate or unwise to get back on their feet. Consider too that Scrooge's current business, speculation, could very well be helping the poor more effectively that any charity he might choose to support (more on this possibility below).

Had Scrooge invested in a job-training firm, for example, he could carry business cards promoting his job-training services to helpfully put in the cups of beggars. In this way he could have helped the needy and profited as an investor in training-services at the same time (perhaps naming his enterprise Scrooge Phoenix University). Many for-profit as well as nonprofit organizations today provide job-training services and generate income through job-placement. The poor learn skills and pay a portion of their later salaries back to the job-training/job-placement organizations.

My great-great-grandfather, Dr. Thomas Guthrie helped start the Ragged Schools for Children in Scotland and England. He went to the Scrooges of his day (the 1840s) and convinced them to contribute. There were 192 Ragged Schools in operation at its peak with 20,000 destitute children attending each year. An estimated 300,000 attended overall, from 1840s to 1880s. The English government apparently saw the Ragged Schools as unwanted competition to their poor houses and new government-funded schools, and they drove the Ragged Schools out of business. (Students apparently preferred the industry-training they received as part of their education at the Ragged Schools. The UK government went so far as to sue to force students out of Ragged Schools and into government schools. Glimpse this fascinating story here: www.infed.org/walking/wa-shaft.htm)

Because Scrooge feels he has already discharged his obligation to help the poor (thanks to state-mandated poor-house welfare), he loses touch with that part of the world. He doesn't bother looking into the management and operation of poor houses because their tax-funding insulates them from private reform. And he knows he wouldn't be allowed to withhold his taxes if he found them badly managed.

Had he been able to choose among private alternatives he would have had an incentive to investigate how his money was used. He doesn't do much investigation after being saved, in the George C. Scott version. He just gives a big donation to the private relief effort he refused the day before. But even so, he will surely take an acute interest in that private relief project after donating a huge sum to it. He would be angered as well as embarrassed if the relief effort he supported turned out to be ill-managed or a fraud.

Scrooge, thanks to tax-funded poor houses, is less likely to be drawn into civil society philanthropies that might have opened up his life (and he might have been less in need of spiritual shock-therapy).

His very skeptical eye would be a valuable service for private charities, as he seems to understand that good intentions matter less than good results. He would probably be a better trustee of a private charity than his "do-gooder" nephew, for example.

George C. Scott's Scrooge notes with disapproval his nephew's offer to overpay Cratchit's son. Scrooge understands that overpaying for a young person's first job can have negative consequences. It breaks the connection between a person's productivity and their pay. It confuses charity with wages in the mind of both the employee and employer.

The intricate dance toward “just” or market wages not only pits each worker against others willing to take on a job, it pits each employer against all others willing to pay higher wages. When employers get greedy and try to hold wages below the marginal earnings each worker brings the firm, other employers have a profit opportunity, if they can hire that worker away.

Smaller earnings from each of twenty or a hundred workers can add up to far more than large earnings from five. Henry Ford earned far less profit per car sold than did Henry Royce. But in the end, he did okay.

The push for profits in the labor market leads employers to a bidding war that narrows the gap between what workers earn for firms and what they are paid. Competition for workers is endlessly frustrating for employers who hire and train new employees only to find them lured away by better offers. The core source of Bob Cratchit’s low pay is likely his limited responsibility and productivity at the firm of Scrooge and Marley. In fairness to Mr. Cratchit, it may not be his fault that Scrooge has been holding on too tight and not delegated enough. Marley may have offered Scrooge more opportunities to learn and share responsibilities at the firm than Scrooge had so far given Cratchit. Either could be blamed, but it seems reasonable to find fault with the side most capable of changing the situation: the boss.

Seeing the Ghost of Famine future 


Some are visited by the ghosts of terrible futures that never happen, but might have. Imagine Ebenezer Scrooge dreaming of a terrible famine would soon strike. Perhaps nightmare tariffs on imported grain coupled with bad harvests in England drive corn prices beyond the reach of the poor and spread famine across the land. Famines in Scrooge’s time were not rare and he would have lived through one in his youth. The Europe-wide famine of 1816/17 followed poor harvests across Europe and the general destruction of the Napoleonic Wars. Crop yields in Western Europe fell 75 per cent triggering wide-spread famine and death.

For a businessman like Scrooge, such a vision might lead to careful (and costly) review of weather news across Europe as harvests approached. News of potentially bad harvests would be a reasons for taking a major investment position. Early on in the movie George C. Scott’s Scrooge visits the city grain exchange to do some business. He holds out for a higher price for corn in his warehouse, and is accused of hurting the poor through his greed. But is holding out for higher prices really hurting the poor? Yes and no.

His “hoarding” or speculating on grain does raise the price today. But it also has the consequence of pushing prices down in the future. Scrooge has seen a vision of scarcer grain in and higher prices the future (otherwise he would sell at today’s prices). He is raising the price of grain for the poor (and everyone else) today, in exchange for lowering the price in the future. If his vision proves true, he will have performed a service for society by pushing all to conserve now a resource that will be more scarce in the future.

The businessmen in the movie claim Scrooge is raising grain prices for the poor today by holding back. These less visionary businessmen may lack the weather information Scrooge could have gathered. Or they may just wish to buy Scrooge's corn at lower prices either to help the poor today or to help themselves. How can we know they would pass these lower prices on to consumers? Perhaps they would just pocket gains from below-market prices themselves. In any case, I will argue that raising prices now can in fact help the poor. (How is that for a Scrooge-like claim!)

Speculators like Scrooge are time-shifters. Whether or not inspired by ghostly visions, they trade goods through time. Scrooge fills his warehouse with corn then turns the dial on a time-machine to transport them to the future. It is an expensive and risky enterprise. Who knows what the future will bring? Such businessmen make informed guesses, they speculate about the future. If they are right, their fourth-dimension transportation system earns profits, even after paying rent on warehouse space and interest on money tied-up over time. If they guess wrong they lose their investment. And after too many wrong guesses, both Scrooge and Cratchit would be looking for new work.

Across Europe, in old city-centers, you can often find the grain exchange building. Here sellers and buyers of grain would gather each day to buy, sell, and speculate. Farmers are just one part of working agricultural markets. Weather and harvests are hard to predict. Grain can be stored for some time, though at a cost. Grain prices embody the collective guesses of hundred or thousands of people about what the future will bring for the supply and demand of grain. Prices change each day as news of hundreds or thousands of events small and large filter into the buyers, sellers, and speculators on the grain exchange.

Steam powered ships opened vast lands in American and Argentina to supply grain the Europe. And steam-powered railroads allowed Ukraine to be a bread-basket to the world. Transportation costs dropped gradually, then rapidly through the 1800s. Low-priced grain from the America's "flooded" Europe with less-expensive grain, leading European landlords, the landed Aristocracy, to lobby Parliament for tariffs on imported grain. The landed Aristocracy of the time favored "fair trade" not free trade. Lower grain prices led to lower rents on their farmland. Struggling workers who benefited from lower food prices had less opportunity to explain the benefits of lower food prices whilst playing whist at the club.

Scrooge was neither a landed aristocrat born with a silver spoon, nor a farmer, nor a manufacturer. How did Scrooge happen to have the corn in his warehouse in the first place? Economists argue he is performing a service by warehousing corn and releasing it when demand is strong. In the movie he is presented as being greedy and pushing prices higher, thus hurting the poor. But by aiming to make profits speculating on corn, his early purchase pushes prices slightly up and encourages conservation now. By speculating in corn he is a visionary. He guesses that in the near future, current plentiful corn supplies will turn scarce. Those lulled by relatively low corn prices to use it casually today would regret it later--but by then it would be too late. Only by taking action before the shortage can some of today’s relative plenty be set aside for tomorrow.

No one can really see into the future and know what corn, oil, or copper prices will be next week, next month, or next year. No one can know the future, but professional speculators invest time and resources to make educated guesses. When they are wrong, they lose their own money, but when correct they make money by better coordinating consumer behavior through time. The warning from a Ghost of Famines Future alerts speculators to act today. Consumers angry now at rising prices benefit in the future when Scrooge’s warehoused corn is released, easing the shortage and stabilizing or lowering the future’s higher prices. Scrooge profits by coordinating consumption through time.

Yet, interestingly, his actions also generate incentives that can eat away at his potential earnings. By warehousing corn and pushing prices higher now, he not only signals conservation by consumers, but also new production. Higher than expected prices signal farmers to work to expand output, to bring new land into production. These behavior changes caused now by Scrooge’s purchases and warehouse will take time to bear fruit. So when the future shortage and perhaps famine arrives some farmers will have expanded production without ever having seen a ghost themselves. Scrooge’s vision and visionary action, signal invisibly through higher prices today that high or higher prices are expected in the future.

Such “excess” grain production does not help Scrooge profit, in fact it will lower his potential gains as the expanded harvests come to market. Still, Scrooge could not expect to feed all of London from his warehouse. He will profit enough and his speculating will have spurred production. And the ghost of possible famine will fade away in the face of both grain sources. All this happens invisibly through changing prices, trusted contracts, and private property. (And not only happens invisibly, but stays invisible for 160 years!)

Back to Cratchit, Wage Rates, & Responsibility


Many have been written of the economics of A Christmas Carol. But some I think hit a sour note by attacking Cratchit as incompetent and painting the early Scrooge as a hero. We have the luxury of writing our own postscript to the story, one where Scrooge gains some friends, socializes some, and continues to run his business profitably. In our free-market postscript, Scrooge can take an active interest both in supporting well-run and effective charities, and in agitating for government to shut down poorly-run poor houses.

After his conversion, Scrooge gives Cratchit a raise, doubling his salary. Does that mean he was just exploiting him earlier? Or that Cratchit was not particularly competent? No, I think the raise can be seen as a very reasonable decision, part of Scrooge's change of heart, that he wishes to give Cratchit more responsibility at the firm. Scrooge met his own mortality in his dreams that night. He dreamed himself standing before his own grave. Mortality creeps up quietly on all of us, perhaps especially on busy and successful businessmen. With no board of directors to push for a "succession plan" for the firm of Scrooge & Marley, he had avoided the issue.

Scrooge likely didn't pay more earlier because he hadn't given Cratchit enough responsibility to enable him to be worth more. With Scrooge’s change of heart, higher pay would go hand in hand with higher productivity from Cratchit, which would follow from additional responsibilities. Scrooge will need to free up time, after all, for board meetings at the various nonprofits he will be asked to join--word of unexpected large donations gets around fast in the nonprofit community.

Consider too that giving Cratchit more responsibility and more knowledge of the business could dramatically raise Cratchit's income earning ability for the firm. Scrooge might make even higher profits from a better-paid Cratchit.

It could be claimed that Cratchit is incompetent, but nothing indicates bad work habits in the movie, apart perhaps from showing up late to work one day--but that could be blamed on the overlarge and unexpected turkey Scrooge himself donated the day before. The audience, unfortunately, sees only the seemingly arbitrary nature of pay. Bosses can apparently double someone's pay if only spirits scare them half to death in nightmares (something politicians and labor unions have tried to do ever since).

So I recommend George C. Scott’s A Christmas Carol to my young nieces and nephew. They will enjoy it as will other young people (though perhaps not as much as the Mr. Magoo’s cartoon version). Still the hard part is keeping them attentive for the thirty-minute economics lecture following.

Gregory Rehmke (grehmke@economicthinking.org) is a writer and economic educator based in Seattle. He directs Economic Thinking, a program of the nonprofit E Pluribus Unum Films. More information at www.EconomicThinking.org.

Less government, better coping

[comment on Daily Speculations post on various potential crises in China]

“The Chinese government is struggling to cope…” Newspapers regularly report that governments or federal agencies working hard to deal with the crisis-of-the-week. We have a impending water shortage in China this week. Last week the headlines were of massive floods in China. This suggests an opportunity to improve infrastructure (though western environmentalists still oppose new dams).

When water is owned and has prices less will be wasted. If Chinese farms cannot compete without “free” water, they will shift to different crops. When farms pay more for water they economize and innovate, and some on the margins go out of business. Chinese farmers, starved of capital for generations, need far fewer workers as they gain access to modern farm machinery and methods. Workers naturally migration to village and city factories. ”Social upheaval” is more the consequence of Chinese government intervention in capital markets, restricting investment in some areas and subsidizing it in others. Chinese economic growth of 10% is celebrated, yet a free China would grow faster with less pollution and resource waste. Michael Cox offers this analogy. One man struggles to clear a path through the jungle. With a machete he can move ahead much faster (up to 10%, say). But when those behind him find the trail, they can go much, much faster. China found the capitalist trail and would have run along it much faster without the remnants of communist bureaucracies "struggling to cope."

An online source reports the U.S. imported 150,000 tons of apple juice concentrate from China in 2006. That takes a lot of water to grow. U.S. customers won’t notice slightly higher prices from less Chinese apple juice, though U.S. orchardists would. Ending water subsidies for apple production in China could benefit many, while harming some in the short term. Higher pork prices hurt the poor but encourage efficient pig farmers to expand, and to clean up their operations to better avoid disease. Will “social upheaval” follow higher pork prices, or just more fish for dinner?

John Quincy Adams' July 4 Speech

Each July 4th the Declaration of Independence would be read aloud in the capital as part of a July 4th celebration. John Quincy Adam’s July 4th, 1821 speech is memorable. I have long seen quotes of his brief mention of foreign policy. But the rest of the speech is excellent as well. It is often described online as a speech to Congress, but Congress was not in session during the July heat in Washington DC. You can see the full pamphlet online here.

An address,
delivered at the request of the committee of arrangements
for celebrating the anniversary of Independence,
at the City of Washington on the
Fourth of July 1821
upon the occasion of reading
The Declaration of Independence

Adams, John Quincy

Fellow Citizens, UNTIL within a few days before that which we have again assembled to commemorate, our fathers, the people of this Union, had constituted a portion of the British nation; a nation, renowned in arts and arms, who, from a small Island in the Atlantic ocean, had extended their dominion over considerable parts of every quarter of the globe. Governed themselves by a race of kings, whose title to sovereignty had originally been founded on conquest, spell-bound, for a succession of ages, under that portentous system of despotism and of superstition which, in the name of the meek and humble Jesus, had been spread over the christian world, the history of this nation had, for a period of seven hundred years, from the days of the conquest till our own, exhibited a conflict almost continued, between the oppressions of power and the claims of right. In the theories of the crown and the mitre, man had no rights. Neither the body nor the soul of the individual was his own. From the impenetrable gloom of this intellectual darkness, and the deep degradation of this servitude, the British nation had partially emerged. The [Page 4] martyrs of religious freedom had consumed to ashes at the stake; the champions of temporal liberty had bowed their heads upon the scaffold; and the spirits of many a bloody day had left their earthly vesture upon the field of battle, and soared to plead the cause of liberty before the throne of heaven. Through long ages of civil war the people of Britain had extorted from their tyrants, not acknowledgments, but grants of right. With this concession they had been content to stop in the progress of human improvement. They received their freedom, as a donation from their sovereigns. They appealed for their privileges to a sign manual and a seal. They held their title to liberty, like their title to lands, from the bounty of a man, and in their moral and political chronology, the great charter of Runnimead was the beginning of the world.

From the earliest ages of their recorded history, the inhabitants of the British islands have been distinguished for their intelligence and their spirit. How much of these two qualities, the fountains of all amelioration in the condition of men, was stifled by these two principles of subserviency to ecclesiastical usurpation, and of holding rights as the donations of kings, this is not the occasion to inquire. Of their tendency to palsy the vigor, and enervate the faculties of man, all philosophical reasoning, and all actual experience concur in testimony. These principles, however, were not peculiar to the people of Britain. They were the delusions of all Europe, still the most enlightened and most improvable portion of the earth. The temporal chain [5] was riveted upon the people of Britain, by the conquest. Their spiritual fetters were forged by subtilty working upon superstition. Baneful as the effect of these principles was, they could not forever extinguish the light of reason in the human mind. The discovery of the mariner's compass was soon followed by an extension of commercial intercourse between nations the most distant, and which, without that light beaming in darkness, to guide the path of man over the boundless waste of waters, could never have been known to each other; the invention of printing, and the composition of gunpowder, which revolutionized at once the art and science of war and the relations of peace; the revelation of India to Vasco de Gama, and the disclosure to Columbus of the American hemisphere; all resulted from the incompressible energies of the human intellect, bound and crippled as it was by the double cords of ecclesiastical imposture and political oppression. To these powerful agents in the progressive improvement of our species, Britain can lay no claim. For them the children of men are indebted to Italy, to Germany, to Portugal, and to Spain. All these improvements, however, consisted in successful researches into the properties and modifications of external nature. The religious reformation was an improvement in the science of mind; an improvement in the intercourse of man with his Creator, and in his acquaintance with himself. It was an advance in the knowledge of his duties and his rights. It was a step in the progress of man, in comparison with which the [6] magnet and gunpowder, the wonders of either India, nay the printing press itself, were but as the paces of a pigmy to the stride of a giant. If to this step of human advancement Germany likewise lays claim in the person of Martin Luther, or in the earlier, but ineffectual martyrdom of John Huss, England may point to her Wickliffe as a yet more primitive vindicator of the same righteous cause, and may insist on the glory of having contributed her share to the improvement of the moral condition of man.

The corruptions and usurpations of the church were the immediate objects of these reformers; but at the foundation of all their exertions there was a single plain and almost self-evident principle-that man has a right to the exercise of his own reason. It was this principle which the sophistry and rapacity of the church had obscured and obliterated, and which the intestine divisions of that same church itself first restored. The triumph of reason was the result of inquiry and discussion. Centuries of desolating wars have succeeded, and oceans of human blood have flowed, for the final establishment of this principle; but it was from the darkness of the cloister that the first spark was emitted, and from the arches of a university that it first kindled into day. From the discussion of religious rights and duties, the transition to that of the political and civil relations of men with one another was natural and unavoidable; in both, the reformers were met by the weapons of temporal power. At the same glance of reason, the tiara would have fallen from the brow of [7] priesthood, and the despotic sceptre would have departed from the hand of royalty, but for the sword, by which they were protected; that sword which, like the flaming sword of the Cherubims, turned every way to debar access to the tree of life.

The double contest against the oppressors of church and state was too appalling for the vigor, or too comprehensive for the faculties of the reformers of the European continent. In Britain alone was it undertaken, and in Britain but partially succeeded.

It was in the midst of that fermentation of the human intellect, which brought right and power in direct and deadly conflict with each other, that the rival crowns of the two portions of the British Island were united on the same head. It was then, that, released from the fetters of ecclesiastical domination, the minds of men began to investigate the foundations of civil government. But the mass of the nation surveyed the fabric of their Institutions as it existed in fact. It had been founded in conquest; it had been cemented in servitude; and so broken and moulded had been the minds of this brave and intelligent people to their actual condition, that instead of solving civil society into its first elements in search of their rights, they looked back only to conquest as the origin of their liberties, and claimed their rights but as donations from their kings. This faltering assertion of freedom is not chargeable indeed upon the whole nation. There were spirits capable of tracing civil government to its first foundation in the moral and physical nature of man: but conquest and servitude [8] were so mingled up in every particle of the social existence of the nation, that they had become vitally necessary to them, as a portion of the fluid, itself destructive of life, is indispensably blended with the atmosphere in which we live.

Fellow citizens, it was in the heat of this war of moral elements, which brought one Stuart to the block, and hurled another from his throne, that our forefathers sought refuge from its fury, in the then wilderness of this Western World. They were willing exiles from a country dearer to them than life. But they were the exiles of liberty and of conscience: dearer to them even than their country. They came too, with charters from their kings; for even in removing to another hemisphere, they "cast longing, lingering looks behind," and were anxiously desirous of retaining ties of connexion with their country, which, in the solemn compact of a charter, they hoped by the corresponding links of allegiance and protection to preserve. But to their sense of right, the charter was only the ligament between f them, their country, and their king. Transported to a new world, they had relations with one another, and relations with the aboriginal inhabitants of the country to which they came; for which no royal charter could provide. The first settlers of the Plymouth colony, at the eve of landing from their ship, therefore, bound themselves together by a written covenant; and immediately after landing, purchased from the Indian natives the right of settlement upon the soil. [9]

Thus was a social compact formed upon the elementary principles of civil society, in which conquest and servitude had no part. The slough of brutal force was entirely cast off; all was voluntary; all was unbiased consent; all was the agreement of soul with soul.

Other colonies were successively founded, and other charters granted, until in the compass of a century and a half, thirteen distinct British provinces peopled the Atlantic shores of the North American continent with two millions of freemen; possessing by their charters the rights of British subjects, and nurtured by their position and education, in the more comprehensive and original doctrines of human rights. From their infancy they had been treated by the parent state with neglect, harshness and injustice. Their charters had often been disregarded and violated; their commerce restricted and shackled ; their interest wantonly or spitefully sacrificed ; so that the hand of the parent had been scarcely ever felt, but in the alternate application of whips and scorpions.

When in spite of all these persecutions, by the natural vigor of their constitution, they were just attaining the maturity of political manhood, a British parliament, in contempt of the clearest maxims of natural equity, in defiance of the fundamental principle upon which British freedom itself had been cemented with British blood; on the naked, unblushing allegation of absolute and un- controllable power, undertook by their act to levy, without representation and without consent, taxes upon the [10] people of America for the benefit of the people of Britain. This enormous project of public robbery was no sooner made known, than it excited, throughout the colonies, one general burst of indignant resistance. It was abandoned, reasserted and resumed, until fleets and armies were transported, to record in the characters of fire, famine, and desolation, the transatlantic wisdom of British legislation, and the tender mercies of British consanguinity.

Fellow citizens, I am speaking of days long past. Ever faithful to the sentiment proclaimed in the paper [the Declaration of Independence], which I am about to present once more to your memory of the past and to your forecast of the future, you will hold the people of Britain as you hold the rest of mankind,¬–Enemies in war–in peace, Friends. The conflict for independence is now itself but a record of history. The resentments of that age may be buried in oblivion. The stoutest hearts, which then supported the tug of war, are cold under the clod of the valley. My purpose is to rekindle no angry passion from its embers: but this annual solemn perusal of the instrument, which proclaimed to the world the causes of your existence as a nation, is not without its just and useful purpose.

It is not by the yearly reiteration of the wrongs endured by your fathers, to evoke from the sepulchre of time the shades of departed tyranny; it is not to draw from their dread abode the frailties of an unfortunate monarch, who now sleeps with his fathers, and the sufferings of whose latter days may have atoned at [11] the bar of divine, mercy, for the sins which the accusing angel will read from this scroll to his charge; it is not to exult in the great moral triumph by which the Supreme Governor of the world crowned the cause of your country with success. No; the purpose for which you listen with renewed and never languishing delight to the reading of this paper, is of a purer and more exalted cast. It is sullied with no vindictive recollection. It is degraded by no rankling resentment. It is inflated with no vain and idle exultation of victory. The Declaration of Independence, in its primary purport, was merely an occasional state-paper. It was a solemn exposition to the world, of the causes which had compelled the people of a small portion of the British empire, to cast off the allegiance and renounce the protection of the British king: and to dissolve their social connexion with the British people. In the annals of the human race, the separation of one people into two, is an event of no uncommon occurrence. The successful resistance of a people against oppression, to the downfall of the tyrant and of tyranny itself, is the lesson of many an age, and of almost every clime. It lives in the venerable records of Holy Writ. It beams in the brightest pages of profane history. The names of Pharaoh and Moses, of Tarquin and Junius Brutus, of Geisler and Tell, of Christiern and Gustavus Vasa, of Philip of Austria and William of Orange, stand in long array through the vista of time, like the Spirit of Evil and the Spirit of Good, in embattled opposition to each other, from the mouldering ages of antiquity, to the recent memory of [12] our fathers, and from the burning plains of Palestine, to the polar frost of Scandinavia.

For the independence of North America, there were ample and sufficient causes in the laws of moral and physical nature. The tie of colonial subjection is compatible with the essential purposes of civil government, only when the condition of the subordinate state is from its weakness incompetent to its own protection. Is the greatest moral purpose of civil government, the administration of justice? And if justice has been truly defined, the constant and perpetual will of securing to every one his right, how absurd and impracticable is that form of polity, in which the dispenser of justice is in one quarter of the globe, and he to whom justice is to be dispensed is in another; where "moons revolve and oceans roll between the order and its execution;" where time and space must be annihilated to secure to every one his right. The tie of colonial subjection may suit the relations between a great naval power, and the settlers of a small and remote Island in the incipient stages of society: but was it possible for British intelligence to imagine, or British sense of justice to desire, that through the boundless ages of time, the swarming myriads of freemen, who were to civilize the wilderness and fill with human life the solitudes of this immense continent, should receive the mandates of their earthly destinies from a council chamber at St. James's, or bow forever in submission to the omnipotence of St. Stephen's Chapel? Are the essential purposes of civil government, to administer to the wants, and to fortify [13] the infirmities of solitary man? To unite the sinews of numberless arms, and combine the councils of multitudes of minds, for the promotion of the well-being of all? The first moral element then of this composition is sympathy between the members of which it consists; the second is sympathy between the giver and the receiver of the law. The sympathies of men begin with the relations of domestic life. They are rooted in the natural relations of husband and wife, of parent and child, of brother and sister; thence they spread through the social and moral propinquites of neighbor and friend, to the broader and more complicated relations of countryman and fellow-citizen; terminating only with the circumference of the globe which we inhabit, in the co-extensive charities incident to the common nature of man. To each of these relations, different degrees of sympathy are allotted by the ordinances of nature. The sympathies of domestic life are not more sacred and obligatory, but closer and more powerful, than those of neighborhood and friendship. The tie which binds us to our country is not more holy in the sight of God, but it is more deeply seated in our nature, more tender and endearing, than that common link which merely connects us with our fellow-mortal, man. It is a common government that constitutes our country. But in THAT association, all the sympathies of domestic life and kindred blood, all the moral ligatures of friendship and of neighbourhood, are combined with that instinctive and mysterious connection between man and physical nature, [14] which binds the first perceptions of childhood in a chain of sympathy with the last gasp of expiring age, to the spot of our nativity, and the natural objects by which it is surrounded. These sympathies belong and are indispensable to the relations ordained by nature between the individual and his country. They dwell in the memory and are indelible in the hearts of the first settlers of a distant colony. These are the feelings under which the children of Israel "sat down by the rivers of Babylon, and wept when they remembered Zion." These are the sympathies under which they "hung their harps upon the willows," and instead of songs of mirth, exclaimed, "If I forget thee, O Jerusalem, let my right hand forget her cunning." But these sympathies can never exist for a country, which we have never seen. They are transferred in the hearts of succeeding generations, from the country of human institution, to the country of their birth; from the land of which they have only heard, to the land where their eyes first opened to the day. The ties of neighbourhood are broken up, those of friendship can never be formed, with an intervening ocean; and the natural ties of domestic life, the all-subduing sympathies of love, the indissoluble bonds of marriage, the heart-riveted kindliness of consanguinity, gradually wither and perish in the lapse of a few generations. All the elements, which form the basis of that sympathy between the individual and his country, are dissolved.

Long before the Declaration of Independence, the great mass of the people of America and of the people [15] of Britain had become total strangers to each other. The people of America were known to the people of Britain only by the transactions of trade; by shipments of lumber and flax-seed, indigo and tobacco. They were known to the government only by half a dozen colonial agents, humble, and often spurned suitors at the feet of power, and by royal governors, minions of patron- age, sent from the footstool of a throne beyond the seas, to rule a people of whom they knew nothing; as if an inhabitant of the moon should descend to give laws to the dwellers upon earth. Here and there, a man of letters and a statesman, conversant with all history, knew something of the colonies, as he knew something of Cochin China and Japan. Yet even the prime minister of England, urging upon his omnipotent parliament laws for grinding the colonies to submission, could talk, without amazing or diverting his hearers, of the island of Virginia: even Edmund Burke, a man of more ethereal mind, apologizing to the people of Bristol, for the offence of sympathizing with the distresses of our country, ravaged by the fire and sword of Britons, asked indulgence for his feelings on the score of general humanity, and expressly declared that the Americans were a nation utter strangers to him, and among whom he was not sure of having a single acquaintance. The sympathies therefore most essential to the communion of country were, between the British and American people, extinct. Those most indispensable to the just relation between sovereign and subject, had never existed and could not exist between the British govern-[16]ment and the American people. The connexion was unnatural; and it was in the moral order no less than in the positive decrees of Providence, that it should be dissolved.

Yet, fellow-citizens, these are not the causes of the separation assigned in the paper which I am about to read. The connexion between different portions of the same people and between a people and their government, is a connexion of duties as well as of rights. In the long conflict of twelve years which had preceded and led to the Declaration of Independence, our fathers had been not less faithful to their duties, than tenacious of their rights. Their resistance had not been rebellion. It was not a restive and ungovernable spirit of ambition, bursting from the bonds of colonial subjection; it was the deep and wounded sense of successive wrongs, upon which complaint had been only answered by aggravation, and petition repelled with contumely, which had driven them to their last stand upon the adamantine rock of human rights.

It was then fifteen months after the blood of Lexington and Bunker's hill, after Charlestown and Falmouth, fired by British hands, were but heaps of ashes, after the ear of the adder had been turned to two successive supplications to the throne; after two successive appeals to the people of Britain, as friends, countrymen, and brethren, to which no responsive voice of sympathetic tenderness had been returned,–

"Nought but the noise of drums and timbrels loud, Their children's cries unheard that passed through fire To the grim idol :¬–”

[17] Then it was that the thirteen United Colonies of North America, by their delegates in Congress assembled, exercising the first act of sovereignty by a right ever inherent in the people, but never to be resorted to, save at the awful crisis when civil society is solved into its first elements, declared themselves free and independent states; and two days afterwards, in justification of that act, issued this

UNANIMOUS DECLARATION OF THE THIRTEEN UNITED STATES OF AMERICA. …

[J.Q. Adams reads the full text of the Declaration of Independence, then continues with his speech. Full pamphlet is online here.]

It is not, let me repeat, fellow-citizens, it is not the long enumeration of intolerable wrongs con-centrated in this declaration; it is not the melancholy catalogue of alternate oppression and en-treaty, of reciprocated indignity and remonstrance, upon which, in the celebration of this anniversary, your memory delights to dwell. Nor is it yet that the justice of your cause was vindicated by the God of battles; that in a conflict of seven years, the history of the war by which you maintained that declaration, became the history of the civilized, world; that the unanimous voice of enlightened Europe [22] and the verdict of an after age have sanctioned your assumption of sovereign power, and that the name of your Washington is enrolled upon the records of time, first in the glorious line of heroic virtue. It is not that the monarch himself, who had been your oppressor, was compelled to recognise you as a sovereign and independent people, and that the nation, whose feelings of fraternity for you had slumbered in the lap of pride, was awakened in the arms of humiliation to your equal and no longer contested rights. The primary purpose of this declaration, the proclamation to the world of the causes of our revolution, is "with the years beyond the flood." It is of no more interest to us than the chastity of Lucretia, or the apple on the head of the child of Tell. Little less than forty years have revolved since the struggle for inde-pendence was closed; another generation has arisen; and in the assembly of nations our republic is already a matron of mature age. The cause of your independence is no longer upon trial. The final sentence upon it has long since been passed upon earth and ratified in heaven.
The interest, which in this paper has survived the occasion upon which it was issued; the interest which is of every age and every clime; the interest which quickens with the lapse of years, spreads as it grows old, and brightens as it recedes, is in the principles which it proclaims. It was the first solemn declaration by a nation of the only legitimate foundation of civil government. It was the corner stone of a new fabric, destined to cover the surface of the globe. It demol-[23]ished at a stroke the lawfulness of all governments founded upon con-quest. It swept away all the rubbish of accumu-lated centuries of servitude. It announced in practical form to the world the transcendent truth of the unalienable sovereignty of the people. It proved that the social compact was no figment of the imagination; but a real, solid, and sacred bond of the social union. From the day of this declara-tion, the people of North America were no longer the fragment of a distant empire, imploring justice and mercy from an inexorable master in another hemisphere. They were no longer children appeal-ing in vain to the sympathies of a heartless mother; no longer subjects leaning upon the shattered col-umns of royal promises, and invoking the faith of parchment to secure their rights. They were a na-tion, asserting as of right, and maintaining by war, its own existence. A nation was born in a day.
"How many ages hence
Shall this their lofty scene be acted o'er In states unborn, and accents yet unknown?"
It will be acted o'er, fellow-citizens, but it can never be repeated. It stands, and must forever stand alone, a beacon on the summit of the moun-tain, to which all the inhabitants of the earth may turn their eyes for a genial and saving light, till time shall be lost in eternity, and this globe itself dissolve, nor leave a wreck behind. It stands for-ever, a light of admonition to the rulers of men; a light of salvation and redemption to the oppressed. So long as this planet shall be inhabit-[24]ed by human beings, so long as man shall be of social nature, so long as government shall be necessary to the great moral purposes of society, and so long as it shall be abused to the purposes of oppression, so long shall this declaration hold out to the sover-eign and to the subject the extent and the bounda-ries of their respective rights and duties; founded in the laws of nature and of nature's God. Five and forty years have passed away since this Declara-tion was issued by our fathers; and here are we, fellow-citizens, assembled in the full enjoyment of its fruits, to bless the Author of our being for the bounties of his providence, in casting our lot in this favored land; to remember with effusions of gratitude the sages who put forth, and the heroes who bled for the establishment of this Declaration; and, by the communion of soul in the reperusal and hearing of this instrument, to renew the genu-ine Holy Alliance of its principles, to recognize them as eternal truths, and to pledge ourselves and bind our posterity to a faithful and undeviating adherence to them.
Fellow-citizens, our fathers have been faithful to them before us. When the little band of their Dele- gates, "with a firm reliance on the protection of Divine Providence, for the support of this declara-tion, mutually pledged to each other their lives, their fortunes, and their sacred honor," from every dwelling, street, and square of your populous cit-ies, it was re-echoed with shouts of joy and gratu-lation! and if the silent language of the heart could have been heard, every hill upon the surface of this continent which had been [25] trodden by the foot of civilized man, every valley in which the toil of your fathers had opened a paradise upon the wild, would have rung, with one accordant voice, louder than the thunders, sweeter than the harmonies of the heavens, with the solemn and responsive words, "We swear."
The pledge has been redeemed. Through six years of devastating but heroic war, through nearly forty years of more heroic peace, the principles of this declaration have been supported by the toils, by the vigils, by the blood of your fathers and of yourselves. The conflict of war had begun with fearful odds of apparent human power on the side of the oppressor. He wielded at will the collective force of the mightiest nation in Europe. He with more than poetic truth asserted the dominion of the waves. The power, to whose unjust usurpation your fathers hurled the gaunt- let of defiance, baf-fled and vanquished by them, has even since, stripped of all the energies of this continent, been found adequate to give the law to its own quarter of the globe, and to mould the destinies of the European world. It was with a sling and a stone, that your fathers went forth to encounter the mas-sive vigor of this Goliath. They slung the heaven-directed stone, and
"With heaviest sound, the giant monster fell."
Amid the shouts of victory your cause soon found friends and allies in the rivals of your enemies. France recognized your independence as existing in fact, and made common cause with you for its support. Spain [26] and the Netherlands, without adopting your principles, successively flung their weight into your scale. …
[The rest of page 26, page 27, part of 28 omitted.]
The Declaration of Independence pronounced the irrevocable decree of political separation, be-tween the United States and their people on the one part, and the British king, government, and nation on the other. It proclaimed the first princi-ples on which civil government is founded, and derived from them the justification before earth and heaven of this act of sovereignty. But it left the people of this union, collective and individual, without organized government. In contemplating this state of things, one of the profoundest of Brit-ish statesmen, in an ecstacy of astonishment ex-claimed, "Anarchy is found tolerable!' But there was no anarchy. From the day of the Declaration, the people of the North American union, and of its constituent states, were associated bodies of civi-lized men and christians, in a state of nature, but not of anarchy. They were bound by the laws of God, which they all, and by the laws of the gospel, which they nearly all, acknowledged as the rules of their conduct. They [29] were bound by the principles which they themselves had proclaimed in the declaration. They were bound by all those tender and endearing sympathies, the absence of which, in the British government and nation, to-wards them, was the primary cause of the distress-ing conflict in which they had been precipitated by the headlong rashness and unfeeling insolence of their oppressors. They were bound by all the be-neficent laws and institutions, which their forefa-thers had brought with them from their mother country, not as servitudes but as rights. They were bound by habits of hardy industry, by frugal and hospitable manners, by the general sentiments of social equality, by pure and virtuous morals; and lastly they were bound by the grappling-hooks of common suffering under the scourge of oppres-sion. Where then, among such a people, were the materials for anarchy! Had there been among them no other law, they would have been a law unto themselves.
They had before them in their new position, be-sides the maintenance of the independence which they had declared, three great objects to attain; the first, to cement and prepare for perpetuity their common union and that of their posterity; the sec-ond, to erect and organize civil and municipal governments in their respective states: and the third, to form connexions of friendship and of commerce with foreign nations. For all these ob-jects, the same Congress which issued the Declara-tion, and at the same time with it, had provided. They recommended to the several states to form civil [30] governments for themselves; with guarded and cautious deliberation they matured a confederation for the whole Union; and they pre-pared treaties of commerce, to be offered to the principal maritime nations of the world. All these objects were in a great degree accomplished amid the din of arms, and while every quarter of our country was ransacked by the fury of invasion. The states organized their governments, all in re-publican forms, all on the principles of the Decla-ration. The confederation was unanimously ac-cepted by the thirteen states: and treaties of com-merce were concluded with France and the Neth-erlands, in which, for the first time, the same just and magnanimous principles, consigned in the Declaration of Independence, were, so far as they could be applicable to the intercourse between na-tion and nation, solemnly recognized. When expe-rience had proved that the confederation was not adequate to the national purposes of the country, the people of the United States, without tumult, without violence, by their delegates all chosen upon principles of equal right, formed a more per-fect union, by the establishment of the federal con-stitution. This has already passed the ordeal of one human generation. In all the changes of men and of parties through which it has passed, it has been administered on the same fundamental principles. Our manners, our habits, our feelings, are all re-publican; and if our principles had been, when first proclaimed, doubtful to the ear of reason or the sense of humanity, they would have been recon-ciled to our understanding and endeared to our [31] hearts by their practical operation. In the pro-gress of forty years since the acknowledgment of our Independence, we have gone through many modifications of internal government, and through all the vicissitudes of peace and war, with other mighty nations. But never, never for a moment have the great principles, consecrated by the Dec-laration of this day, been renounced or abandoned.
And now, friends and countrymen, if the wise and learned philosophers of the older world, the first observers of mutation and aberration, the dis-coverers of maddening ether and invisible planets, the inventors of Congreve rockets and shrapnel shells, should find their hearts disposed to inquire, what has America done for the benefit of man-kind? let our answer be this–America, with the same voice which spoke herself into existence as a nation, proclaimed to mankind the inextinguish-able rights of human nature, and the only lawful foundations of government. America, in the as-sembly of nations, since her admission among them, has invariably, though often fruitlessly, held forth to them the hand of honest friendship, of equal freedom, of generous reciprocity. She has uniformly spoken among them, though often to heedless and often to disdainful ears, the language of equal liberty, equal justice, and equal rights. She has, in the lapse of nearly half a century, without a single exception, respected the inde-pendence of other nations, while asserting and maintaining her own. She has abstained from in-terference in the concerns of others, even when the conflict has been for principles to which [32] she clings, as to the last vital drop that visits the heart. She has seen that probably for centuries to come, all the contests of that Aceldama, the European World, will be contests between inveterate power, and emerging right. Wherever the standard of freedom and independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own. She will recommend the general cause, by the countenance of her voice, and the benignant sympathy of her example. She well knows that by once enlisting under other banners than her own, were they even the banners of foreign independence, she would involve herself, beyond the power of extrication, in all the wars of interest and intrigue, of individ-ual avarice, envy, and ambition, which assume the colors and usurp the standard of freedom. The fundamental maxims of her policy would insensi-bly change from liberty to force. The frontlet upon her brows would no longer beam with the ineffa-ble splendor of freedom and independence; but in its stead would soon be substituted an imperial diadem, flashing in false and tarnished lustre the murky radiance of dominion and power. She might become the dictatress of the world: she would be no longer the ruler of her own spirit.
Stand forth, ye champions of Britannia, ruler of the waves! Stand forth, ye chivalrous knights of chartered liberties and the rotten borough! Enter the lists, ye [33], boasters of inventive genius! ye mighty masters of the palette and the brush! ye improvers upon the sculpture of the Elgin marbles! ye spawners of fustian romance and lascivious lyrics! Come, and inquire what has America done for the benefit of mankind! In the half century which has elapsed since the declaration of Ameri-can independence, what have you done for the benefit of mankind? When Themistocles was sar-castically asked by some great musical genius of his age whether he knew how to play upon the lute, he answered, No! but he knew how to make a great city of a small one. We shall not contend with you for the prize of music, painting, or sculp-ture. We shall not disturb the ecstatic trances of your chemists, nor call from the heavens the ar-dent gaze of your astronomers. We will not ask you who was the last president of your Royal Academy. We will not inquire by whose mechanical combinations it was, that your steam-boats stem the currents of your rivers, and vanquish the op- position of the winds themselves upon your seas. We will not name the inventor of the cotton-gin, for we fear that you would ask us the meaning of the word, and pronounce it a provincial barba-rism. We will not name to you him, whose graver defies the imitation of forgery, and saves the labor of your executioner, by taking from your greatest geniuses of robbery the power of committing the crime. He is now among yourselves; and since your philosophers have permitted him to prove to them the compressibility of water, you may per-haps claim him for your own. Would you [34] soar to fame upon a rocket, or burst into glory from a shell? We shall leave you to inquire of your naval heroes their opinion of the steam-battery and the torpedo. It is not by the contrivance of agents of destruction, that America wishes to commend her inventive genius to the admiration or the gratitude of after times; nor is it even by the detection of the secrets or the composition of new modifications of physical nature.
"Excudent alii spirantia mollius aera."
Nor even is her purpose the glory of Roman ambition; nor “tu regere imperio populosa” her me-mento to her sons. Her glory is not dominion, but liberty. Her march is the march of mind. She has a spear and a shield; but the motto upon her shield is Freedom, Independence, Peace. This has been her declaration: this has been, as far as her necessary intercourse with the rest of mankind would permit, her practice.
My countrymen, fellow-citizens, and friends; could that Spirit, which dictated the Declaration we have this day read, that Spirit, which “prefers before all temples the upright heart and pure,” at this moment descend from his habitation in the skies, and within this hall, in language audible to mortal ears, address each one of us, here assem-bled, our beloved country, Britannia ruler of the waves, and every individual among the sceptred lords of humankind; his words would be,
“Go thou and do likewise!”

iPhone Crashes the Regulated Industry Party

It is great the way industry leaders sometimes charge into different but related industries. The free-wheeling computer industry doesn’t suffer from the dense regulations and Congressional lobbies that blanket the phone, cable, and cell phone industries.

Verizon, the leading wireless firm, has its roots as a heavily-regulated Baby Bell (Bell Atlantic). It is a pain to deal with (at least it has been for me). Having “the most reliable” cellular network, neither Verizon nor any other major cell phone company allowed their phones and users to switch calls to free wifi networks when available.

Apple enters the cell phone business with a phone that automatically switches to wifi. Apple’s iPhone is partnered with the weakest cellular network, which, being in last place, was willing to cede more control to Apple. Instead of standing in a cell phone store giving your address to a Verizon employee, iPhone buyers activate their cell phones at home using iTunes. That saves somebody money, and allows Apple to sell the iPhone online from their own company store (though with a four-week wait for now).

Just as the most innovative electric cars will likely come from outside the established auto industry, the most innovative cell phone comes from outside the cell phone industry.

The Apple TV device is a similar push to compete with the endlessly irritating services of local cable monopolies.

It is interesting that Apple’s latest ventures are into long-regulated cable and wireless sectors. Apple’s close integration of hardware and software gives them an advantage entering such fields. Hewlett-Packard, Samsung, Sony and Dell lack the software expertise, just a Microsoft lacks hardware and design expertise to match Apple.

What felled Apple and Jobs the first time around, according to Jobs and others, was that they got a bit complacent and greedy. They had great products and high-margins with early Macintosh computers. But they kept their prices too high for too long. Anyone serious about a personal computer in those days, it was believed, should be willing to pay $3,500 and above.

Microsoft developed (and licensed) many of the best Mac features and offered their Windows operating system cheap to dozens of personal computer companies.

Greg Rehmke

Corruption and Old Age

Episode 3 of Friedman's Free to Choose focuses on freedom and prosperity and much of it is set in Eastern Europe. The episodes are online here:

http://www.ideachannel.tv/

In episode 3, at 14 minutes in, there are segments on informal emerging small businesses in Central Europe under communism. A private Hungarian construction company is trying to expand, but can't get permits and needs foreign currency. They have to purchase it on the black market (shown in the video) in order to expand. Later are shown informal clothing companies in Budapest where workers earn three times average wages making clothes sold by street vendors.

In Sebastian Mallaby book "The World's Banker"Chapter 7 is "The Cancer of Corruption." Mallaby argues that corruption was a topic World Bank officials did not discuss publicly. It was only durring Wolfensohn's erratic tenure that the World Bank lurched into corruption issues and began churning out studies of corruption. Corruption became was made an issue (in a speech he gave to bank officials, p 176).

The chapter then has a discussion on Indonesia, on how rapidly it grew (following World Bank advice says or implies the author, which is misleading at least...) An anecdote on p. 180:

Wolfenshon, Suharto and China's vice-premier Zhu Rongji are having tea during break in big summit: Suharto was talking to Zhu, and he summoned Wolfensohn over; and then he broached the subject of corruption: "The latest corruption rankings produced by... Transparency International were most upsetting Suharto declared, for they rated Indonesia as less corrupt than China; he had been happier with the previous year's results, which had recognized his own country as the more energetic embezzler. Zhu looked visibly annoyed, but Suharto carried on. "Don't you think we should tell the president of the World Bank about corruption in this part of the world?"... Then Suharto looked at Wolfensohn. "You know, what you regard as corruption in your part of the world, we regard as family values."

Interesting that Suharto, like Saddam, led administrations that early on were considered efficient and less corrupt than those around them. It was as they got old and their families expanded, skimming more money from a wider range of projects, that corruption began to bite. It was when Suharto's wife ("Madam Tien Percent") became ill in early 1990s that, according the the author, "the children ran amok, and the time when the ruling family would rake off only 10 percent soon became a pleasant memory." p.178 (I highly recommend, by the way, a video clip from the movie Dick Tracy, when all the mob bosses get together to discuss the grand plan for the city. The lead bad guy describes his vision that every time anyone buys anything in the city, the mob will collect 10 percent. After he finishes his grand gangster plan, it is only a barely above-average sales tax.)

So a benefit of democracy would be to kick out Presidents as they get old and naturally corrupt, beguiled by fawning associates, children, and grandchildren. Interestingly, this is much the same benefit of stock ownership for family-run firms whose founders age and whose children often prove less competent and entrepreneurial. Only outside ownership allows ousting of the founder, who left to his own preferences would ride the firm to bankruptcy or the grave, which ever comes first.

As Lord Acton noted: "power corrupts..."

First make sure govt. does no (environmental) harm

Leonard Reed, Ben Rogge, and Ed Opitz of the Foundation for Economic Education had much experience with energetic libertarians who attended FEE seminars. Libertarians were often frustrated that those around them seemed unable to grasp free-market ideas. Libertarians wanted to promote liberty in the worst way, the joke goes, and that is exactly what they did.

Reed, Rogge, and Opitz argued that the best libertarians could do is to present society with one improved person (themselves). People should focus on improving their own understanding and they could expect in time that others would turn to them for advice and opinions. Of course for many this was bitter medicine. It is so much easier to blame others for being thick-headed. I remember reading Hawthorne's short story "The Great Stone Face" and that has always inspired me.

As for gas taxes, I was impressed with John Tierney's NYT column suggesting a revenue-neutral gas tax that would kick in as prices fell (say one penny for every two penny drop). Such a tax could be called an emission tax, energy-securty tax, or misguided overseas intervention tax, or whatever. I think Tierney also proposed current gas taxes be reduced as gas prices went "too high." I don't remember the details. At least for those roads that can't easily be privatized, or fitted with congestion-pricing tolls, gas fees should cover all expenses. General taxpayers should no more be taxes for roads than they should for ports, trains, or airports.

I am working on a study recommending that California, instead of elaborate subsidies for alternative energy and coersive mandates for emissions reductions (forcing firms to retire 10% of their off-road vehicles each year)... that instead of these interventions, California should consider removing current penalties for those who wish to purchase and use new, more efficient, and lower-emission vehicles.

Anyone in California wishing to purchase a new technology car, truck, or off-road vehicle must pay the state of California an 8.5% or so penalty (a sales tax). Why not just remove this tax for those purchasing newer, cleaner, safer, less-polluting technology? Or one could propose a more complicated system where emissions-reduction credits counted against sales taxes.

And contractors (as well as car buyers) would sell their used vehicles to downstream users who would sell or retire their even older, more polluting, vehicles. The net benefit from deploying new lower-emission engines is huge, but California penalizes such purchases.

My proposal is that governments first reduce the harms caused by current policies, before rushing forward with new interventions.

Greg

Big Screen Monitors for Apple's iTV

I finally had a chance this week to plug my Mac Powerbook into my father's new LCD 1080i HDTV. I had ordered a $30 DVI-to- HDMI video cable online (to avoid the $100 price tag for one at Circuit City) and when it arrived I tried it with my brother-in-law's Plasma HDTV. The result was not too impressive (too smeary and unstable). On my father's LCD HDTV, however, the results were amazing. His new TV is also a huge computer screen with near-perfect pictures. I played an iPhoto slide show (though no music through the HDMI cable. I needed separate audio cable for that.). And I was ready to launch into a Keynote (Mac's PowerPoint) economics presentation until significant audience resistance arose.

Still, all these thousands of HDTV entering homes are also external monitors for Apple computer to bring into their iLife network (iMovie, iPhoto, iDVD, iEtc.). The popular tech news media continues to think of Apple as an iPod and iTunes company, the real story will be Apple's effective marriage of iLife (and iTV) with HDTVs.

I videotaped my nieces' basketball game yesterday (at least when they were on the court). In a few minutes (about 20 minutes over playing time) that game can become a DVD with nice transitions between scenes. Or I can post it online so my sister and father can play it on their computers. My father would just sputter if I suggested he download it to watch on his computer. But if he could click a few buttons and play it on his 37" HDTV, well that could work. The video and pictures could download to the hard drives of any Mac computer or soon to Apple's new iTV. Jobs announced iTV in September (http://www.roughlydrafted.com/RD/Home/21133BEF-61B4-40C1-A976-5C1360E60694.html) and we will learn more in the Big Show (Jobs' MacWorld keynote on Jan. 9th).

I would argue that the big iTV value is not storing or watching movies. We have DVD players for that and Hi-Def. movies require a lot of bandwidth and hard drive space. Do we need or want better technology for watching more movies? I think instead, the fact that hundreds of thousands are purchasing 42" computer screens for their living room (that they think of as TVs) opens the door for families to vastly expand their home entertainment options. The can play slideshows with music of beautiful pictures from around the world, from their vacations, from Google Earth, from rainforests, mountains, anywhere. Instead of a 42" dark screen hogging a living room wall when the TV is off, great pictures can be featured that change every minute, hour, or day.

Most people may not now have a collection of high quality pictures organized with transitions to show with music on their new HDTVs. But they have digital cameras and soon they (or their children) may have Apple computers and skills to assemble personal family entertainment. So rather than watching Hollywood families live their lives, we can spend at least some watching our own, and creating our own living-room windows on the world.

Of course I have no idea if all this will push Apple stock prices up still further, or whether the outlandishly high expectations of Apple fanatics (like me) have already push Apple stock too high. Still, I can't help but think the iPod was only the beginning, and only for the kids and young people. Older adults spend more time in front of their TVs, and much more time complaining about the horrendous content delivered from Hollywood and even from NFL, NBA, corporate fruit bowls, etc. Maybe they would rather watch pictures and video from their kids and grandkids basketball games than overproduced NBA and rampages?