Define successful in this context.

Our central bank was quite “successful” in certain peoples opinions over the past two decades, until it wasn’t. Well, perhaps I’m being to generous with them. They probably still think it’s acting successfully.

Well some of it’s good, but this comment was ridiculous:
“ignorant that Jefferson’s economics was so bad that he took small fortune and turned it into poverty.”

Is every economist rich? Is that how we measure how good an economist is?

Better yet, are you rich Dick Fox?

If I recall, Jefferson was a tinkerer and into grandiose stuff. Building cool curved brick walls only one brick wide merely to show a principle is expensive.

Of course, I’m not a historian amateur or otherwise. So maybe he was a poor economist also. He did have the right idea about central banks if he was against them.

If I inherited lots of money then I’d run it into the ground also. Imagine how much fun it is to spend a billion instead of all the hard work in earning it. First thing I’d waste money on is that Bussard fusion reactor. Sounds cool, though not likely to work.

Way to go!

“Must”? How desperate! How imperative! How unassailable!

This is an excellent argument to make to convince people to amend the Constitution to provide for these new powers. But federalists (i.e., nationalists) don’t want to bother with that process.

The main problem with “implied powers” is not the fact that the federal government gets new powers (although that is usually a problem, too). It’s that the federal government gets to be the one to decide, on its own, that it ALREADY HAS whatever additional powers it decides that it needs.

The “implied powers” doctrine is simply a self-aggrandizing method of getting around that pesky and cumbersome problem of having to get the States to ratify amendments. Voters can be so obstinate. Better to just eliminate the part where they get a modicum of control over the size and scope of the power of the government, right?

You have a shallow view that parrots what others have said without going to the source. Hamilton did not give birth to the central bank. The UK had a central bank that was pretty successful in the 1800s.

It is counter productive to have a knee jerk reaction to the term central bank. There are all kinds of ways central banks operate. Look deeper.

Outstanding post!! Well reasoned and logical.

My comment is that I believe you take Hamilton somewhat out of context. He is responding to the idea that there must be sufficient power in the central government to perform its responsibilities.

To understand this a little better here is what he wrote to James Duane in 1780 in his criticism of the Articles of Confederation:

“There is a wide difference between our situation and that of an empire under one simple form of government, distributed into counties provinces or districts, which have no legislatures but merely magistratical bodies to execute the laws of a common sovereign. Here the danger is that the soverign will have too much power to oppress the parts of which it is composed. In our case, that of an empire composed of confederated states each with a government completely organised within itself, having all means to draw its subjects to a close dependence on itself – the danger is directly the reverse. It is that the common sovereign will not have power sufficient to unite the different members together, and direct the common forces to the interest and happiness of the whole.”

In his argument as stated by you above he states, “If it would be necessary to bring proof to a proposition so clear, as that which affirms that the powers of the federal government, as to its objects, were sovereign…” Note the phrase I placed in bold. Hamilton recognizes that the federal government is only sovereign “as to its objects,” its responsibilities. Then he goes on to offer as his proof that the constitution makes federal treaties “sovereign” over the states. He therefor concludes that engaging in activities of the federal government only “as to its objects” must also be sovereign over the states. Hamilton does not at all state that all federal laws are sovereign over the states but only those laws that support its constitutional responsibilities.

To take Jefferson’s statement to its logical conclusion the federal government can have no power to enforce any of its responsibilities. In other words we must return to the Articles of Confederation where the federal government can suggest but the states have the right to ignore the suggestions be it taxes or defense of the now united states.

In his letter to Duane, Hamilton uses the example of the “Grecian republics” to show that they “for want of a union fell a prey to their neighbours.”

Mary: I wonder what a “killer app” might be in the world of Ideas. Apple hasn’t had a killer app, per se, but we might consider the iPod to be a “killer” in its own market with a roughly 70% share of the pie. As ideas, though, I don’t know what might be packaged together out from an overarching philosophy–a package that could be accepted and take over the marketplace. Hmm.

Dick Fox: Thanks for the links. Looking at Hamilton’s argument, there is a pretty foundational argument that I took exception to. We writes:
“If it would be necessary to bring proof to a proposition so clear, as that which affirms that the powers of the federal government, as to its objects, were sovereign, there is a clause of its Constitution which would be decisive. It is that which declares that the Constitution, and the laws of the United States made in pursuance of it, and all treaties made, or which shall be made, under their authority, shall be the serene law of the land. The power which can create the supreme law of the land in any case, is doubtless sovereign as to such case.”

Look at that last sentence. He claims that the federal government is sovereign over the various States because it has the power to create laws that have supremacy. I’m no historian, but didn’t the people of the States create that power (the Constitution)? If his argument is that whatever power that creates sovereign law is sovereign itself, then he’d have to argue that the people themselves are sovereign.

The federal government of the United States did not create itself. It was the ratification by the people of the various States that created it. In its creation, the people did not fashion out a many-headed King. Instead, they created a Steward of the States, limited with clearly defined powers.

Hamilton seems to rely on this idea of the government being sovereign (as opposed to just the law being sovereign) to argue for the constitutionality of the creation of corporations like central banks. There IS a distinction here. If, as Hamilton argues, the government were sovereign then they could do whatever they wanted regardless of whatever laws were previously in place. On the other hand, if the law were sovereign then all the laws that followed would have to line up with the ones previously in place.

Hamilton seems to think that if some power is “implied” through creation of the federal government, then the government should be able to delegate, incorporate, or nationalize at will. But, as Jefferson argues: “To take a single step beyond the boundaries thus specially drawn around the powers of Congress is to take possession of a boundless field of power, no longer susceptible of any definition.” Who is to say what is “implied” and what isn’t? That’s the danger of Hamilton’s argument, in my opinion.

John Steele Gordon cannot tell the difference from an independent bank large enough to be the lender of last resort with a Federal Reserve System that engages in the worst Keynesian Social Engineering the world has ever experienced.

But then Thomas DiLorenzo’s rebuttal is so ignorant of what Alexander Hamilton believed that it is like a physician bleeding a person dying of a gunshot wound. Anyone who would write, “Compared to Jefferson, Hamilton was an economic ignoramus” is ignorant of what Hamilton has written and even more ignorant that Jefferson’s economics was so bad that he took small fortune and turned it into poverty.

Hamilton was not perfect, but neither was he evil. If it had not been for Alexander Hamilton the United States would not exist today. He returned the US to a gold standard, paid the war debts of all the states, and gave the US one of the highest bond ratings in Europe of any country in the world.

Decide for yourself rather than following blindly either Gordon or DiLorenzo. Here is Jefferson’s argument as presented to President Washington http://courses.pasleybrothers.com/texts/Jefferson_on_BUS.htm and here is the argument of Hamilton as presented to President Washington http://avalon.law.yale.edu/18th_century/bank-ah.asp

The actual question debated is whether the constitution empowers the government the right to do what ever is necessary to fulfill its enumerated responsibilities. This became known as the “implied powers” doctrine. Ask yourself the question Hamilton implies. Can a government exist if it has not power to enforce its enumerated responsibilities?

True, Microsoft does have a larger share than Apple. My point was not to make an analogy between Apple and Austrio-libertarianism, but your points are well-taken. In fact, we could even take the idea a step further in terms of studying strategy for market share.

Microsoft, on one hand, is highly ingrained in the business enterprise systems. Many things run MS software, or require it. People at home tend to buy PCs because they are cheaper, and because they are familiar with them at work. They have them at work because entrenched businesses would find it very expensive to switch over. In the same way, most people accept the government as par for the course because that’s what they are familiar with. Also, systems like fractional-reserve banking and the Fed have intertwined with regular business activities–so much so that many companies are run on a system of borrow-and-operate. Although there may be a better product out there, the change would be drastic, unfamiliar, and worrisome to most business persons.

Apple, on the other hand, takes the approach that many authoritarians have made in decades past: they try to infiltrate the schools. Apple is very involved with getting their computers in schools so that children are used to it and will therefore be more likely to go with the same later in life. We can see that going on in our public schools now with some very statist ideas being promulgated–from the universities on down to the lower grades.

As to the question of Apple being a better product.. I think it is a trade-off. Sure, the object itself is probably better for some things (graphic design, photography, ease-of-use).. but it comes at a price. It’s like, you know, which is better: an Aston Martin or a Chevy? Again, the analogies are falling apart all around me! Libertarianism is, in my opinion, the best product for the lowest price. (With our current system, we’re getting a Datsun at Ferrari prices.)

But, yes, I’d agree that Austian economics and libertarianism are a better product with a lower market share. Again, I think the issues are entrenchment of the old system and the perceived cost of the new one. Case-in-point is this election we in the US are going through right now. Conservatives everywhere would love to vote libertarian, but the perceived cost is “that socialist would get in!” For the more left-leaning libertarians, the cost might be “that imperialist might get in!” Fear is a hard shackle to break.

Don’t Microsoft/Intel products still have a grossly larger share of the market than Apple?

That used to be because of two factors: (1) compatibility with everyone else; (2) cost. These days I don’t think compatibility is much of an issue anymore, but win-tel products are still noticeably less expensive. Linux/Intel products have also carved out a nice niche for themselves, and not made it any easier for Apple to gain market share.

It seems that one could say Austrian economics and libertarianism have already achieved a market position similar to Apple: a superior product but smaller market share (though I can’t claim to personally know that Apple is superior).

Form over function in action

I think this is because the kind of person that goes and studies, tests, and tries to look at economics from all sides is a very different animal than the salesman or marketeer. To effectively sell and market a product, a person has to be slightly disingenuous. To sell, you see, you have to reduce your message to the lowest common denominator so that it reaches the broadest number of people. I say that this is a lack of sincerity, since some of the very important points of your product (or idea) would need to be watered down.

The kind of person that is willing to water down their message (even to the point of being inaccurate) for the sake of broad evangelism is not the kind of person that slogs through tomes, historical research, and articles of current events. I get the feeling that the world (sadly) has grown accustomed to lazy salesmen. They are used to people who don’t understand the product they peddle, but they sound good doing it.

My view on salesmanship, however, is not completely bleak. There are some great examples of effective marketing of products–without sacrificing the message. The trouble is that it takes a long, continued effort and a big budget. Case-in-point: Apple. Their product is attractive, it works, and it is in many (but not all) ways intuitive. Its marketing backs this up. It does not use one message in and of itself, but spreads out the message over many many commercials. It is consistent in that it owns the idea of “simplicity”. And it backs all of this up with big budgets and constant visibility.

Now, I would love to see the same kind of approach applied to Austrian economics in particular and libertarianism in general. Maybe I’m too young, but has anyone seen an effective campaign of this sort in the theater of ideas? Such “salesmanship” of the Jeffersonian tradition (Ugh. I hate to say that. As correct as that man may have been regarding central banking, I cannot ally myself with him because of his egregious actions against the Cherokee Nation. It makes me want to not carry $20s in my pocket–but $10s are no better. But I digress.) would require several things:

1. A unifying thought that sums up our ideas.
2. Breaking up our message into digestible parts that all tie into that unifying thought.
3. Clever packaging of those parts.
4. Broad dissemination of those parts.

Again, relying too much on Apple, They take step 1 and come up with “Simplicity”. They take step two and find things like security, file compatibility, OS stability, pre-installed software, Widgets, etc. They take step 3 and make the wonderful commercials that each address only one of the points derived from step 2, all in a visible message that highlights the choice between two options (PC vs. Mac) in a manner that screams “Simplicity!” Lastly, they take a huge bag of money with step 4 and spread the message.

So! Can the Mises Institute do that? Mr. Tucker, Mr. Woods? Anyone? Bueller? Bueller?

Somehow, the Law/Hamilton side are able to make gods out of there heroes. They did the same with Keynes who, as I understand, knew very little economics, but was a good salesman and sided with Law/Hamilton. All Keynes did was make Law respectable.