Category Archives: Fiscal Policy

RIP, Fred Folvary

I had the distinct pleasure and honor of being in touch with my friend, Fred Folvary, as late as May 11, 2021, the day I wished him “Happy Birthday.” I learned yesterday that Fred had passed away on June 5, only a few weeks after we’d corresponded.

Fred was an amiable soul and a maverick thinker, who embraced aspects of public choice and Georgist theory, offering novel discussions of everything from public goods to the boom-bust cycle.

My deepest condolences to his friends and family. He will be missed.

Revisiting Kolko’s “Triumph of Conservatism”

In light of our recent discussions of the history of “capitalism”, check out Chris Wright​’s succinct 2018 summary of Gabriel Kolko‘s trailblazing work on the Progressive Era. Kolko has been taken to task by many, but even those who disagree with aspects of his work, such as my pals, Rob Bradley​, and recent JARS contributor, Roger Donway, have readily acknowledged that Kolko blew “to smithereens the smug narrative about Progressivist regulation,” “disproving the old stereotypes of Gilded Age businessmen as uncompromising pro-capitalists and Progressive reformers as do-gooders. He showed that industrialists had not been as laissez-faire or reformers as high-minded as Progressivism alleged.”

The Facebook discussion that followed from my cross-posting of this led me to reproduce in whole a note from my Journal of Ayn Rand Studies-published review (vol. 20, no. 2, December 2020, pp. 340-71): “Free Market Revolution: Partial or Complete?” (references therein):

For my own comparison of the parallels between Rand’s critique of the neofascist mixed economy and that offered by Kolko, see Sciabarra [1995] 2013, 311–12. The debate over Kolko’s historiography—particularly in light of the fiftieth anniversary of his profoundly influential Triumph of Conservatism—has spiked in recent years. Bradley and Donway (2013) devote an article to a reassessment of Kolko’s revisionist perspective on the Progressive era, including his study of Railroads and Regulation (Kolko 1965). They argue correctly that industries, such as railroads, were essentially “feudal” from their inception (Bradley and Donway 2013, 564). They take issue with the neo-Marxist premises in Kolko’s conceptual framework and Kolko’s questionable interpretations of some of the data. Still, as critical as they are, they conclude: “Ourreinterpretation of Kolko in light of libertarian thought should not take away from Kolko’s success in amending the simplistic Progressivist interpretation of American history. The present review merely points out that a libertarian, anti-Progressivist interpretation of Progressive legislation should be freed from Kolko’s leftist framework and supported by better evidence” (575). They repeat that point in a later essay (Bradley and Donway 2015): “Unquestionably, Kolko did valuable work in disproving the old stereotypes of Gilded Age businessmen as uncompromising pro-capitalists and Progressive reformers as do-gooders. He showed that industrialists had not been as laissez-faire or reformers as high-minded as Progressivism alleged.” The authors also issued a correction with regard to their criticism that Kolko had doctored a quote by railroad magnate James J. Hill (see Bradley and Donway n.d.). But even in a forthcoming reply to Stromberg’s defense (2019, 43) of Kolko’s admirable avoidance of historical “reductionism” (on display in the work of many pre-revisionist left-wing historians), they credit Kolko for having blown “to smithereens the smug narrative about Progressivist regulation, spread by Arthur Schlesinger Jr. and his ilk, which dominated American historiography during the Forties, Fifties, and early Sixties” (Bradley and Donway forthcoming; see also Bradley 2014). Ironically, Kolko provided a back cover blurb for Bradley 2009, praising it as “[f]ascinating, comprehensive . . . far surpassing my own history of political capitalism in the 1960s.”

Bradley and Donway’s criticisms notwithstanding, Kolko is certainly not the only revisionist historian who has written on the corporatist nature of the Progressive political agenda. For example, see essays by William Appleman Williams, Martin J. Sklar, Murray Rothbard, Ronald Radosh, David Eakins, James Gilbert, and Leonard Liggio in Radosh and Rothbard 1972. Also see Weinstein and Eakins 1970; Green and Nader 1973; Liggio and Martin 1976; Sklar 1988; Horwitz 1992; Lindsey and Teles 2017; Rothbard 2017; Holcombe 2018; Newman 2019a.

Newman (2019b) places special emphasis on the principle that “personnel is policy,” that is, those who are appointed to regulatory agencies will often dictate the trajectory of the policies in question. He argues convincingly that, like all legislative processes, the establishment of regulatory agencies, such as the Federal Trade Commission, emerged out of the push-and-pull of conflicting interests, some inimical to business, others fully in favor of using political means for business consolidation. Newman shows “that regulatory capture is a dynamic process that does not follow a deterministic path because control of an agency depends on the commissioners appointed who are continually changing over time” (1038).

“Rent-seeking”—as outlined by public choice theorists such as Gordon Tullock, James Buchanan, and George Joseph Stigler—is made all the more complicated with the “division of power among regulatory agencies that have overlapping jurisdictions, [requiring] special interests . . . to make sure that they have control of multiple commissions in order to accomplish their objectives” (1040).

It should also be noted that Arthur Ekirch, whose work Rand praised, was equally impressed by the theses of revisionist historians on the left. Ekirch remarks that way back in 1944, Friedrich Hayek’s book The Road to Serfdom had warned that the rise of state capitalism, “[t]he progressive abandonment of freedom in economic affairs[,] . . . was leading to a similar destruction of political and personal freedom” (Ekirch [1955] 1967, 310). He highlights the complementary contributions of both Robert Wiebe (1962) and Gabriel Kolko (1963; 1965) toward our understanding of the emergence of a form of “state socialism” or “state capitalism” in which business has been among the chief designers and beneficiaries of the regulatory apparatus from its inception (Ekirch 1974, 143–44).

Gordon Adams (1981) provides another provocative perspective on regulation. Though Adams focuses on “the politics of defense contracting,” his insights are equally applicable to the give-and-take that takes place across all regulatory agencies. The “Iron Triangle,” as Adams famously characterized it, constitutes the relationship between congressional committees, regulatory bureaucracies, and the industries being regulated—that is, the dynamic and systemic interrelationships between congressional committees that create bureaucratic regulatory agencies, which are designed to serve their “constituencies.” But the constituencies of each regulatory agency are not “the people.” Indeed, Adams argues that the constituencies in question are the actual industries being regulated. And so, the entire regulatory state has emerged in a way such that industries push for regulations, which enable them to block entry into markets, using money to buy various forms of “pork barrel” legislation, while lobbying and courting members of Congress and gaining key personnel appointments to the very regulatory agencies that were ostensibly created to “protect” the public from corporate “excess.” See also Higgs 2006. Regulation also helps to socialize risk for a whole panoply of industries—from health care insurance companies to the most blatant of industrial polluters. See Sciabarra 2020 and LaCalle 2019, respectively.

— from my review of the Yaron Brook-Don Watkins book, Free Market Revolution, published in JARS’s December 2021 issue (pp. 362-63, n. 12)

Big Apple 100!

Larry McShane, in yesterday’s New York Daily News reminds us that May 3, 2021 was the 100th anniversary of the first time the term “Big Apple” was used to refer to New York City (by New York Morning Telegraph cub reporter and horse-racing writer, John J. Fitz Gerald). In his article, “Apple of Our Eyes: 100th ann’y of Nickname that’s Synonymous with City,” McShane relies on the work of Gerald Cohen and Barry Popik, who traced the lineage of the term:

Back in 1921, when Babe Ruth was in right field for the Yankees and Mayor John Hylan in City Hall, a horse-racing writer for the New York Morning Telegraph overheard a Louisiana chat between two Black stablehands. The pair mentioned an upcoming trip from New Orleans to New York — the Big Apple, as they called it. …

“Back then, if you wanted to refer to New York by its nickname, it was ‘Gotham’ or ‘Li’l Old New York.’ But not the Big Apple.”

The nickname was resurrected in the 1970s, during the days of rising crime and declining fiscal policy. Of course, folks at that time were talking about how the Big Apple was “rotten to the core.” But jazz aficionado Charles Gillett (and president of the NY Convention and Visitors Bureau) seized on the term, regularly used “among Harlem musicians of the ’30s, who hailed a New York gig as playing the ‘Big Apple’.”

Alas, there is no recognition anywhere in the city of Fitz Gerald (who is buried in an unmarked grave 160 miles north of Belmont Park). Nor has there been any attempt to track down those New Orleans stablehands who used the term that Fitz Gerald brought into print. Just “one more instance of the African-American influence on the language” and on New York City lore.

Coronavirus (30): “Cuomogate” and Systemic Crisis

Back on 5 May 2020, in the twenty-first installment of my ongoing Coronavirus series, “Lockdowns, Libertarians, and Liberation,” I wrote about the state of the COVID pandemic in New York:

Today, the number of confirmed COVID-19 cases in New York state are at a staggering 320,000+ and rising; the number of deaths attributed to the virus nears 25,000. And, of these, New York City accounts for nearly 19,000 deaths. New York state has a death rate of 126 per 100,000 people; the city itself has a death rate of 219 per 100,000. Even if some of my libertarian colleagues wish to dismiss 20% of these casualties because they are typically listed under the category of “probable” rather than “confirmed” deaths, that still means that in excess of 20,000 people in my home state are dead from this virus in two months. We need to put this in perspective because I’m tired of hearing how accidents kill more people in a year or how influenza and pneumonia kill more people in a year, and nobody talks about it. In a typical year, like, say, 2017, 7,687 people died in accidents and 4,517 people died from the flu and pneumonia in New York state. COVID-19 has now killed more than the annual total of these two leading causes of death combined in this state in just two months. It is therefore astonishing to me how any person would indict the state’s healthcare system as somehow to blame for the horrific death toll—whatever problems that are inherent in that system—especially when it has been stretched to its limits, and its doctors, nurses, and first responders have worked heroically to treat and save so many lives.

As a postscript to that installment (25 May 2020), I addressed the issue of  how state governors (such as NJ Governor Murphy and NY Governor Cuomo) were being blamed for having “spiked” deaths in their own states by returning recovering COVID-19 elderly patients to the nursing homes from which they came. I stated:

Well, if you listen to the folks at Fox News, Cuomo, Murphy, etc. purposely sent patients, who previously lived in nursing homes and were subsequently hospitalized for and designated as having recovered from COVID-19, back into the nursing homes from which they came. The Fox Folks claim that this was some diabolical plot to kill off the elderly population and/or to inflate the death tallies in NY and NJ, since many of those who were designated as “recovered” were still capable of infecting others.

But yes, aside from the Fox Folks, there are legitimate questions about the wisdom of the policy of sending these patients back to the nursing homes—though it is not at all clear that the infection rate within nursing homes was strictly a result of this policy. Indeed, it is entirely possible that the spike in nursing homes was as much the result of nursing home residents coming into contact with asymptomatic infected staff.

The initial policy was adopted because the hospitals in NY were being overrun and taxed to a catastrophic degree, and when the USS Comfort arrived, and the Javits Convention Center (along with four other centers in the outer boroughs) were set up, they were opened to take in patients who were not sick from Coronavirus; they were to be places where folks facing traumatic medical problems unrelated to the virus could be cared for under “virus-free” conditions. The private and public hospital network were to shoulder the burden of the growing population of sick and dying patients from the virus, while these other places (the Comfort, Javits, etc.) would provide medical care for those not infected with the virus, but in need of urgent medical care (so-called “elective” surgeries were all postponed, but, obviously, there are many other medical problems that people face, for which they require treatment, in medical facilities that are not death traps for those with underlying pre-existing conditions).

Though the official reversal came at the beginning of May, the policy actually started to change at the beginning of April. It was at that time that the Comfort and the Javits Center were finally opened up to care for the overflow of COVID-19 patients. … [I]t was a policy that was shaped by the exponential growths in hospitalizations and intubations that were happening in late March and early April, until the state hit a plateau of 800-1000 deaths per day. Once it became clear that the healthcare network, as taxed as it was, would not collapse, and that these other facilities could take in COVID-19 patients, the practice of sending recovering nursing home patients back into nursing homes started to change. And extra precautions were put into place at the beginning of May.

Clearly, mistakes have been made at every level of government; but it’s a huge leap to characterize something that was a tragic mistake to viewing it as a criminal act. I live in NY; I’ve lost neighbors, a cousin, friends, and even cherished local proprietors, to this horrific disease. There’s a lot of blame to go around; those most at fault, however, were the folks who denied that there was even a virus at work, that the whole thing was a hoax, and that one could just wash it away with a little detergent or by mainlining bleach.

On 16 July 2020, in the twenty-eighth installment of my Coronavirus Series, “Sweden is Not New York,” I pushed back against those who were comparing New York unfavorably to Sweden in its response to the pandemic. I wrote:

Jon Miltimore’s essay “Why Sweden Succeeded in ‘Flattening the Curve’ and New York Failed” is, sadly, an exercise in comparing apples and oranges. From the article:

If flattening the curve was the primary goal of policymakers, Sweden was largely a success. New York, on the other hand, was not, despite widespread closures and strict enforcement of social distancing policies. The reason New York failed and Sweden succeeded probably has relatively little to do with the fact that bars and restaurants were open in Sweden. Or that New York’s schools were closed while Sweden’s were open. As Weiss explains, the difference probably isn’t related to lockdowns at all. It probably has much more to do with the fact that New York failed to protect the most at-risk populations: the elderly and infirm.

The article goes on to discuss the debate between the implications of different public policy responses to the virus. In response, I wrote:

There is absolutely no comparison between the Swedish and NY cases, regardless of the public policies adopted by either government. First, in NY, the share of COVID-related deaths in long-term care facilities was 20% of the total number of deaths (about 6,500 of the total of 32,000+ deaths in the state of NY). That means that the vast majority of deaths did not occur in nursing homes. Moreover, though damage was done early on, by putting recovering COVID patients back into nursing homes, that policy was influenced by the huge surge in cases at a time when not even the Comfort or the Javits Center were open to COVID patients (a policy that changed at the beginning of April). Conditions were evolving swiftly. Moreover, unlike other states that are experiencing a surge now, therapies based on steroids, plasma, Remdesivir, etc. were not in widespread usage. It’s largely on the pile of bodies in NY that current medical advances have been made, sad to say.

Second, studies have shown that, at least in NYC, the highest transmission belt for the virus was its vast subway system, serving 5-6 million people per day prior to the city’s curtailment of “business as usual” in mid-March and most of the communities that were disproportionately affected by the impact of the virus were minority communities, many of whose members continued to work and crowd the subways and buses, becoming infected and bringing that infection back to their families and neighborhoods. There is no similar density in Sweden (the Stockholm Metro typically serves one fifth the number of people compared to the subways in NYC).

Of course, I got push-back from one commentator who claimed, without offering any evidence, that in New York “COVID-19 has killed at least 11,000 to 12,000 nursing-home and assisted-living residents in New York, nearly double what the state admits to. And as the deaths mount, so have the lies and cover-ups. States like New York exclude from their nursing home death tallies those who die in a hospital. Outside of New York, more than half of all deaths from COVID-19 are of residents in long-term care facilities., even if they were originally infected in an assisted living facility.” To which I replied: “Even if I accepted your statistic—which I don’t—it does not explain the other 20,000 deaths that occurred in this state. Or are those lies too?”

Well, recently, an investigation into the nursing home deaths, completed by New York Attorney General Lettia James, concluded that the state had indeed undercounted nursing home deaths.

I was wrong. There were not 6,500 nursing home-related deaths. Nor were there 11,000 to 12,000 deaths as my interlocutor claimed. In fact, the deaths were more than double the original estimate. Current statistics in an ongoing investigation, combining deaths in nursing homes and nursing home patients who died subsequently in hospitals, now place the total at 13,382, perhaps as high as 15,000, which accounts not for 20% but for around 30% of the nearly 47,000 deaths thus far recorded in the state of New York.

Which means, of course, that my central point stands: The vast majority of the deaths in this state were not nursing home-related; something horrible happened here precisely because it happened here first, in the New York metropolitan area—the densest population center in the United States. None of the newest, scandalous revelations alters this fact.

But these revelations do show that Governor Andrew Cuomo did indeed fail the public trust by withholding information and needlessly endangering lives. Cuomo should have acted differently and decisively in being fully transparent. In thinking about “Andrew’s Next Move,” New York Post writer Bob McManus makes an important point:

“A less fearful, more self-confident governor … would have admitted upfront that a fateful, though defensible, error had been made last March. That’s when the state Department of Health ordered nursing homes to accept COVID-infected patients to clear hospitals for an anticipated wave of new patients. That crisis never came, but that doesn’t make the policy evil or even unreasonable, just tragically mistaken. Cuomo should have owned it and moved on.”

I should state for the record that I am not one of those libertarians who believes that every politician is evil by nature of being a politician. Some do believe, honestly, that they have a calling to public service. And I have no doubt that many politicians, acting during the time of a serious public healthcare crisis, were flying blind and doing everything they could, given the ever-evolving conditions that existed, to meet the challenges before them.

But “flying blind” led to tragedies far beyond the deaths of nursing home patients.

This whole affair has revealed far more about the gaping holes in our healthcare system and in the insidious ways that our medical-science-state-corporate nexus works, often to the detriment of the very thing it is ostensibly supposed to protect: human lives.

Ultimately, what might be the worst legacy of the Cuomo administration’s handling of the pandemic is how the machinations of that nexus have become transparent in all their ugliness. As the Daily Poster reports: Cuomo’s political machine raked in “more than $2 million from the Greater New York Hospital Association (GNYHA), its executives and its lobbying firms,” which funneled more than $450,000 to New York legislators in 2020 alone. Moreover, the administration moved to shield “hospital and nursing home executives from legal consequences if their corporate decisions killed people during the pandemic.” This wasn’t merely protecting frontline health workers from lawsuits; it was a deliberate attempt to provide “liability protection to top corporate officials who make staffing and safety decisions.” Today, 27 states have adopted this policy, granting legal immunity to nursing home executives.

And let’s be clear: This is not a Cuomo conspiracy. It is a policy that has been fully embraced by top Republicans, who often decry Cuomo’s “murderous” response to the pandemic. By shielding from civil litigation (forget criminal prosecution!) politically connected hospital and nursing home executives (who heavily fund political campaigns), patients who have been put at serious risk and the next of kin of those who have lost their lives have no legal recourse for compensation, given a broken healthcare system that can’t provide basic health insurance for the vast majority of people in this country. Republican Senator Mitch McConnell has been calling for a national policy guaranteeing such immunity, especially for corporate executives who might be putting their workers at serious risk, as part of any relief package.

So, like everything else: While some public policies may lead to progress in combatting a serious health crisis, they are still filtered through a system that must, by necessity, corrupt.

From the very beginning of this nightmarish pandemic, governments at every level—city, state, and federal institutions—have played a part in this systemic corruption. This is not an exercise in “What-about-ism.” Let us not forget that Former President Donald Trump admitted to Bob Woodward that he wanted to downplay the seriousness of the pandemic so as not to cause a public “panic.” He claimed credit for a vaccine because of “Operation Warp-Speed,” giving billions of dollars to Big Pharma companies to fast-track vaccine development, fully socializing their risks, fully guaranteeing their profits in a public-private “partnership.” Little thought was given to how that vaccine was supposed to be delivered to the vast majority of Americans, stranding millions of people with no ability to even schedule an appointment. People are standing for endless hours in long lines outside stadiums or massive makeshift fields hoping to get vaccinated, and are often turned away. Big Box stores are being subsidized to participate in the massive effort, but serious shortages remain, even as this country reaches half-a-million fatalities from this pandemic.

Even a simple alteration of policy to allow primary care physicians to inoculate their own patients hasn’t been entertained.

I will take whatever vaccine is available to me whenever it becomes available because I’m a guy with plenty of pre-existing medical issues. But that doesn’t mean I have to like the politicized processes that have poisoned this country’s response to a crisis of such horrific magnitude.

Independent Institute Publications

I received a message from my friend, David J. Theroux, the Founder, President, and Chief Executive Officer of the Independent Institute. I have always found their publications to be thought-provoking, whether one agrees or disagrees with any opinion expressed. Folks should check out some of the following links:

The Crisis in Civil Rights: Best Books and Articles on Race, Police, and the Welfare State, compiled by their Senior Fellow Dr. Williamson M. Evers (someone I’ve known since my undergraduate days as a member of Students for a Libertarian Society):

These are among the most exhaustive, annotated reading lists ever assembled on the issues of civil rights, police reform, race relations, and the welfare state, created for educators and students, business and civic leaders, policymakers, journalists, and the general public. Check them out!



7-Day Course Challenge: “Methodology of the Social Sciences” (Course #7)

My friend Daniel Bastiat tagged me on Facebook for a new 7-day challenge: Pick between 2 to 5 books that you would assign for any course of your choosing (each day) and name the course.

Day #7 Course: Methodology of the Social Sciences
(For undergraduate- and graduate-level students)

  1. Investigations into the Methods of the Social Sciences – Carl Menger
  2. The Poverty of Historicism – Karl Popper
  3. The Restructuring of Social and Political Theory – Richard J. Bernstein
  4. Dialectical Investigations – Bertell Ollman
  5. The Dialectics of Liberty: Exploring the Context of Human Freedom – Edited by Roger E. Bissell, Chris Matthew Sciabarra, and Edward W. Younkins [oh c’mon, gimme a break—it’s the very last book recommendation on the very last day of this challenge 🙂 ]
Methodology of the Social Sciences – Selected Readings

7-Day Course Challenge: “Austrian Economics: A Primer” (Course #6)

My friend Daniel Bastiat tagged me on Facebook for a new 7-day challenge: Pick between 2 to 5 books that you would assign for any course of your choosing (each day) and name the course.

Day #6 Course: Austrian Economics: A Primer
(For undergraduate- and graduate-level students)

  1. The Elgar Companion to Austrian Economics – Edited by Peter J. Boettke
  2. The Foundations of Modern Austrian Economics – Edited by Edwin G. Dolan
  3. New Directions in Austrian Economics – Edited by Louis M. Spadaro
  4. Austrian Economics, 3 vols. – Edited by Stephen Littlechild

These volumes include selections from writers across the Austrian tradition, from its founders to its contemporary exponents: Bruce Benson, Peter Boettke, Eugen von Bohm-Bawerk, Sam Bostaph, Donald Boudreaux, William Butos, Richard Ebeling, Roger Garrison, Steve Horwitz, Sanford Ikeda, Emil Kauder, Israel Kirzner, Roger Koppl, Ludwig Lachmann, Don Lavoie, Peter Lewin, Stephen Littlechild, G. B. Madison, Carl Menger, Ludwig von Mises, Gerald O’Driscoll, Dave Prychitko, Mario Rizzo, Murray Rothbard, Joseph Salerno, Joseph Schumpeter, George Selgin, Sudha Shenoy, Mark Skousen, Barry Smith, Friedrich Weiser, and Lawrence White, among others.

Compilations in Austrian Economics