I am certain that slavery in the United States would have been phased out naturally.  Slavery was beneficial in the south because of low marginal productivity.  The south was predominately an agricultural society, and it had not benefited from the mechanization it would benefit from in the decades directly after the American Civil War.

An important question to ask is whether or not the emancipation of the slaves during the civil war accelerated the post-war industrialization of the south.  No longer benefiting from cheap labor, southern farmers had to radically increase production in order to remain profitable.  This directly leads to another question: how long would it have taken to naturally rid the country of slavery?

There were important technological developments prior to the civil war: steel plows, seed drills, threshing machines, et cetera.  The dramatic burst in agricultural productivity, however, occurred in the post-war (indeed, this increase in productivity directly after the war led to the industrial revolution of 1879-1906, since it allowed otherwise occupied labor to be restructured into more productive industries).

I just think it’s an interesting question to ponder: was the post-war industrial revolution driven by the abolition of slavery, to some extent?  Or, would it have occurred naturally, and perhaps even sooner than it did?

EDIT:  Interesting bit of information from Wikipedia.

Britain had outlawed the slave trade with the Slave Trade Act in 1807, with penalties of £100 per slave levied on British captains found importing slaves. However, this did not stop the slave trade: if slave ships were in danger of being captured by the Royal Navy, captains were known to have ordered the slaves to be thrown into the sea to reduce the fines they had to pay.

Unintended consequence of regulation?  This would make a great Mises Daily.

American efforts to instigate economic growth in countries in need of reconstruction, including Iraq, Afghanistan, and Haiti, have fallen short of expectation.  In a recent article for Foreign Affairs, “Expeditionary Economics,”[1] Carl J. Schramm analyzes the short comings of current American economic policy concerning involvement in economic reconstruction abroad.[2] Schramm, a businessman himself, highlights the importance of a more microeconomic approach to reconstruction, focusing on the importance of entrepreneurship in economic growth.  He consequently rejects the current approach, which focuses more on macroeconomic central management.  While Schramm’s thesis is correct, his underlying premises and his proposed method of policy implementation are less agreeable.

Schramm makes some minor mistakes — he ignores the importance of the black market as a venue for entrepreneurship,[3] and he designates the lack of liquidity as a major impediment to economic progress.[4] The black market should be embraced for what it is, an alternative business method by which to satisfy demand.[5] Removing the government regulations which cause the creation of black markets is the most effective method of dealing with them.  The wealth which can be earned and created through these entrepreneurial activities can later be applied to other projects, causing economic growth.  By either ignoring the black market, or worse trying to eliminate it through force, there runs the risk of neutralizing an important source of wealth creation.

The issue of the availability of capital is less straightforward.  Schramm alludes to the necessity of foreign investment, but he places too much emphasis on the inability for local entrepreneurs to invest their own savings.  The accuracy of the argument that an economy can be strengthened by foreign investment, with the caveat that this foreign investment is made in the form of private entrepreneurship, is undeniable.  Nevertheless, one should not unfairly dismiss the ability of local entrepreneurs to fund their own investments and create wealth.

Focusing on the differences between investments of local and foreign capital also serves to forget about an underlying requirement for entrepreneurship in general — property rights.  In fact, evidence suggests that citizens of developing countries have sufficient capital to invest in their own businesses, if only their rights to property were respected by local governments.[6] Even assuming a shortage of local capital, one can hardly expect foreign entrepreneurs to invest in countries in which property rights are not well defined and respected.

Instead of focusing on the importance of property rights, and by marginalizing the importance of the black market — where entrepreneurs do business by avoiding government oversight, and thus bypassing government’s threat to their private property —, Schramm suggests instigating entrepreneurship through central direction.  This is an ironic position, given that Schramm spends a great deal of time lambasting the present reconstruction strategy with focuses more on centrally managing macroeconomic trends, such as gross domestic product, by injecting vast amounts of foreign aid and distributing this capital through public works.[7] While Schramm recognizes the benefits of a much more individualistic approach, which is by underscoring the importance of the private sector, he is unable to come up with a specific method by which to carry out such a policy.  Instead, he leans on a much more ambiguous and confusing solution — using the United States Armed Forces.[8]

It remains unclear on how Schramm proposes to use the military to instigate entrepreneurship.  In fact, this solution seems contradictory given the array of evidence he provides against central planning.  For example, Schramm recognizes that entrepreneurship and capitalism are anarchistic.[9] Thus, Schramm’s supposed solution begs the question: how does occupation incentivize entrepreneurship?  Schramm also fails to consider a number of negative unintended consequences of military occupations:

1. Occupations cause instability, thus regime uncertainty, hindering entrepreneurship and investment.[10]
2. Occupations are political in nature, and therefore easily corruptible.

A more sensible approach to reconstruction and economic development in crisis countries, such as Haiti and Iraq, is one which reduces the size of government.  Only by reducing the size of government can entrepreneurship be allowed to flourish.

Admittedly, such a solution may at first seem just as nebulous and ambiguous as the one proposed by Schramm.  Ultimately, how a reduction in government is brought about will depend from country to country, knowing that every country has different levels of government intervention and different degrees of existing wealth.

A good comparison is the post-war situations of Germany and Iraq.  The former was in a much better position for economic expansion than the latter.  Ultimately, the road to the necessary political liberty for substantial entrepreneurship to occur is largely dependent on the size of the middle, or merchant, class in a particular country’s society.[11] This is not something which can be centrally planned, or somehow conveyed through military occupation or aid (however you want to call it), but something which occurs naturally.[12]

In fact, historically, occupation has worked opposite of the objectives of a merchant class.  In countries such as Germany and Japan, there was already a large body of entrepreneurs enjoying defined property rights, despite military occupation.[13] These are luxuries which do not exist in nations such as Haiti, Iraq, and Afghanistan, and have yet to be developed.  As such, any economic policy concerning developing nations should respect this natural development of contract or legal code, instead of attempting to force it into existence or forget about it altogether.

Macroeconomic Approach to Reconstruction

Policy makers have a tendency of judging the success of economic programs by looking at macroeconomic aggregates, such as gross domestic product.[14] Telling from these statistics, the American occupation has been marginally successful.  Iraqi gross domestic product has steadily increased since 2004, being roughly twice as much as it was prior to the U.S. invasion.[15] Afghanistan has been experiencing double-digit growth in gross domestic product.  However, these indicators can be misleading.  Iraq’s government has seen a boost in revenue due to increasing oil prices between 2006 and 2008, while both countries receive a lot of money in the form of foreign aid.[16]

According to the United Nations, Iraq’s unemployment currently sits at 18%, with another 10% of the labor force made up of part-time workers looking for more hours.[17] The majority of new job creation has occurred in the public sector, which boasts of double the amount of employees it had in 2005.  Public sector employees account for 43% of the labor force, and 60% of full-time jobs.[18] By simple arithmetic, if unemployment remains the same, yet public sector employment has increased, it must follow that the private sector has been losing jobs.  Compounding increases in private sector unemployment with the fact that Iraq is considered to be one of the top ten countries most likely to default,[19] the idea of a growing Iraqi economy seems rather dubious.

Regarding Afghanistan, 40% of its economy is propped by foreign aid, while another 40% originates from the opium trade.[20] The United States carried out the economic aspect of its “peacekeeping” operation by effectively centrally planning the infrastructure reconstruction.  Dexter Filkins, writing for The New York Times, described these efforts as a “blueprint” to build Afghanistan into a modern state.[21] When not directly building schools, power plants, and other forms of infrastructure, the United States has also led the effort in pumping millions of dollars into local Afghani banks, in an effort to extend liquidity to fund local entrepreneurs.[22] Of course, all of this is done at the expense of U.S. taxpayers.

Even if the infrastructure provided through public-works, or government-funded construction, are demanded in the broader sense[23] — like a school being demanded by a local Afghan village — it does not necessarily mean that by fulfilling that demand the United States provided the necessary infrastructure to allow for entrepreneurship or economic growth.  In fact, these types of programs divert capital and labor, distorting the structure of production and hampering economic growth.  These schools were not provided by the local population due to a lack of capital.  When provided by the government, these local villages and towns still lack the sufficient underlying wealth to operate these schools, while still applying resources to more pertinent wealth-building endeavors, such as agriculture or small businesses.

Like Carl Schramm suggests in his article for Foreign Affairs, a superior technique to building wealth in Afghanistan is one which prefers entrepreneurship over central economic planning.  To accomplish this, planners need to remove focus from the very general notions of “infrastructure” and “liquidity”.  Rather than being arrogant enough to believe that only the West, instead of the locals, can provide for a country’s economic future, planners should center their efforts on recognizing what is impeding local entrepreneurship.  Ideally, planners should acknowledge that their services are unnecessary and in fact counterproductive, if one is to accept the anarchistic nature of economic growth.

Another Approach to Wealth Creation

Wealth creation, or production, is anarchistic.  As Ludwig von Mises explained, “What is to be produced, and how it is produced, is decided in the first place by the owners of the means of production, who produce, however, not only for their own needs, but also for the needs of others…”[24] Recognizing the nature of the market, or a complex combination of countless individuals each working to meet his own needs, is paramount to understanding how to initiate economic growth in countries beset by crises and tragedies.  As such, the concept of central planning should be completely abandoned—crisis countries do not need more central planning, on top of that already practiced by their own government.

Economic growth is driven by entrepreneurship, or individuals allocating resources towards specific actions which lead to wealth creation.  In “Expeditionary Economics”, Schramm accurately pinpoints entrepreneurship as the centerpiece to growth, but he makes the mistake of calling entrepreneurship “[t]he United States’[s] method…”[25] Entrepreneurship, or capitalism, was not developed by the United States.  Neither is it unique to the United States.  Human creativity is an innate condition of humanity, and as such entrepreneurship only necessities the proper environment for this creativity to flourish.

At this point, it is worth considering that entrepreneurship in these crisis countries is not limited by liquidity, in the broadest sense.  The problem is not solely the lack of capital, as has been commonly suggested.  In the third world, much of the problem lies in the inadequate definition of ownership.  In Haiti, for example, economic Hernando de Soto estimates that 68% of the urban population and 97% of the agrarian population do not have legal, or defined, claims on their housing.  This is collectively worth around $5.2 billion, which is four times the total value of all legally operating businesses, nine times greater than the value of government, and 158 times larger all foreign direct investment since 1995.[26]

The problem is not as much as one of liquidity, but one in which those who hold capital are unwilling to lend it, because of the inadequacy of ownership titles.  For example, the lack of property rights on housing means that potential entrepreneurs are hamstrung by the fact that they cannot use their houses as collateral for a loan.  It remains unclear how further provision of liquidity by foreign organizations will alleviate the situation, other than lead lending institutions to make poor decisions when distributing what essentially comes down to free money.

Admittedly, while a great deal of economist can be made to agree that the market is the only solution to pull crisis countries out of poverty, the concept is vague.  Furthermore, the idea of the free market as a path to prosperity is not new.[27] But while capitalism is great, why are some nations so willing to allow it while others are not?  What will cause the third world to accept the graces of the free market?

Carl Schramm’s solution — which is the root disagreement of the present essay — is to use the American military to export capitalism.  Schramm remains vague on how exactly this is to occur.  How can a military “export” entrepreneurship without this turning into a form of central planning?  Schramm’s mistake is in failing to recognize creativity as a universally existent attribute of humankind.  Ultimately, acceptance of the market is not exportable.

Furthermore, Schramm leaves three, previously listed, crucial points out of consideration.  Military occupations cause regime uncertainty, which is a force acting opposite of entrepreneurship, and they also have a tendency to allow for politicization of their economic efforts.  A third important argument against military involvement in economic reconstruction is that the belief in military-led capitalism seems to lead to the creation of a slippery slope, where governments can justify deployments on the account that they are merely doing so to rebuild a damaged economy.  As such, the military is no solution at all.

Instead, the correct answer is that there is no easy way towards implementing capitalism in the third world.  In the main, though, one has to come to terms with the fact that high economic growth requires small government, or ideally no government at all.  A lack of entrepreneurship in the third world is not the result of poor creativity or a lack of liquidity, but of overbearing government.

Why did the United States accept capitalism as early as it did?  The United States was founded by colonists looking to escape interventionism in the Old World.  It was founded by individuals who they themselves were looking to limit the role of government in entrepreneurship, and already had a legal code defining property rights.  This is an important difference.  The governments of Haiti, Iraq, Afghanistan, and other crisis countries, were not built around an existing and accepted legal code.  Instead, the governments of these countries were in large part founded by individuals looking to impose their legal code on others.  The people of these countries must take the opposite route of first reducing government, and forcing government to accept a legal code developed by the market.

This is a slow process, and one that requires the development of a middle class.  As the merchant class grows, one can be reassured that those with wealth to lose are bound to find ways of circumventing or blocking government encroachment on their property.  The path to an entrepreneurship-heavy environment is in large part political in the sense that it requires friction between government and a disgruntled property-owning population.  Governments must be forced to accept the terms of size reduction.

Unfortunately, there is no method by which one can centrally plan or manage this process.  As much as there are people who would like to speed it up or organize it, it is a process completely natural to the market. As such, only partial abandonment of central planning, a la Carl Schramm, is insufficient.  All government methods of “exporting” capitalism must be discarded.  Those looking for economic growth in the third world will have to trust in the idea that sooner or later markets will prevail over governments.

[2] Countries recently beset by crises, including but not limited to countries beset by earthquakes, other natural disasters, and war, will be referred to as “crisis countries” throughout this article.

[3] Schramm downplays the importance of the black market in two instances.  First, he interprets the drug trade in Afghanistan a result of poverty — accusing farmers and traders of targeting Afghanistan for this reason —, as opposed to a business and a result of the very entrepreneurship he argues for.  “Afghanistan has been very poor and thus a magnet for illicit activities, such as the opium-poppy trade, for many years.”  Similarly, he does not recognize the black market as a similar arena for entrepreneurship.  He writes, “New opportunities must be created that are more attractive than trading on the black market…”  Ibid, p. 91.

[4] Carl Schramm, however, does recognize the limitations of foreign aid and the provision of liquidity by institutions such as the International Monetary Fund.  Nevertheless, he writes, “[i]n poor postconflict countries, few entrepreneurs can finance their own projects, especially if these are ambitious ventures with high growth potential.”  Ibid., p. 97.

[5] “When something becomes illegal, consumer demand does not vanish. Instead, consumers seek alternative, more costly and risky, means of satisfying their wants.”  LeRoy, Danny G. (26 May, 2010), “The Underground Economy in One Page”. Mises Daily.

[6] The pioneering discussion on economic growth, entrepreneurship, and property rights is provided by Hernando de Soto. De Soto, Hernando (2000).  The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.  New York City: Basic Books.

[7] Schramm 2010, p. 95.  “Going in, detailed economic planning probably is not necessary and may even be counterproductive.”

[8] Ibid., p. 99.  “The United States’ armed forces are uniquely positioned to contribute to world peace and prosperity by means other than actual force.”

[9] Ibid., p.  Entrepreneurial capitalism is messy, since it is highly organic rather than centrally planned or centrally managed.  Many different people and entities bring the elements—from new firms to university research to federally funded research—into place, and activity flourishes from letting them all evolve and interact in the marketplace.”

[10] The concept of regime uncertainty is largely a result of the work of Robert Higgs, see: Higgs, Robert (2006).  Depression, War, and Cold War.  Oakland, California: The Independent Institute.

[11] This is a relationship suggested by Kimberley Marten, writing on economic growth in Medieval Europe, “Merchants thus had an incentive to take political action to lower the transaction costs associated with doing business. The overlapping taxes and incompatible monetary systems of the feudal system gave them reason to escape to territory where they could conduct their business without interference from feudal lords. Merchants who were able to form or settle in self-regulating towns, where impersonal legal codes protected their property rights and set predictable tax rates, prospered.”  Marten, Kimberley (2006), “Warlordism in Comparative Perspective.”  International Security, 31(3), pp. 41–73.

[12] For an application of this theory to the situation in Afghanistan, see: Finegold Catalán, Jonathan M. (17 March 2010), “Nation Wrecking in Afghanistan”.  Mises Daily.

[13] American military forces in Germany and Japan were usually secluded to military bases, their purpose being more oriented towards war with the Soviet Union, rather than actual nation building or peacekeeping.  In the post-war, for the most part these nations enjoyed political stability.

[14] This point is made by Schramm, “Growth is not simply a mechanistic composite of statistical indicators.”  Schramm 2010, p. 96.

[15] Figures for gross Iraqi gross domestic product between 2000 and 2008 are taken from Index Mundi: http://www.indexmundi.com/g/g.aspx?c=iz&v=65.  Index Mundi references the CIA Factbook, but their figure for 2009 does not match.  The CIA factbook (https://www.cia.gov/library/publications//the-world-factbook/geos/iz.html) puts the estimated 2009 Iraqi GDP at $112 billion, while Index Mundi has it at $94.97 billion.

[16] Schramm 2010, p. 96.

[17] This is supported by Carl Schramm, who also notes that unemployment has not improved since 2004, despite increases in gross domestic product.  Ibid., p. 90.

[18](January 2009) Iraq Labour Force Analysis 2003–2008. Inter-Agency Information and Analysis Unit.

[19] Iraq has a cumulative probability of default (CPD) of 27.36%, right above Portugal.  For comparison, Greece has a CPD of 44.54%.  Statistics from: http://www.cmavision.com/market-data.

[20] Schramm 2010, p. 96.

[21] Filkins, Dexter (14 October 2009), “Stanley McChrystal’s Long War.”  The New York Times.  “McChrystal’s plan is a blueprint for an extensive American commitment to build a modern state in Afghanistan, where one has never existed, and to bring order to a place famous for the empires it has exhausted.”

[22] (17 November 2006), “FINCA International to Expand Rural Microfinance Program in Afghanistan”.  Philanthropy News Digest.

[23] What is meant by “demand in the broader sense” is something which is wanted, but not necessarily attainable.  For example, many people “demand” wealth in the sense that they would love to be wealthy, but the amount of wealth they are looking to own may not be immediately attainable.

[24] Mises, Ludwig von (1980).  The Theory of Money and Credit.  Indianapolis: Liberty Fund, pp. 41–42.

[25] Schramm 2010, p. 92.

[26] De Soto 2000, p. 33.

[27] For example, Richard Ebeling outlined a general platform for economic growth a few weeks after the earthquake which hit Port-au-Prince.  Ebeling, Richard (18 January 2010), “Real Economic Reform for a Hurting Haiti”.  Mises Daily.

Planning to re-write it, I was thinking on the topic and it struck me that the process towards establishing sufficient political freedom to allow for broad entrepreneurship is largely anarchistic.  In other words, it’s a process which requires the slow accumulation of capital within the hands of a class large enough to provide some type of struggle against the government to protect their new-found wealth.  Usually, this “merchant class” builds itself through the black market.

After the famine of the 1990s, and with the deaths of an estimated hundreds of thousands of North Koreans, Kim Jong-Il marginally opened the markets.  For the short amount of time that Kim Jong-Il allowed for currency exchanges and broader trade with China and South Korea there was a growth in North Korea’s middle class.

Unfortunately, in late-2009 many North Koreans lost their wealth when the government decided to reevaluate the currency.  The reevaluation was basically a tax on North Korea’s privately-held wealth, and was for the most part an attempt by the government to counter the efforts of a growing middle class.  I think that this reevaluation has caused a lot of disgruntlement against the government amongst a wide body of North Koreans, which includes government officials (which explains the transfers of power in the government)   and military officers.

I think the worst thing South Korea and the United States can do is take North Korea’s bait and isolate it even further.  The best method by which to slowly push the current regime out of power is to continue pushing for trade, even through a black market, with North Koreans.  By alienating the North Korean people, the West is giving justification to Kim Jong-Il’s tyranny (by providing some type of “common enemy”).  Otherwise, North Korea is on the verge of a political revolution.

It’s also ironic given that our single biggest reason for launching Operation Overlord as early as as June 1944 was possibly because the Red Army had clearly taken initiative on the Eastern Front (and had had initiative since at the very latest after defeating the German strategic offensive against Kursk during early July 1943). Knowing that if we did not liberate France as soon as possible, the Red Army was bound to overrun the entirety of Germany (when we first invaded France, even high command saw it possible to take Berlin by “the end of the year”, give or take a few months), and we had no interest in allowing the Soviet Union to gobble Europe west of Poland and the Balkans.

So, our greatest enemy at the time was not only Hitler’s Germany, but Stalin’s Soviet Union. The seeds for the Cold War were planted many years before the end of the war (and probably many years before the war even started, given that Germany was largely allowed to rearm at first to act as a buffer against the Soviet Union).

Before going into economics I used to be a big war buff, and so these topics still interest me.  Researching for a potential article to be written in the near future, I came across some information on political instability in North Korea.  There are a number of factors which may be contributing to instability:

1. Kim Jong-Il’s persistent health problems.
2. Poverty, famine, a lack of power (electricity, fuel,…), et cetera.
3. A ‘pro-American’ faction in government.

I also remember reading about a younger military class in North Korea (I don’t remember where), far more belligerent than past generations of military officers.

My early thesis is that this is no more than a manipulation of political events in order to necessitate the consolidation of power between the hands of those more loyal to the idea of a ‘Communist’ North Korea, or at least those who believe in military dictatorship over more open forms of government.  Of course, these types of ploys can easily lead to war.  I don’t know enough about North Korean politics to comment on what is the most likely scenario, but I think that it’s obvious enough that North Koreans are not explicitly looking to go to war.

On Tuesday, the toll of American dead in Afghanistan passed 1,000, after a suicide bomb in Kabul killed at least five United States service members. Having taken nearly seven years to reach the first 500 dead, the war killed the second 500 in fewer than two.

Most blame it on the lack of a strong central government in Afghanistan, unable to control the country through military force.  I’m not sure what the Americans were expecting.  The Taliban, probably one of the strongest governments in Afghanistan to date, were unable to exact control over the entirety of a country dominated by warlords.

Besides, strong central governments are not a path to long-run stability.

Officials said that after two days of intense questioning of the bombing suspect, Faisal Shahzad, evidence was mounting that the group, the Pakistani Taliban, had helped inspire and train Mr. Shahzad in the months before he is alleged to have parked an explosives-filled sport utility vehicle in a busy Manhattan intersection on Saturday night.

I hate to sound like a conspiracy theorist, but I find it extremely suspect that the government is so quick to point at the Taliban is those responsible.  Especially when President Obama is finding it more and more difficult to justify the United States’ continued presence in Afghanistan, and its frequent strikes in Pakistan.

What is more hypocritical, and maybe more agreeable, is the hypocrisy of condemning this attempt as terrorism, while bombing Afghanistan is thought of as just and necessary.  It’s interesting how even the New York Times alludes to the idea that this was an attempt at retribution,

The message may be, “ ‘The U.S. is pounding us with drone attacks, but we’re powerful enough to strike back’; it’s certainly enough to attract ever more recruits to replace those they’re losing,” Mr. Hoffman said.

With the exception of a few lonely surviving supply-siders, most economists believe that deficits matter, and the huge deficits to finance the war will have their toll in the long run. Deficits matter in both the short run and the long. They help crowd out private investment that would have stimulated the economy far more than the war expenditures; and the reduced investments reduce long-run productivity. With 40% of the funds borrowed from abroad, Americans will be sending interest payments abroad – lowering living standards at home. Finally, even Fed Chair Bernanke (formerly the president’s economic adviser) admits that the deficits have reduced the room to manoeuvre – the ability of the government to respond to the looming economic crisis.

Although, I’m sure the learned Keynesian will respond by suggesting that spending on war and spending on stimulus are two different things.  Surely, this is what Paul Krugman claims; although then Krugman goes and claims that high deficit spending during the Second World War led to prosperity.

In a recent book review for Keynes: The Return of the Master, Stiglitz argues,

We should be clear about this: economic theory never provided much support for these free-market views.

Stiglitz should spend more time reviewing his own economic theory, rather than criticize free-market economists with baseless assertions.

1. A Place In the Sun, The Economist:  The Economist reports on an eleven-man inquiry, led by Ron Oxburgh, on the CRU scandal known as “climate gate”.  While I’ve decided not to pass judgment on the entire issue of anthropogenic global warming, largely because I don’t have the time nor the interest to research the details, it seems to me that the inquiry is largely bias once you take into account that Lord Oxburgh is one of the most outspoken proponents of AGW.
2. Did FDR End the Depression?, Burt and Anita Folsom, The Wall Street Journal:  Robert Higgs has led to research on World War II prosperity, largely working from the premises of Ludwig von Mises and the prior generation of Austrian economists.  In 2008, Burt Folsom published New Deal or Raw Deal?, which is more of a recapping of what can be called “New Deal revisionism”.  Folsom is not necessarily an Austrian; he ascribes to Milton Friedman’s theory for the causes of the Great Depression, a poor response by the Federal Reserve.  But, in the book Folsom borrows from Higgs and suggests Higgs’ “war prosperity” theory as the most accurate depiction of what actually ended the Great Depression.  Since then, Folsom seems to have done a lot of research on his own.  Although short, the article is certainly contains some good information.  This is a topic I’ve been wanting to write on for the Mises Institute (after writing a piece on the New Deal).
3. Samuelson Memorial, Paul Krugman:  I criticize Krugman quite a bit, but every once in a while he writes something I enjoy reading.  The most interesting part, “I had no idea that the MIT economics visiting committee tried to force Samuelson to call off the publication of his 1948 textbook, on the grounds that Keynesian economics was too left-wing.”
4. Anti-American Demonstration in Najaf, Joao Silva, The New York Times: How can we succeed in Iraq if even the Iraqi people prefer a future without us?  The road out of Baghdad will be longer and more violent than Obama suggests, and I’m willing to bet money that once the majority of American personnel withdraw there will be nothing resembling peace in Iraq.