The One with Capitalism and Freedom

219. Title & Author: Capitalism and Freedom by Milton Friedman (202 pages)

Genre: Nonfiction—Political Philosophy & Economics

Completed: 4 March 2012

Summary & Review:

Nobel-prize winning economist and libertarian Milton Friedman presents his argument that economic freedom and political freedom are intertwined and inseparable. Without free markets, political freedom is impossible and Friedman makes the case that such freedoms are the path to increased harmony and prosperity in the world. By examining both broad concepts, such as the proper role of government in a free society and monetary policy, and specific social issues, Friedman makes a logical and convincing case. An “Arguments Summed Up” post will follow in a few weeks with a more detailed discussion of this seminal text.

Even though this book was written over forty years ago—the edition I read was the fortieth anniversary edition—the arguments and principles that Friedman puts forth are wholly relevant and applicable to today’s situation. Actually, they are probably even more important now than ever. Far too many people have abandoned a belief in maximized personal freedom and minimized governance from the state.  But, to me, it is clear that one can only life a fully satisfying and complete life when he is free to choose, to make mistakes, and to succeed without coercion from his neighbor or his government.

This is an important book and I definitely recommend it.

Rating: 9.5

Arguments Summed Up: The End of Prosperity

Title & Author: The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let it Happen by Arthur B. Laffer, Stephen Moore, and Peter J. Tanous
Genre: Nonfiction--Economics
My Rating: 9.0

Summed Up:
The malaise of the 1970s was caused by several key economic problems: rampant inflation, high tax rates, a crushing regulatory burden, and runaway government spending. By addressing those problem areas through supply-side economics, Ronald Reagan was able to usher in twenty five years of prosperity. More wealth was created in those twenty-five years than in the previous two hundred.

When economic policies reward growth that is exactly what happens.  Incentives matter. Prosperity doesn’t happen by accident, and growth must be nurtured and rewarded. The key is to stimulate investment, not consumption. High taxes are a major depressant on investment, work, effort, entrepreneurship, and risk. People are more likely to invest, work, and live in areas where they can keep more of their income and more of their returns on investment. High taxes force capitalism to try and succeed without the capital needed for that to happen: capitalism without capital.

However, when politicians get everything wrong—tax policy, regulatory policy, trade policy, monetary policy—they can completely stifle and destroy growth.  Almost always, these disastrous policies are coated in good intentions, e.g. to help the poor, but the result is usually the opposite. For example, liberal Democrats constantly try to raise taxes so the rich pay their “fair share,” but it has been shown that higher tax rates decrease the amount of revenue raised.  I loved this quote: “To us the best form of welfare is still a good high-paying job. There is no alternative to economic growth. And a tax system that destroys jobs and wealth is the most regressive tax of all.” (255)

The authors identify four killers of growth: Trade protectionism; tax increases coupled with profligate government spending; new regulations and increased government intervention in the economy; and monetary policy mistakes. Supply-side theory on the other hand is based on the following: free trade, stable prices and sound money, light and efficient regulation, welfare reform to encourage work, a generous immigration policy, and smaller government.

In regard to taxation, the authors propose a low flat tax where everyone pays the same rate. This flat tax on business and household income would only have to be 12 percent to retain the same amount of government revenue. In fact, but lowering the tax rate and increasing the tax base, revenue would increase because of the increased economic activity sure to follow. This principle follows the idea of the Laffer Curve which shows that increased tax rates decrease government revenue and lower tax rates increase revenue. People work more when there are lower taxes, the incentives to work are higher when people get to keep more of their money, therefore economic production increases and the economy grows creating more wealth to be taxed. For example, Russia, a recent adopter of a flat tax, gets more revenues with a 13 percent flat tax than it did with the old rate of over 50 percent. Around the world, countries have switch to flat taxes and seen not only their collected revenues soar, but their economic output skyrocket as well.

Some critics of supply-side economic policies call it “trickle-down economics” and bemoan an increasing gap between the richest and poorest. The authors point out that this gap is not due to the poor becoming poorer, in fact during these twenty five years the poor have seen their income grow by the highest percent. The gap is due to many Americans becoming fantastically rich. But, this increased wealth did not come at the expense of the poor.

A large portion of the book is dedicated to using historical examples to show how supply-side economic policies have always lead to growth, lower unemployment, and increased quality of living, while Keynesian policies lead to high unemployment, increased poverty, and inflation. The final chapter of the book is an excellent guide to managing your personal investments to weather economic downturns and benefit from periods of growth.

You can read my review of The End of Prosperity here. 

The One with Restoring the Constitution Handbook

218. Title & Author: Restoring the Constitution Handbook published by FreedomWorks Foundation (64 pages)

Genre: Nonfiction—Politics

Completed: 25 February 2012

Summary & Review:

This small book includes the Constitution of the United States, including all the Amendments, and a short guide to grassroots organization to support the ideals of low taxes, small government, and maximized personal freedom.

What always amazes me about the Constitution is its brevity. The Founders were able to organize a country that has successfully survived under a single form of government for over two and a quarter centuries in a handful of pages. Today, however, bills are thousands of pages long with so many rules, regulations, exceptions, conditions, caveats, and loopholes that no one understands them, or even reads them for that matter. This is a very unhealthy thing for a republic since this practice leaves the door wide open for opportunistic megalomaniacs to exercise broad power and authority over the lives of ordinary citizens. 

Rating: For the Constitution: 10.0; for the rest of the handbook: 6.0

The One with Ender's Shadow

217. Title & Author: Ender’s Shadow by Orson Scott Card (469 pages)

Genre: Fiction—Science Fiction

Completed: 21 February 2012

Summary & Review:

In order to survive on the streets of Rotterdam, Bean, who is incredibly undersized even for his young four years of age, uses his prodigious genius to become part of a local crew of street kids. His civilizing influence and obvious intelligence are noticed by a nun at a local charity kitchen who works with the I.F. to look for new recruits to send to the elite Battle School, a training ground for the future commanders of wars against the alien invaders. Bean easily posts the highest test scores ever recorded at Battle School and is seen by many of the faculty as the potential replacement for Ender Wiggin, the one on whom humanity’s hopes for survival are pinned. Rather than becoming Ender’s replacement, Bean becomes his most reliable ally as the two young geniuses take on an almost insurmountable and unbearable task.

This book is a parallel novel to Ender’s Game (#186), so it follows the main plot line of that book but uses Bean as the protagonist, allowing the reader to experience a whole new view and perspective on the incredible events Bean and Ender endure. While Bean served a vital role in Ender’s Game, we never really got into his head or knew a whole lot about him. This book explores Bean’s troubled past as an orphan on the streets nearly starving to death and traces his path to Battle School. What I found most fascinating about this book was seeing the mind set of Bean and how devoted he was to Ender. Bean’s character is an unmitigated genius, academically smarter than Ender, yet he is able to recognize that Ender possesses natural leadership qualities that make him the commander who must lead humanity’s fight for survival.

As this book is a companion novel to Ender’s Game, Card glosses over some of the explanations in this book that he delved into more deeply in the first. Therefore, one should read Ender’s Game before reading Ender’s Shadow to really appreciate how well Shadow complements and fills out Game.

Rating: 8.0

The One with The End of Prosperity

216. Title & Author: The End of Properity: How Higher Taxes Will Doom the Economy—If We Let it Happen by Arthur B. Laffer, Stephen Moore, and Peter J. Tanous (304 pages)

Genre: Nonfiction—Economics

Completed: 16 February 2012

Summary & Review:

The beginning of the 1980s found the American economy limping out of one of the worst decades of recession and inflation in American history. Yet, within only a couple short years, the American economy became the premier powerhouse in the world and stayed that way for a quarter century. How did this transformation take place? Economist Arthur Laffer, Wall Street Journal columnist Stephen Moore, and investment guru Peter Tanous present evidence that the supply-side, i.e. free market, reforms enacted by President Reagan and others during those years unleashed the economy and allowed the country to reach previously unknown levels of prosperity. While the title of the book implies that lower levels of taxation are the key to economic growth, the authors also focus on free trade, sound federal monetary policy, and other free market principles that contributed to the prosperity. As usual with some of the more substantial books I review, I will post a more in-depth summary of the arguments found within The End of Prosperity in a couple of weeks.

This was an excellent book. Laffer, Moore, and Tanous backed up all of their statements and ideas with loads of evidence. I especially liked their discussion of a federal flat tax to replace the insurmountable mountain of tax code that currently exists. As they lay out in the book, when federal tax rates are lowered, tax revenue actually increases. At one point in the book they quote then Senator Obama during a presidential primary debate in 2008 acknowledging the fact that increasing capital gains taxes decreases revenues from that tax. Then he goes on to state that he doesn’t care, he just thinks it is more “fair” for those people affected by that tax to pay more. That makes no sense to me. Liberals posit that they want to help people through government programs. Thus, having more revenues by which to fund those programs would allow them to do more, no? Apparently they don’t really care about what works, but only want to make everyone equal by tearing down those who have more, not lifting those with less.

But, back to the book: It was good. Read it. 

Rating: 9.0

The One with The Fear Index

215. Title & Author: The Fear Index by Robert Harris (286 pages)

Genre: Fiction—Thriller

Completed: 5 February 2012

Summary & Review:

After leaving CERN where he worked as a physicist specializing in automated machine reasoning, Alex Hoffman enters the world of algorithmic hedge funds using his ground breaking VIXAL algorithm. But over the course of twenty-four hours, beginning with a midnight break-in, Hoffman realizes the algorithm he created works all too well and is acting independently of all external human control. In a desperate rush to figure out what moves the program has made of its own volition, Hoffman will face untold peril and danger.

I realize that summary makes the book sound a little hokey, which it isn’t at all, actually. In the hands of a lesser author, a story hinging on the dangers of artificial intelligence would have been incredibly boring, a sort of been there, done that kind of read. Artificial intelligence gone wild isn’t exactly the most original plot line. But, Harris is such a talented writer that I really enjoyed this book even though the major theme is slightly trite. He was able to keep the tension taught and the pace frantic throughout the story.

Additionally, this book was a rather fascinating look into hedge funds and international finance. I am by no means savvy when it comes to investing and bonds and various exchanges of stock, so I thought Harris’ explanations were immensely interesting. 

Rating: 8.0

The One with Killing Lincoln

214. Title & Author: Killing Lincoln: The Shocking Assassination that Changed America Forever by Bill O’Reilly and Martin Dugard (315 pages)

Genre: Nonfiction—History

Completed: 31 January 2012

Summary & Review:

Written in the style of a thriller novel, television news host Bill O’Reilly and historian Martin Dugard examine the final two weeks of the life of President Abraham Lincoln culminating in his brutal assassination and the hunt for his killer. The story follows the inner workings of Lincoln, Booth, General Grant and others during these historic days and attempts to explain why it happened and how it has affected our country ever since.

I have never been nearly as captivated by the Civil War as I have been by the Revolutionary War or World War II, so I enjoyed this entertaining presentation of one of the seminal moments in American history. The beginning portion of the book was a little slow as it traced the eventual surrender of Robert E. Lee, but once the story focused on the build up to Lincoln’s assassination the book focused and the pace picked up. I thought O’Reilly and Dugard did an excellent job getting into the troubled mind of John Wilkes Booth as he convinced himself to take the ultimate plunge.

In several places in liberal media outlets I have read attacks against this book. For the life of me, I do not understand why. While on his show O’Reilly may lean slightly to the right—and that is debatable to me—this book was not political in the least. It was an entertaining history celebrating the life of a very important and beloved president.

Rating: 7.5