Bubble Economics 101

Seemingly Washington does not believe one government-induced housing bubble this decade was enough; President Obama, approved overwhelmingly by the Senate, signed into law a $24 billion economic "stimulus" bill extending the first-time home buyers credit, and unemployment benefits.

More economic fallacies to prop up past failed government market interventions.

How exactly do our politicians believe that further subsidization of home purchases will ease the [necessary] correction in our economy? Government's attempt to continue and prop up home prices will only prolong the housing mess.

When asset bubbles pop, prices must, as a corollary of a free market (which is certainly questionable whether the U.S. still has one), adjust to their pre-bubble levels. Home prices are not deflating as some sort of unknown phenomena, rather home prices are adjusting to their market-clearing levels (or at least as close to it as possible).

With statements such as the following, our politicians continue to prove just how willfully ignorant they are when it comes to market economics. "The credit will allow more people to purchase a home in my district", states Rep. Shelley Berkley of Nevada.

Rep. Berkley may be correct, in the short-run; however, inflated prices, as a result of government intervention into the economy, are precisely what had initially prevented many first-time home buyers from entering the housing market. Moreover, why must taxpayers of the entire union support home purchases in Rep. Berkley's district.

Further intervention into the housing market will again artificially make housing less affordable, and further hurt our economy - as these measures prevent necessary economic correction.

Homes are a consumer good, and the price of this good (homes) is subject to the market forces of supply and demand. Ironically, the government intervention that lead to the first housing bubble of this decade, in part the very reason for the lagging economy, was supposedly a way to make homes more "affordable". The result was exactly the opposite, for many first-time home buyers.

Buffett's Biggest Investment; Corporate Welfare

Don't be confused by Warren Buffett's latest and biggest investment acquisition, via investment vehicle Berkshire Hathaway, of Burlington Northern Santa Fe.

The railroad acquisition by Berkshire Hathaway should not be mistaken as a sign of economic growth or consolidation, as mergers and acquisitions typically indicate. Rather, the investment move by Buffett, a fellow Obamanomic, government interventionist supporter, is a tactic to position himself to reap rewards from government largesse -- similar to Berkshire's large investment in Goldman Sachs, circa 2008.

Look for near-future government subsidization of the railroads (part of the so-called infrastructure spending stimulus) to justify (and serve as payback) Warren Buffett's investment move.

Why the Fed Loves the Current Stock Market (bubble) Rally: The Early 90's All Over Again?

If you are currently paying even a small amount of attention in regards to the U.S. stock market and dollar index , you might be wondering three things. 1) why isn't inflation becoming noticeably rampant given the amount of monetization of government debt and "printing" of new money by the Federal Reserve - little overall upward movement in the consumer price index (CPI), 2) how anyone, let alone "experts" in the field of economics, can be suggesting that a falling dollar is a good thing for the aggregate U.S. economy (and stability), and 3) if the dollar is falling as drastically as it is why is there a stock market rally?

Dr. Mark Thornton shows here how in many cases easy money (the Fed's manipulation of interest rates) first leads to asset bubbles, such as real estate or the stock market, before ending in an inflated bust. Moreover, the inflationary result of the easy money is what generally leads to the bust - a necessary rising of interest rates.

Money that is tied up in an asset bubble initially prevents monetary inflation from being revealed as price inflation as measured by the Consumer Price Index. However, if the monetary pumping is used to purchase assets like stocks, bonds, or real estate then the inflation is revealed in the price of those assets, which will rise even though the underlying earnings of the assets has not improved (emphasis added).

We appear to be witnessing a new asset bubble in the making, this time (again) in the stock market. Much like in the early 90's when interest rates were manipulated lower by the Fed, the ensuing result was the stock market tech bubble -- ending in 2000. And as soon as more investors enter the picture, and more profits are taken off of the table and placed in the consumer markets we are likely to begin experiencing that expected inflation. The question du jour then is, is the Fed continuing to keep interest rates artificially low in attempts to first pay back some friends on Wall Street?

Positively Unstimulating: Make-Work Programs

The AP reported today on stimulus watch, citing "stimulus boon" for several of the south and southwest states. While fully understanding that the stimulus bill has already passed (largely for political posturing purposes), I feel it still necessary in exposing the flaws of make-work economic stimulus programs. I am additionally aware of the daunting, and in some respects almost seemingly futile task before me given the high regard for conventional wisdom's bias toward make-work economic recovery programs. In fact, of the many economic fallacies that have been torn down over and over again by many prominent free-market economist, the make-work fallacy appears to be one of immortality. So, for the sake of brevity, I will merely touch on a couple errors inherent in make-work economic stimulus programs.

The Fallacy of Make-Work Recovery

The underlying premise of the make-work economic recovery notion is that the aggregate economy will be made better off as long as people have some sort of "work" to do. The basis for this notion is that as long as money is circulating an economy will grow and prosper. However, where this concept is clearly mistaken is in the idea that meaningless work, or rather unproductive employment, is mutually beneficial.

On the contrary, largely the end result from make-work stimulus is wasteful consumption of resources without any addition to the economies capital stock. In other words, there exist zero capital productivity when a man is employed to, for example, tear up a road just to put it back together. Scarce resources have been misallocated, and thus wasted. The aggregate economy does not benefit from this man's labor, nor even from his income - given that his daily pay is merely an unwilling redistribution from one (potential productive) sector of the economy to another.

Bryan Caplan, in The Myth of the Rational Voter, takes on in detail the bias of make-work. Additionally, Mr. Caplan clarifies how saving labor is beneficial to the aggregate economy, versus unproductive toil. "For an individual to prosper he only needs to have a job. But society can only prosper if individuals do a job, if they create goods and services that someone wants."

The author's in the AP story clearly, although not their intention, show the absurdity of make-work in Colorado. "On paper, Colorado posted the largest increase of any state, more than 4,700 jobs, largely thanks to a contract to set up a call center to field questions about a change to digital cable. But the jobs were spread across multiple states, underscoring one of the many hiccups in the data. Like most contracting jobs, these were temporary, and most are already over."

Costs vs. Benefits

Even granting that make-work programs are of minimal, short-term success toward local economic recovery (when successful, make-work is very short-lived and its impacts not very far reaching), the plan should still be subject to a cost benefit analysis in order to assure sound economic sense. Cost benefit analysis works well in determining a plan of action, when faced with limited resources and potentially high opportunity costs (the basis of what Mises termed the "praxeology" axiom).

The problem with cost benefit analysis and government, however, is governments are not subject to the profit loss system, and thus opportunity costs. Therefore, when government makes a plan to implement make-work programs, the cost-to-benefits become significantly diminished.

As the AP story reports, "Until more money is spent and more data come in, it is impossible to accurately calculate how much the government is spending per job". Knowing that in the long-run make-work programs result in abject failure toward creating real economic growth, I am confident in betting that the minimal benefits experienced in the short-run are significantly dwarfed by the true costs in both the short and long-term. Again, these short-term make-work projects are consuming resources, but not creating or adding back to the aggregate economies capital stock.

An Alternate Recovery Proposal

The exact cause of the business cycle (Federal Reserve's monetary policy) aside, economic recoveries typically begin with small business expansion. Economic expansion occurs after the economy has hit its trough in the business cycle. However, in order for expansion to soundly begin, government must clear out of the way for innovation and real productivity to take hold. Most importantly, moreover, is for government to discontinue all forms of interventionist policies and dramatically reduce spending and taxes. In other words, government must get out of the way of natural market recovery. This includes the wasting of resources via failed, unproductive make-work programs.

Less from Moore: A Love Affair with Misunderstanding

In the video link here, Moore concedes that what we have, and where the problems derive, is not a true capitalist social system. However, after his rather brief concession, Moore follows up with the typical line of envy and supposed injustices. These rally cries serve as a prelude to the actual content of his film.

Moreover, Moore maintains a completely (in my opinion) inaccurate understanding for true capitalism. In a capitalist system, via consumer sovereignty, market actors do vote with their dollars. So why the clamor for making "capitalism" more "democratic"? Rather, what he and America should be calling for is allowing capitalism to work freely from government interventionism.

The overall premise echoed again and again by capitalist turncoats such as Moore is merely envy and implications to create an environment of "equality of outcome" over "equality of opportunity" - more socialism. In the end Moore regurgitates FDR's call for a bill of rights for 'free stuff.

Shame on Moore for misrepresenting the facts. Maybe if we actually implemented unhampered free-market capitalism all the ills of Mr. Moore's film would become miseries of the past.

Actions Speak Louder than Words: The Obama Show on Wall Street (Act II)

When our president espouses free markets and trade during a speech to Wall Street, I have to question his sincerity. Anyone who is favorable to economic freedom, such as myself, should find it difficult to accept words alone when Obama begins to advocate free markets and free trade. The latter, more specifically, was stated as trade under "conditions" as a necessary path to continue "free trade".

At best, Obama has a completely different view of the free market as do pro free-marketers express, and at worst his comments are nothing more than buzzwords insincerely thrown about in an attempt to deceive those who oppose his policies. In either case, the evidence contradicts the spoken words.

The specific statement made to Wall Street, and main street, was that the president is clearly now and always has been a promoter of the free market. Recent actions taken by the White House and previous pronouncements by the president himself indisputably negate such a proclamation. When judging a person's sincerity you must look at their actions, not just their words.

Over the past 12 month period, although most all of these anti-market sentiments go back much farther, Obama has called for and or enacted the following anti-market programs / measures; Government stimulus, equitable redistribution (via tax laws and government programs), higher corporate taxes, rewarding firms who keeps jobs in America (anti-globalization / protectionism), increased union powers, bailouts, cap and trade legislation, and government-run health care. Moreover, on January 8th of this year, Obama stated, "Only government can break the vicious cycles that are crippling our economy". While the list of contradicting anti-market sentiments does not necessarily stop there, this should be sufficient evidence that our president is not sincere in claiming adherence to free market principals. In fact, each of the above programs and claims are the antithesis to a freely functioning market.

Mixed economies are hardly stationary, that is often moving either toward or away from central planning. And, planning under the guise of market mechanisms does not constitute a free market. As Mises eloquently stated, "If people speak of "planning" they mean, of course, central planning, which means one plan made by the government -- one plan that prevents planning by anyone except government". Free markets, of course, work under the mechanism of everyone planning toward meeting their own desired goals through freedom of mutual exchange.

The idea of government interference as a "solution" to economic problems leads, in every country, to conditions which, at the least, are very unsatisfactory and often quite chaotic. If the government does not stop in time, it will bring on socialism - Ludwig von Mises, Economic Policy; Thoughts for Today and Tomorrow.

After mentioning a proclivity toward free markets, the president went on to state that in order to encourage and continue "free trade" we must strictly adhere to current trade agreements. The only agreement necessary in a freely globalized economy, or bilateral free trade, is the commitment to allow the free movement of goods and services across borders - that is in addition to upholding laws that protect private property.

Again, we seem to have either a disconnect in the understanding of free trade versus "managed trade", or simply another instance of insincerity. Further evidence for the latter is the recent passing of a 35% tariff on imported Chinese tires. As stated by IBD editorials earlier this week, "This protectionist move, meant to please a single labor union, takes a big bite out of our global trade credibility, making us look like a country that can't compete in global markets".

The imposition of tariffs by governments both interferes with free markets and free trade. We eliminate means of consumer choices by limiting freedom of voluntary exchange. Moreover, actions by our government such as this have the effect of supporting the public's otiose "anti-foreign bias" toward trade imports.

At the end of the day, after the show is over, we seem to be only left with one option. We must accept that, at least for now, we have been deceived, and the only compromise made in Washington will be our economic freedom. Tomorrow is likely not to bring us any closer to freedom from intervention, but rather closer to central planning.

Regulation Mysticism: The Obama Show on Wall Street (Act I)

One thing is for certain, the current administration does not fail in providing ample theatrical events. Monday's speech on Wall Street was again a success in providing some of the same "entertainment", along with being complete with errors and fallacious notions regarding the laws of economics that we have come to expect from the Obama administration. Much like the speech last week to Congress on the health care issue, this week we witnessed much theater but little substance.

Three acts of insincerity that stood out specifically, to me, in Obama's speech were the president's constant calls for "common sense regulations", portrayal of free-market advocacy, and his statements on free trade. I will cover regulation here, and will touch on the other two topics in a separate piece.

The pronouncement of regulation and reform seem to be never ending. However, what type of regulation, how past regulation created the current economic mess, and at what cost we are willing to tolerate for new regulations is constantly lacking in clarity. Moreover, financial market regulation in the context provided by the White House is at best a euphemism for government control, and at worst a government-sponsored, non-market path toward special privileges.

My proclivities in the science of economics are aligned with the Austrian School's explanation that the laws of economics are a priori, thus these laws cannot be changed from day to day or year to year - nor from one administration to another.

Government imposed regulations do not change the way in which rational people respond toward economic incentives. Rather, poorly designed government-created incentives lead to new avenues of risk, uncertainty and market distortions. IBD editorials on Tuesday, in an article titled Lessons Unlearned, stated in simple terms how foolishly inaccurate the premise of calls for "reregulation" in the financial markets is at preventing another market meltdown. "Bad government, not Wall Street, caused the crisis - not a popular sentiment, but true nevertheless".

According to Obama's speech, deregulation of the past is specifically what had caused irresponsible behavior and excess. Aside from a congressional act in 1999 that allowed bank holding companies / institutions to provide and own non-banking financial services (a repeal of the Glass-Stegal Act of 1933), the deregulation of the financial markets is largely a myth.

The largest contributing factors of the financial mess beginning in late 2007, starting in the housing sector via risky packaged loan derivatives and Fed's easy money policy from 2003 to 2004, were the new incentives created and championed by our government. Specifically, the congressional calls for "housing for everyone".

A sharp Boom and bust in the housing markets would be expected to affect the financial markets, as falling house prices led to delinquencies and foreclosures. Those effects were amplified by several complicating factors, including the use of subprime mortgages, especially the adjustable-rate variety, which led to excessive risk taking. In the United States such risk taking was encouraged by government programs designed to promote home ownership, a worthwhile goal but overdone in retrospect,
explains John B. Taylor in Getting Off Track.

Enter laws of economics. People respond to incentives, and when government changes or makes new regulations pertaining to our financial sector, such as encouraging housing for everyone via prodding Freddie and Fannie to take on a larger portion (pouring in loads of money for loans) of the secondary mortgage market and the Fed's role in making money extremely cheap, what you end up with are new incentives not a lessening of risky behavior.

Obama's comment about "common sense regulation" implies risky behavior and excess can be regulated out of existence, and this is where he is both misleading and inaccurate.

In order to prevent moral hazard (externalized risk), we must eliminate bailouts, implied government backing and sponsorship, special favors to coveted financial institutions (by the Fed and Treasury), end the notion of "too big to fail", and reinstate the rule of being responsible for your own actions --- upholding laws that respect and protect private property (including the fruits of one's labor). In other words, allow necessary failures, a much necessary part of capitalism as are profits, to take place to ensure optimal allocation of resources and speedier correctional periods.

Regulation should not and does not imply good behavior or efficient markets, just as "ought does not imply can". This is false, and recent history proves it. Therefore, it is a foolish statement to suggest that new regulation will prevent, if not eliminate future economic distress - of any level or scope, even when the proposed new regulations are professed as "common sense".

De-stimulating the desire to work

The stimulus bill will include large appropriations to the welfare state; just what we need to create jobs, eh government. The editors over a Nationalreview.com posted a pretty good article on this atrocity.

I think that when dealing with economics it is very important that we not forget, and re-learn if necessary, the most basic laws of microeconomics and human action. The two economic laws that I believe to be most self-evident are that people respond to incentives and decisions are made at the margins. Government enjoys distorting both of these economic laws, via minimum wage laws and welfare.

Expanding the welfare state is the antithesis of creating jobs. Why should we give an incentive (or increase that incentive) to not work, when we are supposedly attempting to create jobs? If you can only make $300 (although temporarily as income will likely increase as a result of hard work) working but pocket $350 not working, it's not hard to figure which decision will be made. This is also why the unemployment numbers are often skewed. If adding more people to the government dole is creating jobs, then I guess this will be a success.

2009, A Return to 1932 Economic Policy?

I do not normally post a blog that is simply the writing of another author; however, the following article is, in my opinion, an excellent parallel between some of the economic situations that lead up to the FDR election win in 1932 (and after) and Obama's election win in 2008 (and what is predictably to come). This article is also a much better comparison than I had made previously - America cannot afford another 1932.

Daily Article by Llewellyn H. Rockwell, Jr. This article can be found at Mises.org.

How This Happened

For years, many of us puzzled about how something so stupid and destructive as the New Deal could have happened. The stock market crashed because it was overinflated. That's nothing new. History is filled with credit bubbles that pop. Resources are reallocated to reflect economic reality and we move on.

The New Deal was different. It actually began under Hoover, who initiated new spending programs, jobs programs, and tried to inflate the money supply and bail out the banks. He was blasted by FDR for his big government policies, and FDR won the election. Once in power, FDR went nuts, instituting a program of central planning that combined features of the Soviet and Fascist models.

It was one idiotic program after another. They tried to raise wages when they should have fallen. They tried to save banks that should have collapsed. They destroyed resources when they were most needed. They encouraged spending when people should have been saving. They smashed the dollar at a time when it needed to be shored up. They cartelized business when competition was most necessary.

What were the results? Economic growth went nowhere between 1933 and 1939, with real gross domestic product per adult still 27 percent below trend at the end. Per capita GDP was lower in 1939 than in 1929. Unemployment was at 17.2 percent in 1939. This was actually higher than it was in 1931. This is despite 100 percent increases in monetary expansion. Taxes had tripled. Employing people became ever more expensive due to unions and national income guarantees. Every time the economy would bottom out and genuine recovery would begin, policy would knock it back down again. Other seeming upturns were entirely artificial: make-work instead of real work, for example. Regimentation was everywhere so that business couldn't compete, farmers were destroying livestock and crops on command, and dissidents were being ferreted out through police-state tactics......(complete article)

If Deflation is the Enemy than Reflation (Inflation) cannot be the Hero

The following is a quick highlight of the differences between deflation and inflation as outlined in the essay, Deflation & Liberty, by Jorg Guido Hulsmann.

First, let’s start with the basic notion that both deflation and inflation are “monetary phenomena”, and occur as a result of central banking (the Federal Reserve) monetary policy.

Inflation or inflationary policy is the vast increase in the quantity of paper money over the increase in production. Thus, as a result of this increase in paper money over production prices will rise (i.e. reduce the purchasing power of existing paper money). However, this rise in prices does not occur all at once nor does the reduction in purchasing power impact all of the citizenry at the same time. Herein lies the inequality (that government claims to be a defender of); those who receive the new money first, before prices in general have risen, benefit from the inflationary policy. Inflation is a redistributive governmental practice.

The relentless influx of paper money makes the wealthy and powerful richer and more powerful than they would be if they depended exclusively on the voluntary support of their fellow citizens…….inflation puts a brake on social mobility

Deflation, no less, is merely the opposite, where the supply of money “disappears” and prices drastically fall as a result. In the case of deflation, much like with inflation, there are also winners and losers as the final outcome. However, the fear of deflation seems to be based on a fallacy, which is the disappearance of money will lead to the disappearance of “physical structure” and wealth (wealth equals previously produced capital goods not yet consumed). This fallacy seems to have been placated by the producers of money and policy (the policy of deficit financing).

But our tools, our machines, the streets, the cars and trucks, our crops and our food supplies – all this is still in place. And thus we can go on producing, and even producing profitably, because profit does not depend on the level of money prices at which we sell, but on the difference between the prices at which we sell and the prices at which we buy. In a deflation, both sets of prices drop, and as a consequence for-profit production can go on.

Therefore, if inflationary policy (i.e. easy credit) leads to the boom in the business cycle, which inevitably must come to correction as a result of exuberant misallocation of resources, then the deflation that occurs during a market correction only serves to speed up the correction process much like inflation speeds up the (illusory in this case) market expansion. “…Rothbard’s analysis of deflation, which demonstrated in particular the beneficial role that deflation can have in speeding up the readjustment of productive structure after a financial crisis.”

In short, the true crux of deflation is that it does not hide the redistribution going hand in hand with changes in the quantity of money…..Both deflation and inflation are, from the point of view we have so far espoused, zero-sum games. But inflation is a secret rip-off and thus the perfect vehicle for the exploitation of a population through its (false) elites, whereas deflation means open redistribution through bankruptcy according to the law.

So, is deflation really so bad for the aggregate economy or harmful only for those who have benefited from inflationary policy? Which, inflation or deflation, is more in-tuned with liberty?

If we tie this up with our comparative analysis of free and compulsory production of money and money substitutes, we come to the conclusion that deflation is not a mere redistribution game that benefits some individuals and groups at the expense of other individuals and groups. Rather, deflation appears as a great harbinger of liberty. It stops inflation and destroys the institutions that produce inflation. It abolishes the advantages that inflation-based debt finance enjoys, at the margin, over savings-based equity finance.

Energy Efficiency is Market Efficiency

While I am not a fan of Time magazine, for reasons I do not know I receive Time magazine at my home – so I read it most of the time. The January 12th edition’s front page leads the reader to a story about energy efficiency, by Michael Grunwald. The beginning of this article is pretty much, in my opinion, an accurate perspective of the differences between energy efficiency and conservation. Energy efficiency is ideal when the cost to benefits reveal positive alignment with free market forces (prices).

However, were Grunwald goes wrong is his implicit disregard for market forces and how the free market is the best approach to bringing about efficiency (of all productive capacities). Specifically, Grunwald writes: “History has shown that when the government mandates efficiency, the market figures out how to achieve it.” The processes of government mandates already reduce the possibility of market efficiency. That is these mandates distort market prices, which market prices are the best way to decide whether a given action is worthwhile.

“The efficiency of a given machine is defined as the ratio between the usable work that comes out of the machine to the energy that went in. But, again, no machine can be made to be perfectly efficient.” (Energy: The Master Resource) Additionally, Grunwald calls for innovation and incentives to spur energy efficiency. Again, markets are what spur innovation to deal with solving the problems that people face. Government mandates fail to fully optimize the productive abilities of free people.

Moreover, while Grunwald does mention the destructive outcomes of subsidizing inefficient energy alternatives he fails to mention why government involvement in the market creates impractical incentives for impractical solutions. Government mandates simply create a market for pressure groups that simply absorb and misuse large amount of economic resources.

“Mandates provide a big stick, but money is still the best carrot, and Obama has suggested that he wants to spend lots of it to promote efficiency.” writes Grunwald. The spending of large sums of money by the government only takes away from the private market’s ability to be productive – thus innovate to achieve efficiency as a result of market incentives.

The free market is still the best way to evaluate the most efficient ways to use our scarce resources in the most productive capacity. Furthermore, if we are to become more efficient in the way we produce and use energy resources, look to the free market to innovate (here are examples by Chris Brown and Murray Rothbard) not the government. A good book to read that is educational on the subject of markets, efficiency, and energy, in my opinion, is Energy: The Master Resource. “Market incentives lead people to balance these trade-offs to make the best use of available resources”.

An Opportunity for Change

The current economic situation presents a great opportunity for yielding a very positive outcome --- a resurgence of economic freedom. While much of the current economic and political agendas are merely more of the same, that is a Marxist and Keynesian approach to solve an economic collapse - no less brought on by much of the same government intervention - there does exist a real opportunity for pushing forward free-market ideas. We can either choose to adapt to ways that provide the best paths for equality and prosperity or instead opt for political rhetoric dressed in failed socialistic ideas.

I will certainly admit that my view is of pure optimism - given the current political environment, however, I feel very confident in suggesting that economic times such as the current is ideal for teaching the truth about economic freedom and its correlation to liberty for all. Just as the bust in business cycles serves to rid the market of malinvestments, now is the time to reverse the tide of economic thought and policy and move in the direction of economic freedom.

As economics remains the topic Du Jour more attention is paid by the masses. With the ongoing talk and clamor, ad nauseum, regarding more bailouts, market failures, recessions, inflation, deflation, socialism, nationalism, protectionism, energy independence, car czars, government interventionism, government debt, and so on – the U.S citizenry now appears poised for truth. During robust times, however, many seem to turn a blind eye to the very principals and economic foundation that has allowed so many to obtain such a high standard of living. Herein lays the great opportunity to ameliorate the understanding by the masses; we must persevere to ensure the connection between economic freedom and liberty is fully comprehended.

While these very truths, prevalent in securing equality and prosperity, have been used before as weapons in the battle of ideas, again more than ever need echoing. Equality of opportunity over equality of outcome; rights to private property and voluntary exchange; free markets and trade; the elimination of government intervention into markets; the removal of pressure groups and government means for confiscation of private wealth (i.e. inflationary policy); and the installation of laissez faire capitalism.

As Ayn Rand had so well stated: “Is there any hope for the future of this country? Yes, there is. This country has one asset left: the matchless productive ability of its people. If, and to the extent that, this ability is liberated, we might still have a chance to avoid collapse. We cannot expect to reach the ideal overnight, but we must at least reveal its name. We must reveal to this country the secret which all those posturing intellectuals of any political denomination, who clamor for openness and truth, are trying so hard to cover up: that the name of that miraculous productive system is Capitalism.”