Many people, especially Keynesian economists, argue that natural disasters, terrorist attacks, war, and other destructive actions are actually beneficial to the economy (for example, see “Larry Summers Claims Japanese Earthquake/Tsunami Disaster Will Boost Economy“). Consider the above two and a half minute video before deciding for yourself whether destruction can create wealth.

This video builds on the work of French political economist Frédéric Bastiat who addressed the “broken window fallacy” by showing it to be incorrect in his essay entitled “What is Seen and What is Not Seen“. In countering Larry Summers’ “broken window” view that the recent Japanese earthquake and tsunami might be good for their economy, Ryan Young writes in “Tsunamis Are Not Stimulus“:

Yes, construction will be a boom industry in the coming months. That’s why people like Summers can claim that the tsunami will create jobs and boost GDP. Better still, the workers will spend their wages and stimulate the rest of the economy, too. Japan will be better off for having endured a natural disaster.

If this were really the case, then the best possible way to boost Japan’s economy would be to level the entire country. Every building should be destroyed, brick by brick. The number of jobs that policy would create would dwarf any tsunami stimulus.

Then, in a few years, when the rebuilding is finished, workers can destroy their entire infrastructure again. Even more jobs will be created!

Taken to its logical conclusion it becomes easier to find fault with the disasters-are-good-for-the-economy line of thinking. Bastiat writes in his “broken window” analogy that, when replacing items, “society loses the value of objects unnecessarily destroyed.” When replacement items like new windows, for example, are bought instead of new shoes, spending is merely shifted away from shoes to windows. However, instead of being able to have both windows and shoes, after a disaster one must choose between one or the other. Simply put, Bastiat concludes, “destruction is not profitable.”

Special thanks to Tom. G. Palmer of the Cato Institute for pointing this video out in “Bastiat on the Japanese Tsunami” and noting that “destruction isn’t stimulative because it cannot create wealth.”

Rep. Ron Paul (R-TX) spoke to the Virginia Tea Party Patriots Convention on October 9, 2010 and delivered an powerful speech about patriotism, the economic crisis, free market economics, the Constitution, and many other current issues impacting our government.

Key quotes from Ron Paul in this 22 minute speech include the following:

• Patriot — “an individual who is willing to stand up against one’s own government when the government is wrong”
• “The economic system that we are suffering from is not free markets — it’s Keynesian intervention, inflationism driven by a Federal Reserve that we need to get rid of.”
• “The government a people get is a government they deserve. . . When the majority of the people change their sentiment governments will change.”
• “The role of government ought to be there to protect our liberties . . . to provide a strong national defense . . . to give us a sound currency . . .”
• “I would believe in freedom and free markets if it did not produce greater wealth. But we who believe in freedom, we don’ even have to argue that because history is on our side. History proved: the freer the market, the sounder the money, the greater prosperity, and the more people that can enjoy it.”
• “The belief in liberty is growing by leaps and bounds.”

In 1979, Nobel Prize in Economics winner Milton Friedman (1912-2006) was interviewed by Phil Donahue. A brief portion of this interview is contained in the above video. In less than 2 and one half minutes Friedman demolishes the argument that capitalism is based on greed. According to Friedman, capitalism, or the free enterprise system, is not based on greed but on “individuals pursuing their self-interests.” Milton Friedman is the author of Capitalism and Freedom.

In the above video, Dr. Mark Thornton presents an informal lecture entitled “350 Years of Economic Theory in 50 Minutes” to a group home school students and parents. Dr. Thornton, Senior Fellow at the Ludwig von Mises Institute, is the Book Review Editor of the Quarterly Journal of Austrian Economics. Dr. Thornton also served as the editor of the Austrian Economics Newsletter and as a member of the Editorial Board of the Journal of Libertarian Studies.

In much of the first 5 minutes, Dr. Thornton provides a quick overview to the topics that he will cover and introduces the Austrian  School of Economics (free market economy) vs. what he calls the statists (including Marxists, socialists, communists, Keynesians, fascists, mercantilists, interventionists, and so forth). He points out that the market economy is not only efficient but “a just system” that is the champion of  “individual liberty, private property, and honest money.”

Using the Biblical David and Goliath analogy, Dr. Thornton compares Austrian economists to David and statists economists to Goliath in the amount of control they have within American society. Dr. Thornton then spends a few minutes sharing his “personal journey through Austrian economics” and how he ended up at Auburn University in 1982 for a graduate program. He recounts a year of discouragement when it seemed that Austrian economics was a “thing of the past.” He then learned that the Ludwig von Mises Institute was coming to Auburn University and he was offered a fellowship to continue his studies in Austrian economics.

After almost 12 and a half minutes, Dr. Thornton begins his formal part of the lecture. Some of the subjects covered include the following:

• How behavior changes due to public policy decisions.
• The impact of higher taxes.
• Indirect and long-run effects of the “minimum wage” — especially job losses for the most needy.
• “Everything the government attempts to do ultimately backfires” — examples are provided.
• The purchasing power difference between “honest money” backed by gold and silver and our current monetary system.
• How “fiat” paper currency can become worthless due to monetary inflation.
• Prices for market-driven goods tends to go down while highly-regulated and taxed items tend to increase.
• Paper money inflation has been institutionalized since the Federal Reserve (the Fed) was created.
• Our highly-leveraged banking system — the fractional reserve banking system — means there is “basically no money in the bank.” Most reserves are in electronic format with the Federal Reserve itself.
• The modern form of inflation is an electronic form of inflation. The Fed buys government bonds from banks and then tell the bank they have reserves for them at the Fed. That is how the Fed electronically creates money and writes it into existence.
• “Monetary inflation at the Fed causes price inflation.”
• “Inflation secretly redistributes money from some groups of people to other groups of people.” Some people are hurt and some are helped by inflation. If you are the first to receive the newly inflated money you benefit before prices increase but if you are on the late end you are stuck with less purchasing power and higher prices.
• Government is the biggest beneficiary of inflation because the trillions in government debt are easier to pay off with inflated dollars.
• “Monetary inflation causes the booms and busts of the business cycle.” Fed-lowered interest rates (i.e. increased money supply) cause a boom which misallocates a lot of things in the economy that have to be adjusted — during the bust — through bankruptcies and unemployment caused by bad investments.

After about 40 minutes Dr. Thornton takes some questions (most are difficult to hear). One interesting historic reference Dr. Thornton makes is that the Federal Reserve tripled the money supply between 1914 to 1929. This period of increase was well before the Great Depression. This massive change did not represent a market economy move for the United States but was instead part of the “Progressive Era” leading to the Great Depression.

There was also a question about changes to the tax code. Dr. Thornton suggests that taxes should be pushed downward and some eliminated outright. He argues that people should never let the government institute a new tax. He also believes that the free market economy, while not perfect, is a superior way to continually improve what human beings can do in the absence of government intervention.

In conclusion, this informal presentation by Dr. Mark Thornton, while light on economic theory, provides a wealth of insight into inflation and other problems caused by government economic interventions. It builds a strong case for replacing our federally regulated economy and fiat money supply with free market solutions.

On August 28, 1963 from the steps of the Lincoln Memorial, Martin Luther King gave his famous “I have a Dream” speech. This brief speech became a defining moment of the American Civil Rights Movement and was part of the 1963 March on Washington for Jobs and Freedom.

Some notable passages from Martin Luther King’s speech are included below:

In a sense we’ve come to our nation’s capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the “unalienable Rights” of “Life, Liberty and the pursuit of Happiness.” It is obvious today that America has defaulted on this promissory note, insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked “insufficient funds.”

But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so, we’ve come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.

The marvelous new militancy which has engulfed the Negro community must not lead us to a distrust of all white people, for many of our white brothers, as evidenced by their presence here today, have come to realize that their destiny is tied up with our destiny. And they have come to realize that their freedom is inextricably bound to our freedom.

We cannot walk alone.

I have a dream that one day this nation will rise up and live out the true meaning of its creed: “We hold these truths to be self-evident, that all men are created equal.”

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character.

This is our hope, and this is the faith that I go back to the South with.

With this faith, we will be able to hew out of the mountain of despair a stone of hope. With this faith, we will be able to transform the jangling discords of our nation into a beautiful symphony of brotherhood. With this faith, we will be able to work together, to pray together, to struggle together, to go to jail together, to stand up for freedom together, knowing that we will be free one day.

Let freedom ring from Stone Mountain of Georgia.

Let freedom ring from Lookout Mountain of Tennessee.

Let freedom ring from every hill and molehill of Mississippi.

From every mountainside, let freedom ring.

And when this happens, when we allow freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God’s children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual:

Free at last! Free at last!

Thank God Almighty, we are free at last!

The above Philosophy of Liberty video is an animation based the epilogue of Ken Schoolland’s book, The Adventures of Jonathan Gullible: A Free Market Odyssey. In 1992, the idea for this Philosophy of Liberty concept was initiated due to the publication of the Russian translation of this book. Publisher Dmitry Costygin pointed out to Schoolland that most Russians did not know what property or taxes were. To bring them up to speed, Schoolland penned a special introduction in his book. Since that time this introduction became very popular and appears as the epilogue in every language edition of The Adventures of Jonathan Gullible. Kerry Pearson, operating under the screen name of Lux Lucre, created the above animation to visually introduce Schoolland’s philosophy of liberty.

You can learn more about The Adventures of Jonathan Gullible and author Ken Schoolland on their official website.

This above video embed contains an audio track of a speech given by then private citizen Ronald Reagan in his campaign against socialized medicine.  As explained by wyattmcintyre who posted it on YouTube, it is from the 1961 Operation Coffee Cup Campaign against Socialized Medicine. This speech was recorded for an LP sent out by the American Medical Association.

On October 27, 1964, Ronald Wilson Reagan delivered his now-famous “A Time for Choosing” speech in support of Republican Presidential nominee Barry Goldwater. The above video contains a 4 minute 28 second segment of this conservative classic. It eloquently warns of the dangers of appeasement and builds a powerful case for full victory over communism and evil.

A transcript for the portion of the “A Time for Choosing” speech contained within this video is included below courtesy of the University of Virginia’s Miller Center of Public Affairs. The entire speech (transcript and video) is available on their website.

. . . This is not a man who could carelessly send other people’s sons to war. And that is the issue of this campaign that makes all the other problems I’ve discussed academic, unless we realize we’re in a war that must be won.

Those who would trade our freedom for the soup kitchen of the welfare state have told us they have a Utopian solution of peace without victory. They call their policy “accommodation.” And they say if we’ll only avoid any direct confrontation with the enemy, he’ll forget his evil ways and learn to love us. All who oppose them are indicted as warmongers. They say we offer simple answers to complex problems. Well, perhaps there is a simple answer—not an easy answer—but simple: If you and I have the courage to tell our elected officials that we want our national policy based on what we know in our hearts is morally right.

We cannot buy our security, our freedom from the threat of the bomb, by committing an immorality so great as saying to a billion human beings now enslaved behind the Iron Curtain, “Give up your dreams of freedom because to save our own skins, we’re willing to make a deal with your slave masters.” Alexander Hamilton said “A nation which can prefer disgrace to danger is prepared for a master, and deserves one.” Now let’s set the record straight. There’s no argument over the choice between peace and war, but there’s only one guaranteed way you can have peace—and you can have it in the next second—surrender.

Admittedly, there’s a risk in any course we follow other than this, but every lesson of history tells us that the greater risk lies in appeasement, and this is the specter our well-meaning liberal friends refuse to face—that their policy of accommodation is appeasement, and it gives no choice between peace and war, only between fight or surrender. If we continue to accommodate, continue to back and retreat, eventually we have to face the final demand—the ultimatum. And what then—when Nikita Khrushchev has told his people he knows what our answer will be? He has told them that we’re retreating under the pressure of the Cold War, and someday when the time comes to deliver the final ultimatum, our surrender will be voluntary because by that time we will have been weakened from within spiritually, morally, and economically. He believes this because from our side he’s heard voices pleading for “peace at any price” or “better Red than dead,” or as one commentator put it, he’d rather “live on his knees than die on his feet.” And therein lies the road to war, because those voices don’t speak for the rest of us.

You and I know and do not believe that life is so dear and peace so sweet as to be purchased at the price of chains and slavery. If nothing in life is worth dying for, when did this begin—just in the face of this enemy? Or should Moses have told the children of Israel to live in slavery under the pharaohs? Should Christ have refused the cross? Should the patriots at Concord Bridge have thrown down their guns and refused to fire the shot heard ’round the world? The martyrs of history were not fools, and our honored dead who gave their lives to stop the advance of the Nazis didn’t die in vain. Where, then, is the road to peace? Well it’s a simple answer after all.

You and I have the courage to say to our enemies, “There is a price we will not pay. There is a point beyond which they must not advance.” [Applause] And this—this is the meaning in the phrase of Barry Goldwater’s “peace through strength.” Winston Churchill said, “The destiny of man is not measured by material computations. When great forces are on the move in the world, we learn we’re spirits—not animals.” And he said, “There’s something going on in time and space, and beyond time and space, which, whether we like it or not, spells duty.”

You and I have a rendezvous with destiny.

We’ll preserve for our children this, the last best hope of man on earth, or we’ll sentence them to take the last step into a thousand years of darkness.

We will keep in mind and remember that Barry Goldwater has faith in us. He has faith that you and I have the ability and the dignity and the right to make our own decisions and determine our own destiny.

Thank you very much.