Literally Making Money

The Gist: 4 ways that conservatives might handle monetary policy to grow the economy and limit government.

For 73 years, from 1886 to 1959, you could buy 6.5 ounces of Coca-Cola for a nickel. Customers may have just come off a horse or a jet, but the price did not change. Today, more than six decades later, glancing at my neighborhood grocery shelves, you might pay more than eight nickels for the same amount of the same product.

Coke

Figure 1. Though it lacks the pep of the original formula which, of course, contained cocaine. You also would be hard-pressed to find just 6.5 ounces to purchase as the nation’s waistlines have inflated along with its currency.

 

On a surprisingly related note, you probably dislike writing a check to the government (or having the government directly take money out of your paycheck). If a politician were to advocate for an increase in your personal taxes (rather than the always promised increase in taxes on someone else), you likely would not be happy with them. Worse, if a politician advocated a tax not just on your income but on your wealth, perhaps 2-3% a year, you’d be outraged. And yet that’s not too different from what actually happens with inflation: all of the money in your bank account is worth that much less in Coca-Cola.

Inflation is a hidden tax and an especially clever one because you might think you have more when you in fact have less. But, of course, it does not affect just you. As Murray Rothbard observed, “By creating illusory profits and distorting economic calculation, inflation will suspend the free market’s penalizing of inefficient, and rewarding of efficient, firms. Almost all firms will seemingly prosper.” As F.A. Hayek added, “including some which ought to fail.” Beyond distorting the price system at the heart of our economy, inflation also punishes savers. At its most extreme, during the Weimar Republic, factory workers were given multiple breaks a day to rush out and buy anything they could with their rapidly depreciating currency. But even at its most gentle: the same number in your account gets less than last year. Rationally, you are tempted to spend it now or even borrow something valuable today to be repaid with something less valuable. The benefits accrue to the nation’s largest debtor, the government, who is largely responsible for inflation. But if one day the government can no longer freely determine the value of its debts, then it faces a reckoning with its profligate spending.

“Monetary policy” can sound oblique and intimidating but it’s the least familiar, most important topic in American politics. Beyond its hiding behind technical gobbledygook, it’s probably especially unfamiliar because inflation has been fairly low since the 1980s so people aren’t crying out for reform. If (when?) more noticeable inflation makes a comeback, that’s an opportunity to consider alternatives. The ideal system grows the economy, not the government, by sending clean signals to businesses and consumers while restricting the government’s ability to borrow. As a conservative, here is your menu of options:

 

  1. Appoint the right God-King to run the Federal Reserve

This is actually the easiest route under our present system and about as far as conservatives have ever gotten. It helps considerably if you surround the God-King with like-minded nobility (those anonymous other members of the Federal Reserve that 99.9999% of Americans would not be able to pick out of a line up). The idea is that, at least for the time he is in office, the God-King will astutely manage the nation’s money supply to avoid inflation and, in particular, pursue potentially unpopular policies like the classic example of taking away the punch bowl when the party gets too rowdy or, to continue the analogy, refusing to bail out the friend who gets arrested for drunk driving out of fear that it might prompt other friends in the future to not better manage their own drinking.

Greenspan

Figure 2. You might, for example, look to see if there’s some dispositionally unthreatening radical who once served as Ayn Rand’s personal economist

 

The trouble is that the President appoints the God-King and Senators confirm him and their job security can be intimately related to the God-King’s decisions, which makes them extremely interested in his being pliable to goosing the economy whenever an election is around a corner (which is always). But that’s not all. Because the nation’s elected representatives want to deliver goodies at minimal cost (for maximum re-electability), they want to borrow ever greater amounts and have a compliant central bank aid them along their merry way. 

This is why conservatives tend to dislike the God-King system, which is basically rigged against sound money – indeed, a nickel in 1913, when the Federal Reserve was created, had more purchasing power than a dollar does today. Insofar as the God-King system is preserved, there is no guarantee (in fact, little hope) that you’d get the right God-King (indeed, you might even get one swept up with magical monetary theory). 

Importantly, even if you have an extremely smart, fairly independent, very well-meaning God-King, any hint of crisis will tempt him (as fallible as any man) to use the heavy-handed powers of the Fed – to lend out money at generous rates, to buy and sell bonds in vast quantities, to regulate how much reserves banks have – to try to fix the problem. Conservatives generally think that the Fed has no idea what the right interest rate ought to be and should get out of that business altogether to let the market work it out. Conservatives also have very different perspectives from the mainstream on banking reserves (to be discussed later). The power to buy and sell bonds – intimately related to printing more money and the ability of the government to finance its operations – is where there is some acknowledged room for maneuver. But Milton Friedman feared there were excessive, destabilizing lags between a problem like unemployment arising; central bankers discovering and interpreting the problem through statistic collection; and central bankers finally conjuring and applying unpredictable, bespoke, and ham-handed responses. Adeptly deploying sledgehammers with discretion proves impossible.

And yet, among the options we are going to discuss, this is how things will probably work for the foreseeable future. At the very least, conservatives ought to pay a lot closer attention to who gets nominated to the Fed. Indeed, we probably need a Federalist Society for monetary policy. Who knows if any alternative will ever be politically palpable but one thing is significant: the advocacy of alternatives tends to make the God-King behave.

andrew jackson

Figure 3. You can replace Fed Soc’s James Madison silhouette logo with a similar one depicting the magnificent mane of Andrew Jackson. Motto: “The Bank, Mr. Van Buren, is trying to kill me, but I shall kill it!” Since a central bank came back, might as well bring back AJ, too. 

 

2. Compel the Federal Reserve to follow a simple rule

The theoretically easiest change to make to our system would be to impose upon the central bank a rule it must follow. The trouble comes quickly in determining what the exact rule ought to be. The Fed currently is supposed to maintain stable prices and “full employment”, the pairing of which actually gives the Fed more discretion as it pursues two goals that tend to require opposite practices. Conservatives tend to favor eliminating the Fed’s goal of reaching full employment not because more people working isn’t great but because the Fed has only so much to do with achieving the dang thing (i.e. is there unemployment because businesses don’t have easy access to capital… or because of regulations or unemployment subsidy or workforce suitability or what?) Nevertheless, Stanford’s John Taylor came up with a mathematical formula that takes into account both goals and spits out a rule that the Fed could follow – but Republican presidents have passed over appointing him God-King because even that limit on discretion has proven too controversial. 

Conservatives are far more attracted to a rule that simply tracks stable prices or purchasing power. While attractive in principle (isn’t reducing inflation what we want?), there are two significant problems: first, there is substantial disagreement on what prices the Fed ought to track and how it ought to do so. Second, deflation (i.e. cheaper prices) is not necessarily a bad thing – it could be that the cheaper prices are the results of gigantic productivity improvements. Note two things about this chart: healthcare, education, and housing are major and escalating costs for Americans but are not included in the typical government inflation index; screened devices have dropped their prices like a rock. How should the Fed deal with prices moving in opposite directions? It would be silly for the Fed to print more money so that you always had to spend $1,000 on a television even as the manufacturers figured out how to make it for less and less. Simultaneously, increasing healthcare costs may be partially the result of loose money – but they also are more likely to be reflective of a broken system simultaneously subsidized and regulated by the government. Milton Friedman ultimately concluded that such a rule was “too loose and too imperfect” – and that it, too, would easily invite central bankers to tinker. 

Viagra

Figure 4. Central bankers are constantly self-conscious about deflation and so they often needlessly take “corrective” actions. But when their inflation lasts for more than four years, they don’t bother contacting anyone, they just pile on.

 

Reflecting his belief that money was responsive to the laws of supply and demand, Milton Friedman instead suggested that the Fed should simply increase the money supply by a small amount every year – equal to the long-run growth rate of the United States, or about 4%. Interestingly, by doing so, Friedman was actually targeting 0% inflation, hoping that the increase in the money supply would be taken up by economic growth. Relatedly, one of the big worries about a monetary rule is that the Fed would not have discretion to react to a crisis. At first glance, Friedman’s rule looks unresponsive but, because a crisis is often accompanied by a shrinkage in the money supply, a constant 4% increase in the nation’s money supply over last year’s total would actually result in a bigger cash infusion to make up the difference. The trouble with this rule is that the money supply is surprisingly difficult to determine and, due to the constant innovation of the banking system, determination gets harder all the time (Of course money is cash in your hands and your savings accounts – but does it include the surrender value of a life insurance policy?) Notably, this is the rule that has come closest to adoption in the United States, as Paul Volcker broke inflation by letting the market set interest rates and instead managing the money supply. But the God-Kings didn’t stick to it.

The newest conservative proposal is for the Federal Reserve to target a certain percentage growth in how much is spent in the economy (nominal gross domestic product). That number would combine both inflation and actual economic growth, thus policy would be attempting to balance the two. While it may suffer from some problems we’ve seen before – errors in statistic collection, lags, perhaps punishing good deflation – it tends to be the presently favored rule. There are still other rules out there – smaller countries might, for example, peg their exchange rate to the currency of a country better at fighting inflation than they. Ideally central banks around the world would have different rules and we’d see what happens to their currencies – but because they are subject to the same political pressures as us, we have not seen that level of experimentation in restraint.

George Selgin argues that “Of countless monetary rules that have been proposed at one time or another, the vast majority would eventually have led to some extremely undesirable outcomes, if not to outright disaster.” He continues, “The argument for a monetary rule isn’t that sticking to such a rule will never have adverse consequences. It’s that the adverse consequences of sticking to a rule may be less serious than those of relying upon the discretionary choices of fallible monetary authorities.” And yet that brings up an important question: even if there was a Constitution for the Fed, would they actually follow it in an emergency when the temptation is greatest to deviate? Milton Friedman mischievously suggested that the Fed be replaced with a computer preprogrammed with the rule – and yet even he suggested that maybe Japan ought not to have such a rule until they break out of their slump. And who is feeding the computer its information? Still, there was once a quasi-automatic standard.

Hal 2001

Figure 5. “Grow the money supply by 30% in one year? I’m sorry, Jerome. I’m afraid I can’t do that.

 

3. Define the dollar as a certain amount of a commodity (such as gold) and require the government to exchange that commodity for anyone who shows up with a dollar.

The more you think about a fiat currency, the more your head might hurt. The dollar is worth something because you and other people believe it’s worth something and are willing to trade goods and services for it. But that value might change at any time in the future, such that your dollar is worth considerably less (indeed, your nickel might buy 8x less Coca-Cola). Government is responsible for managing the value of the fiat currency but it instead irresponsibly mismanages, mostly because it does not share the same incentives as other users of money. To keep the government honest and limit its ability to infinitely and freely increase the money supply at any time, you could restore the requirement that the government convert the dollar to a preset amount of commodities for anyone who demanded it. This was in fact how paper currency originally worked – the British pound earned its name by once being defined as a pound of silver – the name of the currency was simply a weight and measure, like a yard of yarn.

Scales

Figure 6. A dollar was originally an ounce of silver. No longer. But how familiar are you with the Imperial system’s next smallest unit of weight measure? A dollar is now worth an awkward 1.5 drachm. Only a few more years until we have to measure the dollar in grains of silver!

 

Attractively, a currency backed by commodities almost inherently cannot undergo hyperinflation – and, indeed, has a ceiling on the amount of inflation it can experience based on how much of the stuff there is. For 500 years between 1260 and 1760, English prices rose 0.38% a year, topping out at a whopping 1.28% a year with the massive influx of Spanish colonial silver. Michael Bordo reports that  “Between 1880 and 1914, the period when the United States was on the ‘classical gold standard,’ inflation averaged only 0.1 percent per year… It was also a period of unprecedented economic growth with relatively free trade in goods, labor, and capital.” No wonder Andrew Carnegie agreed to sell his company in exchange for fifty year bonds. Little did he know what was to come: the U.S. dollar was once pegged at $20.67 per ounce of gold. In 2020, an ounce of gold crossed $2,000.

The principal trouble for consumers is that a commodity-based currency can undergo short-term volatility in its value. For better or worse, the supply of a commodity-based currency can only be increased by an increase in the commodity. If the economy as a whole grows faster than the money supply, the money will actually increase in value – for advocates of the gold standard, this is a virtue: the increased value invites miners to find more gold and for foreigners to export more gold to the country under the standard. Milton Friedman argues that, before World War I, “The blind, undesigned, and quasi-automatic workings of the gold standard turned out to produce a greater measure of predictability and regularity — perhaps because its discipline was impersonal and inescapable — than did deliberate and conscious control exercised within institutional arrangements intended to promote stability.” Mark Skousen argues that, somewhat intriguingly, the supply of gold grows at about the same rate as historic U.S. growth, even during the big shocks, between 1-5% a year, and that it functions more similarly to Friedman’s favored rule than you might guess, though obviously it would not grow at the same rate every year. 

But the short-term volatility of money’s value has a particular problem with sticky wages: nobody likes to get paid less, even if “less” actually buys more. You tend to think in terms of the stated amount – “I’m paid $30,000 a year” not “I can buy this amount of groceries.” Rather than reduce employees’ wages (which are increasingly expensive), companies might fire them and try to hire someone else. But that someone else might not have mentally adjusted for purchasing power themselves and not be willing to work for less than a certain price. It’s a problematic cycle. Murray Rothbard suggests that money inherently can’t have price stability as a commodity but that if businessmen, consumers, employees were interested in it, they could contract around it by tying their payments to some mutually agreed index.

A conventional criticism of a commodity standard is that it wastes resources. Austrian economist Roger Garrison seems to have undermined the critique by demonstrating that after the gold standard was abandoned, contrary to Keynesian predictions, substantial resources were still expended pursuing precious metals – in fact, more than before, because of fears about paper currency being worthless. But even were resources specially expended for the purposes of money, George Selgin argues, “Trying to save resources by forcing a switch from a commodity standard to a fiat standard is like trying to save resources by forcing people to take off the locks on their doors and give them to scrap-metal dealers. It is obvious that the cost of making locks is far less than the cost of losing one’s property.” 

The fact that a commodity standard actually employs resources is what keeps the government honest. If the government wants to expand, it can raise taxes (never popular), borrow (usually at a good rate from its central bank), or it can just overprint money (which is cheap and even gives people the temporary illusion of prosperity). The last is the easiest – unless the government is obligated to exchange its money for a commodity, thereby requiring it to use real resources. Notably, this is something the Founders appeared to understand –  the U.S. Constitution says that “no state shall… make any thing but gold and silver coin a tender in payment of debts” (alas, unincorporated against the federal government) and also gives Congress the power to “coin” alongside, not coincidentally, the power to fix weights and measures. (For what it’s worth, the Federal Reserve itself is of questionable constitutionality, as are all “independent” agencies)

Though it may sound fairly simple, there are several ways to run a commodity-backed currency and how it’s run affects how “good” it might be. The biggest question is this: does the dollar supply equal the government’s gold supply? For the period that America was supposed to be on the gold standard, the answer was no. The government overprinted dollars on the hope that not everyone would show up at once to claim physical gold. During the Great Depression, the government not only closed the opportunity for citizens to get gold for their dollars, they made private gold ownership illegal. But to at least maintain the fiction we retained the standard, we allowed foreign governments to exchange dollars for gold. But by the time of the Nixon administration, we had overprinted so much that foreigners were rationally demanding gold redemptions for their depreciating dollars. Rather than painfully reign in the money supply, we ended redemption. Given this record, can you really trust the government to maintain the gold standard in a crisis? In the past, the gold standard only really worked because it was considered a source of national shame to abandon it. No longer.

Isaac Newton

Figure 7. Isaac Newton spent a good portion of his life trying to figure out alchemy when the secret was right in front of him the entire time: as master of the Royal Mint for 30 years, he just needed to convert to a fiat currency and start printing!

 

If we were somehow convinced of the government’s benevolence (perhaps through a Constitutional amendment), the economic transition would be a challenge because we have overprinted so many dollars. For maximum benefit, gold standard advocates tend to favor 100% backing, but it’s also 100% theoretical. Indeed, Hayek feared that the global economy was too large for everyone to be on the gold standard. The U.S. government has trillions of dollars of gold in its vaults but not as much as the supply of dollars, which means that it would have to expend resources to get more gold (or, dangerously, restore the gold standard at not 100% backing, thereby tempting the government to gamble on lesser and lesser reserves and you’d quickly get into the problem of defining the money supply). There’s even some questions about whether the government could secure enough gold to back our current money supply. An intermediate step might be the U.S. government selling bonds which promised interest payments in gold ounces, but the U.S. government defaulted on its last issue of those, again raising the question of government trustworthiness. 

Of course, the dollar does not have to be backed by just gold – gold just happens to have been historically demonstrated over a long time, relatively convenient as a medium of exchange, and somewhat mystical in the public imagination. This last part is fairly intriguing: does gold really have much intrinsic value or does it, like the fiat currency that replaced it, have value because people believe it has value? Some economists have argued for the currency to be backed by a basket of goods, thus limiting the impact of any one commodity’s shortage or glut. But like the problem of determining the price index, what should be in the basket? Relatedly, some supply siders have suggested that the government need not keep any gold at all, just use its powers to try to get an ounce of gold to equal a certain amount of dollars. But, given the short-term volatility of the price and the Fed’s heavy-handed imprecision, implementation would be challenging – and the most significant benefit of a commodity standard is that convertibility keeps the government honest.

Scissors

Figure 8. Has anyone in the history of rock, paper, scissors ever really thought that paper beats rock?

 

As Hayek sums up, “The gold standard… served no other purpose than to impose upon the issuers of money such a discipline and, by making its regulation automatic, to deprive them of the power arbitrarily to change the quantity of money. It is a discipline that has proved too weak to prevent governments from breaking it.” But Hayek points to a fourth option: “so long as the management of money is in the hands of government, the gold standard with all its imperfections is the only tolerably safe system. But we certainly can do better than that, though not through government.”

 

4. Restore private currencies to compete with and perhaps replace the government one.

Fundamentally, if you don’t think the government does an especially good job of anything, why trust it with the fundamental responsibility of maintaining currency? Or, at the very least, why require that the government have a monopoly on currency? As Hayek observed, government’s exclusive control over currency “has the defects of all monopolies: one must use their product even if it is unsatisfactory, and, above all, it prevents the discovery of better methods of satisfying a need for which a monopolist has no incentive.” Friedman thought that the law of supply and demand applied to money in managing the supply – but why not take the perspective further? Whatever you personally want out of money – stable purchasing power, for example – the free market might be able to deliver if left to its own devices. Hayek argued we should have “the control of money in the hands of agencies whose sole and exclusive concern [is] to give the public what currency it liked best among several kinds offered, and which at the same time staked their existence on fulfilling the expectations they had created.”

Why the heck would you want a Deutsche Bank mark rather than the United States government dollar? Well, Deutsche Bank would have to convince you that their currency had value. In the real historical examples of free banking, private currency issuers operated on their own commodity standards, offering to convert their currency to a commodity, usually gold, whenever a customer showed up and demanded it. Essentially, your Deutsche Bank mark is really just a claim on something in Deutsche Bank’s vaults, while your Chase yen is a claim on something in Chase’s vaults, etc. You would accept a salary in DBM because Amazon would accept payment in DBM because ultimately it could be converted into something tangible and useful as a medium of exchange. What sounds novel and scary at first seems a lot more grounded than the system we have.

Hayek strongly believed that the free market would deliver an inflation-resistant currency: “Money is the one thing competition would not make cheap, because its attractiveness rests on it preserving its ‘dearness’.” Free banking allows money to be chosen by consumers – you and me – not imposed by the nation’s largest debtor. Politicians not only can be but want to be irresponsible with a monopoly state currency. Bankers have to be responsible or else no one would use their currency and they might go out of business. Hayek concludes, “Blessed indeed will be the day when it will no longer be from the benevolence of the government that we expect good money but from the regard of the banks for their own interest.”

But just how free ought to be banking? An interesting aspect of historic free banking systems is that they were largely self-regulating. Currency issuers not only competed for consumers with better offers of service and reliability but, due to the magic of redeemability, they also were constantly testing their competitors by redeeming other currencies for their promised gold. In other words, a customer might deposit Chase yen with Deutsche Bank, who would then trade Chase for any marks it held – but if the trade were uneven, Deutsche would demand Chase turn over additional gold. As Lawrence White notes, “The overexpansive bank will discover that its specie reserves are draining away, a situation it cannot let persist.” An aggressive bank might quickly get to the point where no competitor would accept their deposits, no credit card would process their currency, no merchant would accept it, no consumer would use it. Contrast this against the experience of the Savings and Loans industry heavily regulated by the U.S. government: in the 1980s, over 2,800 banks and S&Ls failed.

soccer

Figure 9. In a professional soccer match regulated by refs, a light tap inspires an Academy Award caliber performance of a career-ending injury. In a self-regulated street game, players play on, lest they not be able to play again.

 

The United States once had private currency issuers but over-regulation produced more problems than benefits. Rural banks feared that city banks would gobble them up and so successfully lobbied state governments to impose branching restrictions that limited any bank from opening many locations, sometimes not more than one. As a result, banks were not big nor diversified enough to deal with crises and often failed. Furthermore, state governments attempted to make banks partners by requiring that they carry state debt as their reserves – but that debt often was not worth very much, thus leaving banks with a fundamentally unstable foundation. Finally, entry into the banking industry was tightly controlled by state legislatures, meaning that one had to be a better lobbyist than a banker in order to get a license to print money. 

Across the border, Canada’s contemporary free banking experience was a model of stability (and, indeed, their lack of branching restrictions meant that in contrast to the thousands of American banks that failed after 1929 in the Great Depression, zero Canadian banks failed). Scotland had a free banking system for about 150 years with considerably less regulation and, in particular, zero barrier to entry, such that one of the largest ultimate banks began as a linen exporter. Our modern world feels so vastly different from a proliferation of currencies that it can be hard to contemplate. Hayek began thinking about the idea in the context of border towns and tourist centers that took multiple government currencies. Cryptocurrencies give you a bit of insight but ultimately differ in their lack of redeemability for a commodity as well as their very limited present use in purchases of goods and services. But consider your possible enthusiasm for airline miles or credit card points or any number of other practically private currencies in effect today, where you can redeem them for some product, perhaps only at their offering store – but why should they not be allowed to trade on the open marketplace? There’s a small secondary market for gift cards, where Amazon trades basically at par and less popular retailers you can get at a discount. To the degree that you’re afraid the airline will devalue your miles on the open marketplace, that’s the point: you would not want to be paid in such a currency. But if a merchant found that its rewards program was circulating at par around the economy, perhaps because it offered redeemability in a commodity, then it might quickly find out that it’s actually a currency-issuing bank.

Notably, most Scottish banks had a feature that is very unusual in today’s world: they were unlimited liability corporations, meaning that shareholders were completely on the hook for their problems. As you can imagine, this led to a great degree of prudence in their operations. Even when Scottish banks did (rarely) fail, currency holders were made whole. While the purest free bankers believe that banks should be able to choose their liability exposure and then advertise to customers to choose between them accordingly, this is one simple, significant regulation that could head off a lot of future issues while not even requiring any regulators.

Jail

Figure 10. As if personal liability was not enough, this was also a time of debtors’ prisons!

 

The more contentious bank regulation – something that is considered across all four possible ways to reform our monetary system we’ve been discussing – is how to deal with regulating bank reserves. Conservatives have tended to believe that the financial system relies on a myth that money can be in two places at once – you have your money in a bank account that you can withdraw entirely at any time, but the bank is simultaneously using that money to lend out to others. That’s why a run can ruin a bank. Presently, the government requires that banks hold a certain relatively small percentage (about 10%) of their outstanding loans in reserve in case depositors need it and, through the FDIC, it also guarantees that, eventually, accounts under a certain size will be restored to full value by taxpayers in case of the bank’s failure.

Conservatives have tended to consider this a pre-bailout inviting banks to moral hazard and have for a long time favored 100% reserve banking (also called single-purpose banking). Banks would be split between two functions, warehouses for money and lenders. You could either have total access to all of your money at any time (as if it was in a safe deposit box) or you could agree to eliminate your access in exchange for an interest payment (as if you bought a bond). An unpopular feature of this is that you may have to pay to store your money – but perhaps not if banks ran it as a loss leader to attract customers. But conservatives have nevertheless advocated for the position as a way to stabilize the banking system (if your bank must keep 100% of your money, no reason to make a run on on it) and (especially for Friedman) control the money supply (banks no longer have discretion on what proportion of their reserves to lend out). Notably, no lender of last resort is necessary.

If banks were legally able to issue their own currencies, the outstanding currencies would be, from an accounting perspective, very similar to the liabilities that banks possess in savings accounts. The freest bankers insist that the government really ought to have a 0% reserve requirement and let competition work out the problems. Notably, in the Scottish system, this occasionally meant that banks were down to as little as 2% of their reserves – and, as a result, they sometimes instituted policies that meant customers might have to wait 6 months from a redemption request in order to get their gold. Interestingly, though this delayed redeemability was unpopular and attracted some limited regulation, the notes circulated at par in the interim and were indeed redeemed as promised. While no restrictions on reserves worked for the Scottish banking system, it might have been due to other factors like their unlimited liability and (eventual) convertibility to gold. If we had instant totally free banking today, there might be more risk if consumers were prepared to accept, say, cryptocurrency, as a reserve. Compared to our current system, though, Selgin suggests, “If consumers were willing to accept a fiat standard voluntarily, banks could induce them to do so by offering higher interest rates than competitors who still held commodity-money reserves, reflecting the lower operating costs of not having to hold non-interest earning assets. If this does not happen, one must conclude that consumers perceive a commodity standard as a higher-quality good than a fiat standard.” Notably, if there is no reserve requirement, there is dramatically less pressure on having the exact amount of resources to match the money supply.

Mark Skousen asks, “On a practical level, who wants to deal with potentially dozens of different kinds of privately issued bank notes?” Hayek responds, “If the public understood what price in periodic inflation and instability it pays for the convenience of having to deal with only one kind of money in ordinary transactions, and not occasionally to have to contemplate the advantage of using other money than the familiar kind, it would probably find it very excessive.” The point is that there is no natural monopoly in currency where competitors are allowed to produce. Hayek continued, “in the field of money I do not want to prohibit government from doing anything except preventing others from doing things they might do better.” Sweden for seventy some years had a system of begrudging free bank acceptance in addition to a government-preferred bank with a very explicit policy that no private bank would be bailed out. But the government favoritism backfired: the private banks were so responsible that none failed – indeed, despite the facts that their currency was not legal tender and was actually taxed, they were so successful at attracting consumers that the preferred bank successfully lobbied that it could only survive if given a monopoly on currency issue, thus ending free banking in Sweden.

Walmart

Figure 11. On a practical level who wants to deal with potentially dozens of different kinds of private grocery stores or newspapers or anything else free enterprise competitively offers? Very probably: You.

 

I must conclude with the sad story of the Liberty Dollar. For nine years, Bernard von NotHaus sold tens of millions of dollars in gold and silver medallions to hundreds of thousands of Americans who either could take delivery outright or receive a certificate that allowed them to redeem their precious metals at any time. The George W. Bush administration responded by raiding his vault, seizing nine tons of precious metals (some medallions depicting Ron Paul), publicly accusing von NotHaus of “domestic terrorism,” and trying him for counterfeiting. Tragically amusing, his lawyer insisted “the last thing Mr. von NotHaus wanted was for Liberty Dollars to be confused with coins issued by the United States government.” We shall see what happens to cryptocurrency, but the U.S. government does not appear to be interested in currency competition in the near future. 

As stated near the beginning, the ideal monetary system sends as clean signals as possible to business and consumers while restricting government’s ability to grow.  If government’s growth was fueled by central banks, then reverse engineering the process means eliminating the central bank. As Hayek noted, “There can be little doubt that the spectacular increase in government expenditure [-] with governments in some Western countries claiming up to half or more of the national income for collective purposes [-] was made possible by government control of the issue of money.” So, “Unless we restore a situation in which governments (and other public authorities) find that if they overspend they will, like everybody else, be unable to meet their obligations, there will be no halt to this growth which, by substituting collective for private activity, threatens to suffocate individual initiative.” Indeed, “Under the prevailing form of unlimited democracy, in which government has power to confer special material benefits on groups, it is forced to buy the support of sufficient numbers to add up to a majority. Even with the best will in the world, no government can resist this pressure unless it can point to a firm barrier it cannot cross.”

Adam Smith, the father of modern economics, wrote eloquently about the power of capitalism to bring us wealth. Perhaps not surprisingly, he lived right in the middle of Scottish free banking with redeemability for commodities. At the time that he wrote, he considered his advocacy of free markets practically utopian, and yet within the coming decades Britain embraced most of his agenda. If you desire limited government and sound money, don’t be deterred by what is seemingly politically possible. Fight for the firm barrier that government cannot cross.

vienna chicago

Figure 12. For background about conservative economic approaches, check out Mark Skousen’s Vienna & Chicago: Friends or Foes? Chicago tends to prefer a rule-based solution to our monetary predicaments, though Milton Friedman softened on gold and free banking in his later years. Austrians tend to be split between those who favor a gold standard and those who favor free banking. See my two part review: first, about the history of how the schools came to be; second, about what their differences are. For a primer on what the Fed actually does, Steven Horwitz’ introduction from the Mercatus Center is quite good, though the Fed’s response to covid will require an update.

capitalism and freedom

Figure 13. For more details on a monetary rule, check out Milton Friedman’s Capitalism and Freedom, which tackles a lot of topics but also explains his preference for a rule slowly growing the money supply. You should also read Scott Sumner’s case for NDGP targeting. You can also read George Selgin’s caution about monetary rules in this blog post. 

What has gov done to our money

Figure 14. For more details about a commodity based standard, check out In Search of a Monetary Constitution, an anthology of various bright conservative scholars arguing about different potential monetary systems in 1962. Ben Graham favors a basket of goods, James Buchanan playfully argues for a brick standard, someone else argues for a fractional reserve gold standard, and Murray Rothbard argues for a 100% gold standard (and there are still others, including Milton Friedman, arguing for various non-commodity standards). Though this book is quite good, it can be hard to pin down. If you’re eager to read something on this, try Murray Rothbard’s What Has the Government Done to Our Money?, which includes both his contribution to In Search of a Monetary Constitution and an additional essay.

denationalisation

Figure 15. For more details on free banking, check out F.A. Hayek’s Denationalization of Money; Lawrence White’s Free Banking in Britain; and George Selgin’s The Theory of Free Banking. Hayek revitalized interest in free banking and his book is a smart, speculative take on what free banking might look like. White did significant research into how free banking worked in practice during his longest run: some 150 years in Scotland. Selgin surveys other historical examples but spends most of his book digging deep into the theory of how it might work. Notably, the works of White and Selgin are available for free!

Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend: know anyone interested in economics or history? How about someone who wants limited government? Or do you know anyone who ever uses money to pay for things?

I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

    Many Happy Returns

    The Gist: Money actually can buy happiness – and pretty cheaply – if it is spent on certain non-things.

    A review of multiple books, most notably Your Money or Your Life by Vicki Robins.

     

     

    How much more money would you have to earn per year to make you happy?

     

    If you’re like most people, you’d answer about 50% more than you do now. But therein lies the problem: Most of the people who make 50% more than you do believe their happiness requires yet another 50%.

    Bezos

    Figure 1. “Maybe if there was a global pandemic forcing people to stay at home and order everything online, I could finally be happy,” he thought before making a substantial donation to the Wuhan Institute of Virology. 

     

    Vicki Robin identified this hedonic treadmill in Your Money or Your Life: whatever you make quickly becomes “normal” and you are instilled less with gratitude than renewed inadequacy. Jonathan Clements, the writer of How To Think About Money, notes that, as Americans, “We have twice as much to spend as we had 42 years ago—but our reported level of happiness is no higher and our satisfaction with our financial situation has declined.”

    Treadmill

    Figure 2. Of course, if you have a treadmill desk, then you at least can get a runner’s high en route to endless under-satisfaction

     

    The good news is that most Americans are happy – apparently around 85% on a daily basis. But there’s only so much correlation with that feeling and money. As your household income approaches about $75,000, you can rough out the edges of life. But after that, there’s no gain in happiness. The typical billionaire is about as happy as someone earning in the upper quarter of the five-figures. In fact, Jason Zweig, the author of Your Money and Your Brain, reveals that 19% of those with a net worth of over $500,000 agree with the statement “Having enough money is a constant worry in my life” — and, incredibly, “among those who were worth at least $10 million, 33% felt that way.”

    Jet

    Figure 3. Apparently, you go from worrying about the price of milk to the price of jet fuel. 

     

    To understand how money is misleading, the blogger Mr. Money Mustache asks quite vividly: “would you lock yourself in a dark, silent box forever in exchange for becoming a billionaire?”

    Perhaps that offer doesn’t tempt. But Zweig suggests that “While it’s doubtful that money can buy happiness, happiness can buy money.” At its most basic, to chase more dollars, you can work for more hours for more years at jobs you dislike. Robin encourages you instead to radically choose to consider what you have enough.

    Choosing enough concedes a personal truth that conservatives are fond of observing about government: we have a spending problem, not an income problem. We tend to stressfully spend too much generally but especially on things that don’t make us happy. There’s a better way: embrace the old-fashioned virtue of thrift. And, ironically, by focusing less on earning more and more on spending less, you increase your chance at creating (and retaining) real wealth.

    Robin proposes you undertake two jarring tasks. First, determine just how much money you have earned throughout your life – and then compare it to your present net worth. Note that the typical American with only a high school education brings in over $1.3 million in lifetime earnings, and the number jumps with additional degrees. Robin asks: What have you got to show for all you’ve made?

    Horse

    Figure 4. When asked how he managed to lose $10 million in lifetime earnings, old Hollywood leading man George Raft replied, “Part of the loot went for gambling, part for horses, and part for women. The rest I spent foolishly.”

     

    Second, “keep track of every cent that comes into or goes out of your life.” For every category of spending, what kind of return in personal satisfaction are you getting over time? Personal finance at its most basic is to spend less than you earn and invest the rest (hopefully in index funds). Take a hard look at your spending to determine whether it delivers: Price is what you pay, value is what you get. If you can save over 20 cents of every dollar you make, you are well on the road to wealth – but any percent is better than none. As Thomas Stanley notes in his book, The Millionaire Next Door, “If you make a good income each year and spend it all, you are not getting wealthier.” In his surveys, over 2/3 of millionaires know exactly how much their family spends on food, clothing, and shelter every year – but only about 1/3 of those with high income but no millions have any idea. 

    As you try to buy happiness, studies suggest that there are spending categories that tend to have the highest return on investment. Generally, free time and the autonomy to say no is a broad and powerful happiness benefit of having enough money – in other words, just shifting your mindset will already yield rewards. The best specific return is generosity: as Clements reveals, “We get greater happiness if we spend our money on others rather than on ourselves.” Giving to your favorite charity, buying your friend lunch, getting flowers for your wife all have wonderful personal happiness yields. Relatedly, spending money to spend more time with family and friends – whether moving closer, jumping on a flight, or just getting movie tickets – has a great return. When you do spend money on yourself, nutrition and health are practically priceless: large, fresh fruit everyday will make you happier over the long run than the finest cigars. And money spent on delegating or avoiding things you dislike also has a good return – the evidence here is strongest on avoiding long commutes in traffic by moving closer to work.

    How much of your current spending is going toward those categories? There’s really not much more that produces consistent reported satisfaction for people. In particular, what folks often reach for but has the least long-term return are physical things. Bryant observes the better alternative that constitutes the final spending that has proven to yield a good return: “Experiences not only offer the chance for eager anticipation, but they can also leave us with fond memories—and those memories often grow fonder over time, as we recall the overall event and forget the incidental annoyances. Meanwhile, we quickly adapt to material improvements in our life, plus we have to care for these possessions and watch them deteriorate.” In other words, you will probably be happier occasionally renting a sports car for a driving spree than actually owning one. In fact, in Stanley’s survey of millionaires, more than half had never paid more than $30,000 for a motor vehicle.

    Present

    Figure 5. The ultimate source of happiness is the act of regifting to others all the stuff you don’t want! Indeed, the secret to dying happy is quite simple: write a will. 

     

    There’s also a controversial aspect to your money and happiness. The same house could be a source of misery or joy, depending on the neighborhood you are in. Conventional financial advice is that you should buy the worst home on the block – but that’s the recipe for agony. H.L. Mencken once joked that a happy man is one who makes more than his wife’s sister’s husband – and there’s an unfortunate amount of truth in that. Our tribal minds are too sensitive to status and comparison – so, ideally, happiness-wise, you delete Instagram, throw out the TV, live in one of the nicer homes of your neighborhood, and volunteer regularly at the local homeless shelter. Note that in Stanley’s survey, “Fully 90 percent of millionaires who live in homes valued at under $300,000 are extremely satisfied with life” and about half of millionaires have been in the same house for more than twenty years. The millionaire mindset – and quite a happy one – is that “financial independence is more important than displaying high social status.”

    As you cut down the categories that don’t yield satisfactory returns, Robin reports a variety of approaches:

        • “Personal finance Ninjas love to run the numbers, optimize systems, exploit niches, study personal finance blogs, mess with investments, hack the system to get free flights and hotel stays.” This category includes my best friend, who buys his favorite brands’ gift cards at steep discounts, practically has a doctorate for studying credit card points and benefits, and has set up a variety of quasi-permissible systems to bring his costs to nill. 
        • Robin also tells us of “the Frugalistas, who love bargains, clipping coupons, free-cycling, and deal making,” a category that thankfully includes my fiancee, a devotee of thrift stores, discount hunting, and instantly returning anything less than satisfactory. 
        • Then there are “the Supersavers, who love beating last month’s percentage of salary saved.” Even if you can’t compete in this Frugalympics, there’s a deep satisfaction in watching a chart of your income stabilizing or increasing, your costs decreasing, and the gap in between representing larger and larger savings, i.e. your freedom. 
        • There are the “DIYers,” a category that includes my future father-in-law, a retired metalworker who collects with a discerning eye everything from old tractor engines to abandoned buoys – a large garage full of which his wife threatens to sell to 1-800-GOT-JUNK. But he can fix virtually anything and, as Robin describes, he has a blast “Building, farming, tinkering, making, cooking, gardening, designing, creating, painting, or inventing.”
        • And finally, there are the minimalists, a group to which I aspire, for whom “It’s not about the money; it’s about the meaning.” Robin suggests that “minimalism” may be a little bit of a misnomer: “Waste lies not in the number of possessions but in the failure to enjoy them… To be frugal means to have a high joy-to-stuff ratio.”

    I should close by noting that the literature about reducing spending overall and redirecting it toward personal satisfaction has become especially popular due to a movement acronymed FIRE: Financial independence, retire early (sometimes as early as their 20s). A tenant of the faith is that if you can live on 4% of your investment portfolio, then you are financially independent. This is based on a study that found if you withdrew 4% a year from a portfolio of 50% stocks, 50% bonds, in 96 out of 100 starting years, you would not exhaust the principal over 30 years (and indeed, in many years, your wealth would grow dramatically). There are quite a few issues with this, including the fact that 25 year old retirees will need more than 30 years of income, but William Bernstein summarizes: “At a 2 percent withdrawal rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3 percent, you are probably safe; at 4 percent, you are taking real chances.” To be safer, “limit annual withdrawals to [the] percent of a three-year moving average of your portfolio.” And Clements advises you can practically extend this by varying spending, lowering your withdrawal in a bear market by keeping your fixed costs as low as possible.

    That’s about it: Embrace the magic of enough, enact daily the virtue of thrift, and see the benefit to your happiness and wealth. 

    your money your life

    Figure 6. Click here to buy Vicki Robin’s Your Money or Your Life (7/10), a book about mindset. Has an especially arresting passage about how “Midlife comes and we discover…we’ve been filling teeth for twenty years because some seventeen-year-old (was that really me?) decided that being a dentist would be the best of all possible worlds.” My principal caveat is to use the radical notion of “enough” to work hard chasing your dreams, not completely exit the world (unless, of course, hermitage is your aspiration).

    the millionaire next door

    Figure 7. Click here to buy the Millionaire Next Door (6/10), a survey of millionaires whose primary insight is that most live modestly compared to their means. But there are others – such as 4 out of 5 are first-generation affluent. As a descendant of Scots (“Starrett” apparently translates into “Over a bog”), I was especially intrigued that the longer an ancestry group has been in America, “the less likely it will produce a disproportionately large percentage of millionaires. Why is this the case? Because we are a consumption-based society.” But there’s an exception.

    The Scottish ancestry group makes up only 1.7 percent of all households. But it accounts for 9.3 percent of the millionaire households in America. Thus, in terms of concentration, the Scottish ancestry group is more than five times (5.47) more likely to contain millionaire households than would be expected from its overall portion (1.7 percent) of American households… more than two-thirds of the millionaires in America have annual household incomes of $100,000 or more. In fact, this correlation exists for all major ancestry groups but one: the Scottish. This group has a much higher number of high–net worth households than can be explained by the presence of high-income-producing households alone… More than 60 percent of Scottish-ancestry millionaires have annual household incomes of less than $100,000. No other ancestry group has such a high concentration of millionaires from such a small concentration of high-income-producing households… A household of Scottish ancestry with an annual income of $100,000 will often consume at a level typical for an American household with an annual income of $85,000.

    Your money your brain
    How to think about money

    Figure 8. Click here to buy Your Money and Your Brain (9/10) or How To Think About Money (6/10), each by a different Wall Street Journal columnist. In Your Money and Your Brain, Jason Zweig presents an excellent practical application of the work of Daniel Kahneman about how your mind’s shortcuts can interfere with the best investment decisions. And he cites an array of revealing data points, such as “Among American workers who say they are ‘very confident’ that they will have enough money to live comfortably in retirement, 22% are currently saving nothing for that goal, and 39% have saved less than $50,000. Another 37% have never even estimated how much money they will need to retire comfortably.” Which brings to mind a joke told by the Bogleheads from Jonathan Pond: You really don’t need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you’ll be able to retire comfortably at 70.” Jonathan Clements’ How To Think About Money opens up with an especially good chapter about the relationship between spending and happiness – and advances the interesting notion that we find pursuing goals more satisfying than achieving them.

    Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend: know anyone who wants to be happy? How about somebody who wants to better control their spending? Or do you know a billionaire who needs advice for how to give it all away? (I am available for personal consultation on the last).

    I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

      Check Your Texts

      The Gist:  Scalia argues that judges should interpret what the Constitution said, not what they want today.

      A review of A Matter of Interpretation by Antonin Scalia.

      In November of 2012, I made my annual trip to Washington D.C. to participate in the national convention of the Federalist Society. Once the leader of Vanderbilt law school’s student chapter, now the leader of Nashville’s lawyer chapter, always a supporter, my name tag is usually delightfully outfitted with enough ribbons to impress a Russian general – or at least a grand poobah of the local Moose Lodge.

      But with the re-election of President Obama earlier that month, this was not a happy time for a group of conservative and libertarian attorneys “founded on the principles that the state exists to preserve freedom, that the separation of governmental powers is central to our Constitution, and that it is emphatically the province and duty of the judiciary to say what the law is, not what it should be.” 

      Now this is a big conference – though the vast right-wing conspiracy is not quite as vast, right-wing, nor conspiratorial as ideal. But at one point I found myself in conversation with a small group that included the Federalist Society’s original faculty sponsor and the man most responsible for elevating its ideas to national significance: Antonin Scalia. Gloomier than anyone else, but always possessing his trademark humor, the legendary Supreme Court justice joked that the Constitution would survive, though his own retirement was delayed.

      Scalia

      Figure 1. Rest in peace, Nino.

       

      Scalia never got the chance to retire, but his legacy endures. In his book A Matter of Interpretation, Scalia does something striking: the Justice lays out his case for how our republic can best live up to its values – and then invites four prominent experts to challenge him. To anyone who has read one of Scalia’s amusing and cutting judicial opinions, this should come as no surprise: the man loved a good debate. But to anyone who has not and never will, this book offers both a clear introduction to Scalia’s philosophy – and to some of its criticisms. 

      Scalia believes that every law must be interpreted based only on what the text says, not what a judge wants. You are probably shocked that this is a controversial proposition, but it is. But how do you determine what a text says?  The most important concept, alluded to in the term “originalism,” is that the text must be interpreted according to the original public meaning of the words. In a republic, power is centered in the people who delegate legislators to make laws on their behalf. Those legislators only agreed to what the words meant at the time, not to whatever those words may mean in the future – so the only power laws have is in their original meaning. So judges must write opinions armed with contemporary dictionaries, not the latest op-eds and policy briefs. Without this constraint, if laws can be interpreted by anyone to mean anything, what is the point of having laws in the first place?

      Humpty Dumpty

      Figure 2. “When I use a word, it means just what I choose it to mean. Neither more or less.” – Humpty Dumpty, the most strident advocate of Living Constitutionalism in Wonderland, and a preferred legal authority for certain Americans looking abroad for standards.

       

      Importantly, Scalia is NOT saying laws should never change – they should! But they must be changed through the democratic process – the regularly elected legislature rather than the unaccountable judiciary. Scalia insists on judicial restraint: “Congress can enact foolish statutes as well as wise ones, and it is not for the courts to decide which is which and rewrite the former.” No, the obligation of the courts is to determine whether the law is followed, not what the law should be. “To be a textualist in good standing, one need not be too dull to perceive the broader social purposes that a statute is designed, or could be designed, to serve; or too hidebound to realize that new times require new laws. One need only hold the belief that judges have no authority to pursue those broader purposes or write those new laws.” Scalia goes further in his observation that if he could change one thing about the Constitution, he would make it easier to change – so that people could litigate their ideas in elections rather than before the courts. Still, this is a relatively recent phenomenon: Scalia points out that we felt obligated to pass a constitutional amendment to give women the right to vote even though modern courts probably would have just ordered it to happen.

      So you’re sold on original meaning, but why original public meaning? This is most relevant to the Constitution, which derives its authority from the consent freely given by Americans in 1787 when it was submitted to state conventions for ratification. But it also applies to modern statutes: Scalia stridently challenges the attempt to discover meaning by trying to divine what legislators intended to do, as opposed to what they actually wrote into the text and voted upon. To Scalia, this is an impossible task of soothsaying: How can one possibly know the intentions of 535 legislators and a president in crafting legislation? Is a speech – or worse, a private comment – by a single legislator perhaps listened to by no one really the indicator of anyone else’s intent – or even that legislator’s intent? Does a committee report drafted by unelected staff and never read, amended, or voted upon by Senators really reveal their intentions? Scalia maintains that the United States is “a government of laws, not of men. Men may intend what they will; but it is only the laws that they enact which bind us.” Furthermore, Scalia fervently believes in the separation of powers – and that the Constitution grants “all legislative powers” to the Congress as a whole, not to any committee, nor any individual legislator, and certainly not to the judiciary. The search for legislative intent, Scalia reveals, is really a “handy cover for judicial intent.” The more material that judges can draw upon to make a decision, the easier it is for them to justify a decision that comports with their policy preferences rather than a balanced, neutral perspective on what the law really means.

      Ouija

      Figure 3. Amazingly, whenever Living Constitutionalist judges consult the spirits of past legislators about whether what they really meant to say is that judges should just do whatever they think is right, the Ouija board always says “YES.”

       

      Hogwash, replies Lawrence Tribe, a Harvard law professor and co-founder of a liberal counterpart to the Federalist Society. Tribe alleges that it is difficult, if not impossible, to “discover” the meaning of the Constitution or any law and that judges should “replace such pretense with a forthright account” of whatever they find most plausible and best, though he says “in light of the Constitution as a whole and the history of its interpretation” – a minor concession given how far the Constitution’s original meaning has been bent and bruised. But Tribe goes further and says “There is certainly nothing in the text itself that proclaims the Constitution’s text to be the sole or ultimate point of reference.” But what then should America’s 1000+ judges (and in particular, 5+ Supreme Court Justices) review? That, Scalia responds, is the fundamental weakness of Tribe’s position: 

      Perhaps the most glaring defect of Living Constitutionalism… is that there is no agreement, and no chance of agreement, upon what is to be the guiding principle of the evolution. What is it that the judge must consult to determine when, and in what direction, evolution has occurred? Is it the will of the majority, discerned from newspapers, radio talk shows, public opinion polls, and chats at the country club? Is it the philosophy of Hume, or of John Rawls, or of John Stuart Mill, or of Aristotle? As soon as the discussion goes beyond the issue of whether the Constitution is static, the evolutionists divide into as many camps as there are individual views of the good, the true, and the beautiful.

      Tribe concedes that he has no overall perspective because he is “doubtful that any defensible set of ultimate ‘rules’ exists.” If that’s the case, why not trust the democratic process? Scalia explains that’s the point: Living Constitutionalists want to subvert the system. First, they are frustrated with the fact that the Constitution was designed to limit evolution. That’s why we wrote something down, as opposed to allowing the law to just develop on its own as it does in the United Kingdom. And it’s why we created three branches, each with unique responsibilities, inside one of which are two distinctly elected houses of Congress, all designed to achieve ambition clashing against ambition – and limit big jumps in policy. Second, they are frustrated by voters and eager to restrict democracy: courts have taken away power from voters and ordered that God cannot be invoked at public school graduations, that welfare can’t be terminated (or public employees fired) without a hearing, or, perhaps sometime soon, that the right to bear arms will be gutted. But Scalia warns:

      We value the right to bear arms less than did the Founders (who thought the right of self-defense to be absolutely fundamental), and there will be few tears shed if and when the Second Amendment is held to guarantee nothing more than the state National Guard. But this just shows that the Founders were right when they feared that some (in their view misguided) future generation might wish to abandon liberties that they considered essential, and so sought to protect those liberties in a Bill of Rights. We may like the abridgment of property rights and like the elimination of the right to bear arms; but let us not pretend that these are not reductions of rights… As things now stand, the state and federal governments may either apply capital punishment or abolish it, permit suicide or forbid it—all as the changing times and the changing sentiments of society may demand. But when capital punishment is held to violate the Eighth Amendment, and suicide is held to be protected by the Fourteenth Amendment, all flexibility with regard to those matters will be gone.

      Gordon Wood, Pulitzer Prize-winning historian of early America, agrees with Scalia’s indictment of what happens when judges make law – but insists that it’s nothing new. The patriots of 1776 were outraged at “the extraordinary degree of discretion exercised by royal judges” and “sought to severely limit this judicial discretion” in favor of legislatures producing clean and comprehensive codes that would address any situation. Thomas Jefferson demanded an end to “‘the eccentric impulses of whimsical, capricious designing man’ and to make the judge a ‘mere machine.’” But it turns out that legislatures are full of eccentric, impulsive, whimsical, capricious, designing men and they proved incapable of the task, passing a muddle of conflicting laws driven by interests both partisan and corrupt. After fighting a revolution for freedom and to limit laws, James Madison complained “there were more laws enacted in the decade following the Declaration of Independence than had been enacted in the entire previous century of colonial history.” By the time of the Constitution’s framing, “more Americans began looking to the once-feared judiciary as a principal means of restraining these wild and rampaging popular legislatures.”

      Vending Machine

      Figure 4. Lifetime tenure will take on a whole new meaning when we can appoint Justice vending machines pre-programmed with the Constitution. A lot cheaper than conventional human judges, but they do require crisp bills of only those denominations that depict the Founding Fathers.

       

      Wood notes that the judiciary has only historically recently become its own branch of government (having been in either legislative and executive before – including Tennessee’s original Constitution) and that early American judges were often not lawyers at all and “involved in politics and governing to an extent that we today find astonishing” – including simultaneously serving in executive positions like lieutenant governor, Secretary of State, or other diplomatic positions. In the 19th century, courts attempted to withdraw from the “most explosive and partisan political issues” but insisted on retaining power to define rights. Wood concludes that what Scalia indicts is not a modern phenomenon but “one deeply rooted in our history” and may only be “a change in degree, not one in kind.”  And Wood fears that Scalia’s remedy is “scarcely commensurate with the severity of the problem and may be no solution at all” – both because judges can abuse textualism but also because we must either only appoint textualists or convince judges to be textualists.

      Scalia indicates that this is part of the give and take of the separation of powers, and that “there have always been, as there undoubtedly always will be, willful judges who bend the law to their wishes. But acknowledging evil is one thing, and embracing it is something else… There has been a change in kind, I think, not just in degree, when the willful judge no longer has to go about his business in the dark—when it is publicly proclaimed, and taught in the law schools, that judges ought to make the statutes and the Constitution say what they think best.” Indeed, when you go to law school, you don’t actually study the Constitution’s text, the Federalist Papers, dictionaries from 1789 – you read the opinions of judges, lots of opinions, and your professors engage you in Socratic dialogue, asking you how the judge reasoned her way to the result. Part of this is so the law student can see what happens when the Constitution meets a situation – but the bigger part is that opinions become the law by virtue of a doctrine called stare decisis, where the court is supposed to defer to what it has said in the past unless it can distinguish the current case. Scalia approvingly quotes the 19th century codifier Robert Rantoul: “The judge makes law, by extorting from precedents something which they do not contain. He extends his precedents, which were themselves the extension of others, till, by this accommodating principle, a whole system of law is built up without the authority or interference of the legislator” or, as Scalia points out, the people. But when is it okay to get rid of stare decisis in favor of the Constitution’s original meaning?

      American Gothic

      Figure 5. Thanks to judicial discretion, stare decisis, and what one Living Constitution advocate called the “non-textual amendments” to the Constitution, we get to build our case law upon Wickard v. Filburn, where the Supreme Court determined that the Constitution granting power to “regulate Commerce…among the several States” meant that Congress could fine a small farmer thousands of dollars for growing more wheat than the federal government mandated – even when he only consumed it himself, within a single state.

       

      Mary Ann Glendon, conservative Harvard law professor and expert in continental European law where stare decisis doesn’t really exist, worries that without stare decisis, the court will be “lurching along in irrational and unpredictable fashion, like the monster in the old version of Frankenstein.” She echoes the concerns of the early Americans: if legislation is not “comprehensive, coherent, self-contained,” then you cannot expect judges to be constrained by it. Glendon doesn’t agree with particular decisions and warns that “as judicial lawmaking expands, the democratic elements in our republican experiment atrophy. American men and women not only are deprived of having a say on how we order our lives together, but we lose the skills of self-government.” But if the Justices don’t defer to previous decisions, Glendon fears, the court loses credibility and deteriorates to a legislature of majority votes. 

      Here Scalia essentially retreats into his famous self-identification as a “faint-hearted originalist” and unfortunately empowers lesser originalists of even fainter heart, if they be originalists at all. But before we get to Scalia’s perspective, we might channel his colleague Clarence Thomas, who would ask: if we’re looking for predictability, why isn’t the rule that everyone just stick to the original meaning of the Constitution? If you choose to be extremely faithful to precedent, then you are obligated to respect every time the other side, in a majority vote, betrays the original meaning (and, incidentally, often stare decisis itself). What is this extreme fidelity but a slow bleed to pirates who don’t respect the system at all but are happy to take advantage of you?

      Car

      Figure 6. Imagine a family of three – mom, dad, and son –  that has a tradition of making a spring road trip from Nashville, Tennessee to Hilton Head, South Carolina – a family beach destination. Dad takes the wheel for the first leg and drives southeast from Nashville to Atlanta, Georgia before handing it off to his son. The son, however, really wants to check out the casinos in Biloxi, Mississippi, so he unilaterally drives west to Montgomery, Alabama. Now mom takes the wheel. Does she honor the direction of the car and proceed to Biloxi? Does she try to slightly correct and split the difference, perhaps winding up in Panama City Beach, the “spring break capital of the world”? Or does she turn the car around and head to the original destination of Hilton Head?

       

      Tribe reports that,

      “During his confirmation hearings, Justice Scalia revealed that his decision whether to overrule precedent he viewed as wrong would be based in part on how woven the ‘mistake’ was into the fabric of the law. A key factor in making this determination would be how long the precedent has existed. For example, he noted that almost no revelation could induce him to overrule Marbury v. Madison, but he would be more willing to overrule a less established case, such as Roe v. Wade” 

      This is a pretty sensible attempt by Scalia to reconcile his philosophy with the operation of the court – but Tribe understandably attacks him for an ambiguous set of rules for when to overturn precedent, totally untied to anything actually present in the text of the Constitution which is supposed to be Scalia’s lodestar. Scalia accepts the critique, saying, regarding the First Amendment for example, “the Court has developed long-standing and well-accepted principles (not out of accord with the general practices of our people, whether or not they were constitutionally required as an original matter) that are effectively irreversible” and admits that choosing when to respect stare decisis leaves plenty of opportunity for judicial discretion. Scalia says following originalism totally would be “so disruptive of the established state of things that it will be useful only as an academic exercise and not as a workable prescription for judicial governance.” Ultimately, Scalia admits “stare decisis is not part of [his] originalist philosophy; it is a pragmatic exception to it.” To which Yale law professor Akhil Amar responds, “If pragmatism ultimately determines when we do originalism, this is in the end pragmatism not originalism.”

      Scalia’s final challenger is Ronald Dworkin, the second-most cited American legal scholar of the 20th century. Dworkin accepts Scalia’s plea that we look to the text of the Constitution – but suggests that the Founders gave us abstract principles to aspire to that were specifically intended to be redefined with each new generation as opposed to be frozen at the time of enactment. It is through this reading that the historian Wood fears the abuse of originalism or that Obama’s Supreme Court nominee Elena Kagan could claim “We are all originalists now.” When the Founders’ forbade “cruel and unusual punishment,” Dworkin asks, did they not mean for the definition to shift? When the post-Civil War Congress insisted that citizens’ “privileges or immunities” could not be abridged, Dworkin queries, were those supposed only to be as then-imagined? Tribe piles on: why would the Founders only codify those limited liberties enjoyed by the British, where it was a crime to imagine the King’s death? Dworkin notes that the limits of the First Amendment were vigorously debated by the Founding Fathers shortly after its passage – so how can we know what it protected then? Tribe goes further: is there not a subtext – a penumbra, if you will – in the Constitution that says “the right not to have the government put its regiments in one’s home might make little sense without some presupposed right not to have the government regiment every detail of what one does in one’s home.”

      Sunshine

      Figure 7. It will be easier to enforce the Court’s finding that the 8 hour workday is cruel and unusual than its determination that sunshine is a protected Constitutional privilege and cancer immunity must be enjoyed by all Americans. 

       

      Scalia powerfully responds that abstraction is not aspiration:

      “To guarantee that the freedom of speech will be no less than it is today is to guarantee something permanent; to guarantee that it will be no less than the aspirations of the future is to guarantee nothing in particular at all…. It makes a lot of sense to guarantee to a society that ‘the freedom of speech you now enjoy (whatever that consists of) will never be diminished by the federal government’; it makes very little sense to guarantee that ‘the federal government will respect the moral principle of freedom of speech, which may entitle you to more, or less, freedom of speech than you now legally enjoy.’

      Scalia returns to his core principles: where do you stop the madness? What other hidden, unstated rights exist in the Constitution heretofore undiscovered but now convenient? If you can’t rely on the original public meaning of what these things meant, then where do you draw the line? More importantly: how do you draw the line? And why is it that certain areas of the Constitution get this expansive treatment – cruel and unusual can mean only cruel, but not unusual, in the guesstimation of a judge that only ever evolves in one direction  – but others, like the right to bear arms is “limited to musketry in the National Guard.”

      Magnfying Glass

      Figure 8. Not very well known, but if you put on night vision goggles and take a magnifying glass and look closely between the Third and Fourth Amendments of the original document the Constitution is written on, you find nothing.

       

      If the Constitution is aspirational, “Judges are not… naturally appropriate expositors of the aspirations of a particular age; that task can be better done by legislature or by plebiscite.” Dworkin et al simply want a philosophy of “if it is good, it is so. Never mind the text that we are supposedly construing; we will smuggle these new rights in, if all else fails, under the Due Process Clause (which…  is textually incapable of containing them” because “it guarantees only process. Property can be taken by the state; liberty can be taken; even life can be taken; but not without the process that our traditions require — notably, a validly enacted law and a fair trial.”) Scalia concludes: “There is no such philosophizing in our Constitution, which, unlike the Declaration of Independence and the Declaration of the Rights of Man, is a practical and pragmatic charter of government.”

      Ultimately, this is a terrific book, with each challenge elucidating more of Scalia’s view. But the one challenge that is missing, already implied, is from a dedicated textualist unconcerned with stare decisis. When Scalia was challenged about his inconsistencies or asked about this alternative view, he would reply that he was “an originalist, not a nut.” But even if his explanations seem reasonable, did he go far enough in living out his philosophy? Scalia says that “A text should not be construed strictly, and it should not be construed leniently; it should be construed reasonably, to contain all that it fairly means” – but is that enough practical guidance for judges to come to the same conclusion? We may like how he winds up on certain issues (though he often said he ruled against his own policy interests when the Constitution required), but when he says –  “In this constitutional context, speech and press, the two most common forms of communication, stand as a sort of synecdoche for the whole. That is not strict construction, but it is reasonable construction” – does “synecdoche” seem a little too close to “penumbra” to to you? While Scalia lambasts anyone who brings in legislative intent, Scalia disciple Steven Calabresi says, 

      “In constitutional cases, Justice Scalia gave weight to “original expected applications,” which he never did in deciding statutory cases. The reason for this difference is that the people’s representatives can always repeal or amend a misinterpreted statute, but they cannot do so with an erroneous opinion on a question of constitutional law. As a result, and believing that the Constitution gave all three branches coequal power to enforce the Constitution, Justice Scalia generally decided constitutional cases in a way that presumed the political branches had acted constitutionally.”

      Astronaut

      Figure 9. The Constitution has a series of age requirements – Congressmen must be 25, Senators 30, Presidents 35. But when we colonize Mars, which has a 687 Earth-day year, will Americans of that distant colony be required to be 50% older?

      Regardless of how true Scalia was to originalism, he deserves immense credit for bringing it to the forefront- and allowing judges to credibly pursue his ideas further than he did. Scalia is the giant of conservative judicial philosophy – and one of the most significant conservatives of any field in modern American history.

      A matter of interpretation

      Figure 10. Click here to buy A Matter of Interpretation (8/10), an excellent introduction to Scalia’s philosophy and its critics. You can also get a good dosage of originalist interpretation itself, such as this look at the Second Amendment:

      [The alternative] reading of the text has several flaws: It assumes that “Militia” refers to “a select group of citizen-soldiers,” … rather than, as the Virginia Bill of Rights of June 1776 defined it, “the body of the people, trained to arms,” … (This was also the conception of “militia” entertained by James Madison, who, in arguing that it would provide a ready defense of liberty against the standing army that the proposed Constitution allowed, described the militia as “amounting to near half a million of citizens with arms in their hands.” The Federalist No. 46… The latter meaning makes the prologue of the Second Amendment commensurate with the categorical guarantee that follows (“the right of the people to keep and bear Arms, shall not be infringed”); the former produces a guarantee that goes far beyond its stated purpose—rather like saying “police officers being necessary to law and order, the right of the people to carry handguns shall not be infringed.” It would also be strange to find in the midst of a catalog of the rights of individuals a provision securing to the states the right to maintain a designated “Militia.”

      Thanks for reading! If you’ve enjoyed this article, share it with a friend: know any law students or lawyers who should would be interested in this dominant Supreme Court Justice? How about any Americans concerned about keeping their Republic? Or do you know any Supreme Court Justices who should be more textualist?

      Also, feel free to sign up with the box below to receive my email. I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you aboard.

      Santa

      Figure 11. One final comment on the meaning of words. You’re of course familiar with Santa’s search for who is naughty or nice. Well, the original meaning of “naughty” was “needy,” which, when you think about it, unfortunately better reflects Santa’s gift-giving practices.

        Speak For Yourself

        The Gist:  The best advice from a half dozen books on public speaking

        A review of The Quick and Easy Way to Effective Speaking by Dale Carnegie, among others.

        Dale Carnegie discovered the secret to powerful public speaking quite accidentally.

        Carnegie had given up a successful sales job in the Midwest to go to New York and pursue dreams of becoming a performer. But his acting career went nowhere and soon his savings were gone. To tide himself over, Carnegie suggested to the local YMCA that he teach a class on public speaking. Nervous students began showing up and Carnegie was mildly successful in teaching them the ancient art of rhetoric.

        Then one day Carnegie ran out of prepared materials and suggested that students just get up in front of the room and talk about something that made them angry. Suddenly, his students lost their nerves and came alive with passion! 

        Hulk

        Figure 1. “Hulk is strongest public speaker there is! Hulk smash competition!”

         

        Carnegie would go on to found a national chain of public speaking schools and write, in a best-selling book we review here, that passion is the “open sesame to Ali Baba’s treasure cave of courage.” It empowers speakers to use material they already have and care about. And most magical, passion is contagious, giving speakers their best chance at connecting with an audience (even when they’re wrong!)

        Pursuing your passion is the foundation of the best practices of great oratory we’ll explore today. One of the original public speaking coaches, Plato, went so far as to warn that “a wise man speaks because he has something to say, a fool speaks because he has to say something.”

        Breaking

        Figure 2. Note how Plato would classify filling 24 hours a day of cable news.

         

        What do you have to say? Ask yourself what topic “you have lived with [and] made your own through experience and reflection.” Consider “if someone stood up and directly opposed your point of view, would you be impelled to speak with conviction and earnestness in defense of your position? If you would, you have the right subject for you.” In what do you believe with all your heart? What would be the last things, people, practices, ideas, identities, affiliations you’d ever give up? What do you crave to learn more about? On what do you spend your most time, money, attention? What makes your blood boil? What makes your heart sing? Why? The answers to those questions are the best sources for material – and the best chances for resonating with your audience – that you’ll ever have.

        Carnegie argues that the biggest mistake in public speaking is choosing a highfalutin topic, something where you “soar into the realms of general ideas and philosophical principles, where unfortunately the air is too rarefied for ordinary mortals to breathe.” His experience was that “plain, ordinary men and women” better held “the attention of viewers all over the country” when “they were talking about themselves, about their most embarrassing moments, their most pleasant memory, or how they met their wives or husbands.” If you are talking about something grand or complicated, endeavor with all your might to explain how and why it is your passion and relate it to your and your audience’s experiences.

        You’re surely starting to see that to most effectively share your passion, you need to prepare. How well your talk goes will depend on your preparation – luckily, you’re already passionate about the subject. Preparation can feel silly, time-consuming, hard. That’s why most people don’t do it. You need to remember that preparation is not for you. It’s for your audience.

        Icarus

        Figure 3. Icarus presents a cautionary tale of “winging it”

         

        Scott Berkun suggests getting perspective by multiplying the number of minutes you are talking by every pair of ears that will hear you. Respect the collective time that is being spent on you! There are various rules of thumb: comedians can spend over an hour preparing for every minute they speak. Others suggest a 10:1 or 20:1 ratio of time preparing to time speaking. Whatever it is, it’s a lot. My favorite observation about one of the great orators of all time, Winston Churchill, was his son’s remark that Winston spent most of his life preparing to give unprepared remarks. Carnegie reports that “Daniel Webster said he would as soon think of appearing before an audience half–clothed as half-prepared.”

        What does it mean to prepare? Your general aspiration should be to achieve clarity through preparation. Berkun contends that “the difference between you and JFK or Martin Luther King has less to do with your ability to speak — a skill all of us use hundreds of times every day — than it does the ability to think and refine rough ideas into clear ones. Making a point, teaching a lesson, or conveying a feeling to others first requires thinking, lots and lots of thinking, before the speaking ever happens.” Carnegie insists: “True preparation means brooding over your topics” and asking yourself “Why do I believe this? When did I ever see this point exemplified in real life? What precisely am I trying to prove?.. Try your best to develop an ability to let others look into your head and heart.” For maximum quality, limit your subject: “Assemble a hundred thoughts around your theme, then discard ninety.” Ultimately, can you summarize your passion in a sentence? Could a child understand and repeat back your points?

        Crucially, preparation is not memorization. As Carnegie reveals, “If our ideas are clear, the words come as naturally and unconsciously as the air we breathe… Because it will not come from our memories, but from our hearts.” Throw away your memorized (or written) talk to become “more alive, more effective, more human.” As Cato the Elder advises: “Grasp the subject, the words will follow”

        Prepare by testing out your ideas in conversation with anyone to whom you talk – what is their reaction? Stand up and give the talk to an empty room and see how it feels. Record yourself giving the talk and review – what went right? What could be more clear? But doing this alone is not sufficient: you need feedback. Recruit some friends to give your talk to and ask them – what did they remember? What didn’t they understand? Berkun adds “What one change would have most improved my presentation? What questions did you expect me to answer that went unanswered? What annoyances did I let get in the way of giving you what you needed?” And the best practice of all? Give your talk again and again and again on different stages to live audiences.

        But we’re getting ahead of ourselves. You need to structure your speech for feels. As Carl Buechner profoundly observed, “They may forget what you said, but they will never forget how you made them feel.” That other original speaking coach, Aristotle, theorized that rhetoric rested on three pillars: ethos (credibility), logos (logic), and pathos (emotion). The most persuasive speech usually has all three elements but the majority comes from the last: emotion. My own motto, not always followed, is to buy data and sell story. If you’re making a decision, get logical. If you’re persuading someone, get emotional.

        To structure for feels, understand the purpose of your talk: is it to “persuade and get action”? To inform? To “impress and convince”? To entertain? Align your speech’s emotional pitch with the purpose. Make sure your talk makes sense for your audience (or your audience makes sense for your talk). Get to know the venue and how it feels. Arrange an appropriate introduction. And then…

        Grab your audience’s attention immediately! There is no time that the audience will be paying more attention than at the start. How you begin determines how fast people return to checking their text messages. For that same reason, thanking your introducer, apologizing for something, or any preamble takes up too many precious seconds. Get right into it with one of Carnegie’s three suggestions:

        dynamite

        Figure 4. So, for example, you could run on stage. Naked. Holding a lit stick of dynamite. Screaming “I have ebola!” 

         

        First, you could start with a story. The huge advantage of this beginning is that it “hooks attention… it moves, it marches. We follow because we identify ourselves as part of a situation and we want to know what is going to happen…There is no groping for words, no loss of ideas.” Carnegie says he knows of “no more compelling method of opening a talk than by the use of a story.” After all, “one of the most interesting things in the world is sublimated, glorified gossip.” The best stories involve you (usually deficient or in the wrong, but generally empathetic and relatable) in dialogue with other named people (“adds more realism”) in some sort of situation-complication-resolution. The story must be vivid: you have “the obligation to clarify, intensify, and dramatize your experiences in a way that will make them interesting and compelling to your listeners… Your purpose is to make your audience see what you saw, hear what you heard, feel what you felt. Relevant detail, couched in concrete, colorful language.” Jeremey Donovan sensibly adds to “make sure your story is directly relevant to your core message.”

        politician

        Figure 5. “So the first time I went to prison, I got into this argument with Warden Norton…”

         

        Second, you could “state an arresting factor opinion to jar the mind. Donovan says “Though shocking statements most frequently rely on statistics, they can also express strong opinions that challenge conventional wisdom. The important thing is that your point must trigger a range of audience emotions.” If you do go with a statistic, make sure it comes alive. Carnegie tells the story of an extraordinarily effective speaker: 

        “Then, like a whirlwind, he struck. He leaned forward and his eyes transfixed us. He didn’t raise his voice, but it seemed to me that it crashed like a gong. “Look around you,” he said. “Look at one another. Do you know how many of you sitting now in this room are going to die of cancer? One in four of all of you who are over forty-five. One in four!” He paused, and his face lightened. “That’s a plain, harsh fact, but it needn’t be for long,” he said. “Something can be done about it. This something is progress in the treatment of cancer and in the search for its cause.” He looked at us gravely, his gaze moving around the table. “Do you want to help toward this progress?”

        Champagne

        Figure 6. “50% of marriages end in divorce. As we raise our glasses to Don and Betty on this special day…”

         

        But Carnegie warns not to overdo it. He believes that all speeches should be conversational and so, if you are jarring the mind, make sure you do it in a way that you’d feel comfortable doing similarly at a dinner table. Relatedly, Carnegie is very wary of disagreeing with an audience so early, especially if you are trying to persuade them. He quotes Lincoln who reflected that “My way of opening and winning an argument is to first find a common ground of agreement.” Carnegie analyzes,

        Most men, however, lack this subtle ability to enter the citadel of a man’s beliefs arm in arm with the owner. They erroneously imagine that in order to take the citadel, they must storm it, batter it down by a frontal attack. What happens? The moment hostilities commence, the drawbridge is lifted, the great gates are slammed and bolted, the mailed archers draw their long bows—the battle of words and wounds is on.

        commencment

        Figure 7. “Most of you probably should not have gone to college. Let me tell you why…”

         

        Third, you could “arouse suspense.” An example might be opening a book review with the promise of discovering the secret to powerful public speaking. Berkun says, “The simplest kind of tension to build and then release is … problem and solution. If your talk consists of several problems important to the audience, and you promise to release the tension created by those problems by solving each one, you’ll score big.” Donovan says this can also be achieved by asking a question of the audience using the “magical word” of “you,” “putting your listeners in introspective mode.”

        casket

        Figure 8. “Was Steve murdered? As we remember him today, you should reflect on who might have done it and I’ll conclude with my theory”

         

        And then you’re off! Carnegie demands that you “tell the audience what you’re going to say; then tell them what you’ve said.” Repeat your passionate thesis – ideally a short, actionable catchphrase – over and over again until they’re so tired of it that they can actually remember it. Illustrate it vividly with analogies, demonstrations, gestures, emphasis, volume, pauses, common language without jargon, and multisensory allusions that have emerged from your preparation achieving clarity. Consider what Lincoln considered ideal: “I don’t like to hear a cut-and-dried sermon. When I hear a man preach, I like to see him act as if he were fighting bees.” Guide your audience with signposts as to where you are in the logic of your presentation, especially if your speech is long. And avoid quotes and jokes – use funny stories instead.

        Throughout your speech, always empathize with your audience. Be grateful for their time and attention. They want you to succeed! Identify with them and advise how you can help “solve their problems and achieve their goals.” Talk with them as friends.  Fast Company reports this was the secret of the Great Communicator:

        When Ronald Reagan wrote about public speaking, he shared “a little secret that dates back over 50 years to my first stint at a microphone.” On his first day as a radio broadcaster, Reagan was nervous. He wondered how he would “connect with all these people listening to the radio.” The secret? Instead of talking to a “group of unknown listeners,” he imagined he was speaking to the “fellows in the local barbershop.” Reagan wanted to replicate that banter—where everyone would swap jokes, talk sports, and tell stories.

        Another thing Reagan and many of the great speakers would do is have specific sections of their talk that could be adapted to any audience. If your talk relies on statistics, find some that are focused on the community to which you’re speaking. If your concept is unfamiliar, analogize to something they know well. Best of all, tell some stories about people they know or at least recognize. Carnegie tells a story about how one of the great titans of British journalism was asked what interests people. The answer? “Themselves.”

        Whatever time you’re assigned, use less. As Ira Hayes quipped, “No one ever complains about a speech being too short!”

        Once you’ve wrapped up your points (three is usually a sound number), you have a few options for your conclusion. You can (finally) thank the organizers and the audience. You can follow the example of comedians, who try to use their second best joke as their opener and their best as their close: what is the single best analogy, demonstration, story that illustrates your point?

        Carnegie himself preferred to end by appealing for a specific action related to the talk, ideally one that could be done immediately. So, not “Please help this organization,” but “Pull out your phone right now, text this number, and give at least $25.” Not “Write your Congressman,” but “Sign the letter on your table right now and I will personally deliver it.” Not “Love your family,” but “Take your kids out for ice cream tonight and tell them that you love them!” Donovan also suggests “Many of the most satisfying talks recommend that listeners take tiny actions that can lead to large personal and societal benefits.”

        Of course, if you’re following this review, so far you’ve not actually given the talk. Just prepared it. But that’s 90%! If you are pursuing your passion and you’ve achieved clarity through preparation, you’ve earned the right to speak.

        As you head toward the stage, you just need to remember: You’re not nervous. You’re excited.

        Carnegie says everyone’s scared, even the greats like James K. Polk, whose nickname was “Napoleon of the Stump.” Mark Twain said there were two types of speakers in the world: the nervous and the liars. Bergun tells us why: “Our brains, for all their wonders, identify the following four things as being very bad for survival: [1] Standing alone [2] In open territory with no place to hide [3] Without a weapon [4] In front of a large crowd of creatures staring at you.”

        Teddy Roosevelt

        Figure 9. Hence Teddy Roosevelt’s admonition, “Speak softly and carry a big stick”

         

        But it’s to your advantage! Carnegie says that this is your body “getting ready to go into action.” Bergun cites Dr. John Medina’s Brain Rules to note that “it is very difficult for the body to distinguish between states of arousal and states of anxiety.” A Harvard Business School study took advantage of this and found that speakers who told themselves they were excited, not nervous, performed better than control groups left to their nerves. But you can also maximize your readiness by getting enough sleep, eating right, knowing exactly where you need to be and when, and exercising sometime before to get rid of nervous energy.

        So, get pumped! You’re going to share your passion! “Draw yourself up to your full height and look your audience straight in the eyes,” Carnegie advises. And then just start. It’s a lot easier once you get going. “Adopt the tone of a passionate one-on-one conversationalist… speak in your own voice with authenticity, interest, and humility,” suggests Donovan. In other words, talk like a human being. It doesn’t need to be – perhaps shouldn’t be – perfect. You’re aiming to persuade, not become a robot. Let your personality shine! Power through. And next time you’ll be even better.

        Effective Speaking

        Figure 10. I speak publicly with some regularity and I wanted to know best practices. So I asked and Googled around and came up with a list of books that were most frequently, most strongly recommended. Dale Carnegie is more famous for his advice on how to win friends and influence people but his quick and easy way to effective speaking is the best book I’ve read on the subject. 9/10

        How to deliver a ted talk

        Figure 11. When you look into the best practices of public speaking, TED frequently comes up. Jeremey Donovan is an obsessive analyst who got interested in public speaking when he joined Toastmasters and subsequently watched practically every TED video three times, making notes on common features. His book on how to deliver a TED talk has lots of insightful observations from an extremely popular format. 8/10. (Incidentally, I also read another book on TED but it is not a fraction as good – or as focused. Too often it dwells on the substance of the talks rather than the way they’re given. So, for example, one piece of advice it offers is that you can choose to be happy – which is all very well and good, but has little to do with speaking well.)

        Confessions of a public speaker

        Figure 12. For a relatively amusing take from a professional public speaker, check out Scott Berkun’s confessions (7/10). Or, if humor is your thing, you could check out an amateur’s attempt at stand-up comedy (6/10) – he passes along some interesting lessons. But Berkun has perhaps the most fitting passage to end this email on:

        No matter how much you hate or love this book, you’re unlikely to be a good public speaker. The marketing for this book likely promised you’d be a better speaker for reading it. I think that’s true on one condition: you practice (which I know most of you won’t do). Most people are lazy. I’m lazy. I expect you’re lazy, too. There will always be a shortage of good public speakers in the world, no matter how many great books there are on the subject. It’s a performance skill, and performance means practice — and that’s one of the reasons I wasn’t afraid to write this book.

        Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below. I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

          When Are We Ever Going to Use This?

          The Gist: Conventional school teaches disturbingly little worthwhile.

          A review of Bryan Caplan’s the Case Against Education.

          When was the last time you used geometry? 

          Was it important for you to have spent a year studying the subject? Was it vital that the rest of us were forced to study it for a year?

          Most likely the first time people use geometry after leaving school is incompetently helping with their kids’ homework, perpetuating the cycle of uselessness.

          Geometry

          Figure 1. Solve for x. Was that worth a year of your life?

           

          Economist Bryan Caplan makes the Case Against Education in a provocative book that takes on the question of the class clown: What does any of this have to do with life? And why are we making everyone spend 12+ years studying it?

          I hope my obituary includes the following sentence: “He helped end the teaching of French in Tennessee public schools.” French is a language spoken by less than 2% of Earth’s population, a large portion of whom also speak English, and practically none of whom the average American student is likely to encounter. If he does, his high school education is unlikely to be as useful as Google Translate. It’s not difficult to guess that just about the only job in America that requires learning French is teaching French, again perpetuating the cycle of uselessness.

          Mime

          Figure 2. While the class did turn him onto berets, Claude was shocked that learning French did not help him in his career as a mime artist.

          People are welcome to spend their own time and resources learning whatever they desire — but why do we spend a single tax dollar teaching French? More importantly, why do we waste an average of two years of classroom time teaching French when our kids can barely write in English, much less master math?

          But hey, French is easy to denigrate. What about Spanish? Set aside for a moment whether the usefulness of Spanish represents American failure to integrate immigrants. If we assume its utility, we still have to reckon with the statistics of success: less than 3% of students report learning a foreign language “well.” You might as well go to the Five Minute University: “in five minutes you learn what the average college graduate remembers five years after he or she is out of school.”

          Taco Bell

          Figure 3. Frequent customers of Taco Bell know as much Spanish as the average person taught for years.

           

          Disturbingly, even the “useful” subjects are often useless. All those mandatory hours on science? Less than 5% of Americans will use them in their career. There are certainly advantages to math, but we toil through calculus without learning to balance a checkbook. We study great works of literature (when they’re not eliminated by the PC police) without learning how to write a business report.

          Frankenstein

          Figure 4. Dr. Frankenstein credited his success to misunderstanding high school biology.

           

          But isn’t education about the soul? About becoming a good citizen? If true, no one cares: two thirds of high school students report being bored in class EVERY DAY. There is scant evidence that Shakespeare systematically makes better humans – but even if he did, he’s bound to soon be excluded from the curriculum as representing the cisheteropatriarchy. Whatever your values, can you trust the state to teach them?

          Yet it does not stop in high school. College is a vacation from responsibility. No parents, no boss. Caplan reports: “Fifty years ago, college was a full-time job. The typical student spent 40 hours a week in class or studying. Since the early 1960s, effort collapsed across the board. ‘Full-time’ college students average 27 hours of academic work per week.” College is a product that people pay a huge amount only to consume as little as possible. Instead of the quality of education, the biggest draw for a particular college is the quality of its amenities: how nice are the dorms?

          Gym Membership

          Figure 5. College is like a really expensive gym where you still don’t actually work out but you get all the benefits because you can brag about your membership.

           

          Even the classes that kids do attend are often in useless subjects — and not just absurdities like puppetry. Psychology is the most popular major in Tennessee colleges. Across the country, 94,000 students graduate with that major – but there are only 174,000 psychologists in the entire United States. History has 34,000 graduates a year – but there are only 3,500 historians. STEM majors are hard and can involve a practical education yet three quarters of STEM majors wind up in jobs that don’t use their specialized training.

          Shrink

          Figure 6. “Tell us first about your childhood” “No, no, tell us about your dreams” “Forget that bunk, tell us about your sexual inadequacies.”

           

          College is a game where students ask “Who is the easiest teacher?” not “Who is the best teacher?”; “What do I need to graduate?” not “What can I learn?”; “Will this be on the test?” not “Will this help me on the job?” And they’ve been rewarded over time with grade inflation, where B is now average (A- at Harvard). Despite that, most fail to finish: “About 25% of high school students fail to finish in four years. About 60% of full-time college students fail to finish in four years.” Publicly available debt finances the whole questionable enterprise, all the more a burden for those who don’t finish.

          And what do college graduates do? They’re more likely to be cashiers or waiters than mechanical engineers. More likely to work as security guards or janitors than computer systems administrators. More likely to be cooks or bartenders than librarians.

          Waiter

          Figure 7. “Yes, madame, here at Pierre’s we pride ourselves on hiring only the college-educated. Where else would we learn to pronounce ‘quinoa’?”

           

          So why do people go? Social expectation… that leads to individual payoff. Because going to college does pay off for lots of graduates. Interestingly, Caplan reveals that one of the biggest payoffs to going to college is finding a high-earning spouse. But even the college-educated waiter commands a bigger salary than the waiter without. This can be taken too far, of course: Bill Gates would not likely have earned 73% more if he had not dropped out of Harvard – and because the most ambitious do go to college, you don’t know if it’s the person or the college that is producing the result. 

          Caplan explains by compellingly arguing that our formal education system doesn’t actually teach all that much – but it signals to employers three key qualities: intelligence, conscientiousness (i.e. the ability to complete tasks), and conformity. Importantly, education does not TEACH those qualities, it reveals them. By completing college, you show an employer you can handle and complete tasks that society expects of you, even if they’re irrelevant to your specific job. Seems like the Army would be just as good a signal – and much cheaper – if society would get aboard. Strikingly Caplan asks: “Does education have any effect on genuine intelligence? Despite decades of research, we really don’t know.” 

          One of the most compelling statistics Caplan offers for signaling over actual teaching is the earning power of dropouts. If actual teaching was the key reason college graduates earned more, then we’d expect that someone who completed 99% of college but failed to earn a degree would earn practically the same. Instead, the differences are stark. Get a diploma and you will earn more than the expected bump in income from completing freshman, sophomore, and junior years combined. And, if you recall senioritis, that is not because senior year involves some massive education gain. If you had to choose between receiving a diploma without having attended a minute of class or attending four years of class while missing a diploma, the choice is obvious. And many of us came much closer to the first in real life.

          So what’s the implication? Caplan suggests that “subsidizing everyone’s schooling to improve our jobs is like urging everyone to stand up at a concert to improve our views. Both are ‘smart for one, dumb for all.’” His controversial preference is for a separation of school and state – for markets to effectively decide the proper role for education. Though it takes some math you might have forgotten from school, Caplan argues that more and more people going to college actually impoverishes society at large (do we really need to subsidize college-educated waiters?). 

          More modestly, Caplan suggests that the curricula at state schools from kindergarten through graduate school needs to be reorganized to get an actual return and government loans should not be available for a host of majors. In high schools, Caplan says we need a lot more vocational training: “Most education experts remain leery of vocational ed. Chief objection: it’s shortsighted. The vocational track teaches students specific skills they need for their first job. The academic track teaches students general skills they need for every job. The wise approach is to set everyone on the academic track. Let kids max out their general skills before targeting any particular vocation. This objection is confused. While literacy and numeracy are genuinely general skills, most academic classes amount to vocational training for ultrarare vocations. Think about classic college prep in literature, history, social science, and foreign language.” The vast majority of students will not wind up authors, historians, academics, linguists — or even mathematicians or scientists.

          But what about that which is actually within your control: the education of yourself or your kids? Caplan actually has an extensive section about what your expected payoff might be as an individual based on your early school performance – if you are a good student, college is going to be a very good financial bet, especially if you study STEM, even if you don’t use any of it. But if you are a struggling student, college is far more questionable. 

          Caplan himself went to Berkeley and got a PhD at Princeton. I took five years of Latin, studied history at Stanford, and went onto Vanderbilt law school — all to develop real estate and write book reviews. I think his self-label is correct: he reports as a whistleblower — someone who has thrived in the education system but is prepared to tell all its flaws. He does not succumb to the bias to just say nice things like “all education is good all the time.” But even if you do go through the faulty American way, don’t forget the immortal words of Mark Twain: never let schooling get in the way of your education.

          Case Against Education

          Figure 8. Click here to buy the Case against Education. 8/10. Very provocative arguments but gets bogged down by math in the middle. Feel free to skip ahead. 

          Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend: Know anyone with kids in school? How about anyone who cares about education?

          I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!