Private Enterprisers and the Dallas Fed

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The criticisms of APEE mentioned below concern that organization solely as it functioned in 1996-1998, ther period of my experience with them. They are entirely irrelevant to the organization as it is now constituted.

Several years ago I attended a meeting of the Association of Private Enterprise Educators (APEE).  This group was initially started by a group of holders of free enterprise chairs at various universities (I suppose I now qualify under that rubric) but membership had been long before open to all those academics and other scholars who favor, and work for the promotion of, free enterprise and economic freedom. (This is my own description of that group, but I doubt that any member of it would object.)

Much to my surprise, and even dismay, the high point of the program, the plenary after dinner speech, was given by a member of the Dallas Fed, who described his organization as the “free-enterprise” Fed.  I also learned that this organization was one of the major financial supporters of APEE, or at least of that particular meeting.

This gave me pause for thought, to say the least.  At the conclusion of His speech, skunk at the garden party style, during the question and answer period, I got up on my hind legs and declaimed that this was more than passing curious.  How is it possible to reconcile participation of the Fed, any Fed, in a group ostensibly devoted to laissez faire capitalism?  Would not the money supply in an economically free country consist of something chosen by market participants, for example, gold, rather than of fiat currency imposed, from above, by government of all institutions, of which the Fed was part?

I also appended to my remarks a gratuitous, or, perhaps, not so gratuitous attack on Alan Greenspan, for having known these truths during his Randian days, for still claiming free enterprise credentials, and yet continuing to preside over the Fed.  In response the speaker said that Greenspan could defend himself — a reasonable enough proposition, I suppose — followed by a litany of all the great free enterprise things done by the Dallas Fed — which I thought beside the point.

My queries were met by stunned silence from the crowd.  There were no publicly made follow up supportive questions or comments from the audience. Only one person approached me afterward, with support for my position.

In the intervening years, I have had time to reflect upon this curious situation, and hence a few thoughts.

1. The “free enterprise” of APEE as constituted in the nineties did not extend so far as to include money, macro economics, business cycles, etc.  APEE espoused a rather narrow conception of economic liberty.  Were there many members of the group who included such issues in their vision of the free marketplace, they would likely either cut off affiliations with the Fed or at the very least have speakers advocating free enterprise in this realm.  It would be unlikely in the extreme that they would highlight a Fed speaker in this manner, with no opposition on the program. 

This would never occur at a Mises conference; the Austrian Scholars Conference might well include a Fed supporter, but this would likely be part of a debate; it would not receive an official imprimatur.

2. Is it even compatible with libertarianism for APEE to accept funds from a tainted statist agency such as the Fed?  Although this will be controversial within libertarian circles, I maintain that it is.

Let us consider this under two rubrics: deontology, or strict libertarian theory on the one hand, and what might be called libertarian utilitarianism (will an act promote liberty) on the other.

Under the later category, better that these monies go to APEE which is a pretty good organization all things considered (apart from this one lacuna), than to conduct ordinary Fed business, that is, to further debauch the currency.  On the other hand, publicly accepting money from this source sends out a mixed message to the citizenry.  It implies that there is nothing incompatible between laissez faire capitalism and government involvement in the money supply.

What about pure libertarian principle?  Is it illegitimate to ever accept, or even to seize government property, money or wealth?  Yes, certainly, it is.  Ragnar Danneskjold, a fictional character in Ayn Rand’s Atlas Shrugged, did precisely this.  Of course, this was only the first in a two-part act; the second of which was to return the, not stolen but rather liberated money, to its rightful owner, in this case Hank Reardon, representing for present purposes victimized tax payers.

What about acquiring government property and not returning it to its rightful owner, either keeping it or destroying it? Yes, surely, this, too. Let us first consider keeping it, not returning it. Is such a person a thief, and therefore acting incompatibly with libertarian principles, per se? No. A robber is by definition someone who grabs property from the rightful owner.

The government in this scenario cannot possibly qualify in that regard.  Rather, the position occupied by APEE in this scenario (or anyone who accepts a pay check from a statist entity such as a public university, or even from a private university which, in turn, accepts such largesse, or anyone who walks on a public street, or uses the post office) is not that of a thief, since he is by stipulation taking money or property from a wrongful owner.

Dr. Block [send him mail] is a professor of economics at Loyola University New Orleans. See his Autobiography Archive.

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