Western Civilization II Lesson 39: The Wars of the Spanish Succession

In this lesson I learned about the War of the Spanish Succession. The ordeal was fought over who would succeed the childless Charles II of Spain.

Western Civilization II Lesson 38: Louis XIV, Part II

In this lesson I learned more about Louis XIV, following his pursuit of religious uniformity through the persecution of the Jansenists, his minister of finance, Jean-Baptiste Colbert, and French foreign policy in the seventeenth century.

Western Civilization II Lesson 37: Louis XIV, Part I

In this lesson I learned about Louis XIV’s conception of kingship, the Palace of Versailles, what he did to gain and centralize power, and enforce uniformity of religion, namely Catholicism.

Western Civilization II Lesson 36: Mercantilism

In this lesson I learned about Mercantilism, it’s effects in sixteenth-century France, and ultimately why the free market is more efficient.

American History Lesson 63: Constitution, Part 1

In this lesson I learned about the preamble as well as the first and second articles of the Constitution.

What follows below is the Constitution’s original preamble. Though the first three words are familiar, the rest of it is far less inspiring.

We the people of the States of New Hampshire, Massachusetts, Rhode-Island and Providence Plantations, Connecticut, New-York, New-Jersey, Pennsylvania, Delaware, Maryland, Virginia, North-Carolina, South-Carolina, and Georgia, do ordain, declare, and establish the following Constitution for the Government of Ourselves and Our Posterity. ~ The Constitution’s Original Preamble

As run of the mill as it was, this preamble in fact announced the beginning of a revolution. According to the old constitution, the Articles of Confederation, the manner in which the new constitution was ratified, was illegal. The Constitution established a new country on a new basis, but under the illusion of the old name, the United States of America. The sovereign was also changed to those three words, “We the people” from what had previously been, all though vaguely described, God. Obviously this preamble names specific states, giving them a degree of sovereignty. It also still kept the government’s tasks to a minimum, only citing that it was for their self governments and future generations.

Of course this is not the preamble that most people know. This is because it was not good enough for the members of the Committee on Style and Arrangement, which included Hamilton and Madison. Without explanation the preamble was changed to:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

This preamble completely removed the illusion that the states had any sovereignty. They weren’t even mentioned. Rather the sovereignty was shifted over to the “People of the United States” whoever they were. This was literally a declaration of independence from the state government. Also added was a statement of faith, which included positive corporate sanctions or basically promised goals.

For the actual Articles, I’m just going to list out what Dr. North thought was worth mentioning in terms of what they did.

Article I (dealing with Congress)

1. Slaves counted for representation in the House as 3/5 of a person (This gave the south a more dominant position in the House of Representatives)
2. One-third of the Senate would be rotated every election (This prevented public opinion from affecting the whole Senate, it could already affected the House)
3. Impeachment would be determined by the House, but the actual Trial would be determined by the Senate (Two-thirds of members would be required to convict the president)
4. Immunity from lying and slander in speeches
5. The ability to regulate the value of money
6. No limit on fiat-money by national government
7. Control over the militia (The founding fathers knew it was really the militia which really won the Revolutionary War)
8. A standing Army and Navy (This gave the central government lots of power)
9. No Habeas Corpus in the case of rebellion or invasion (A person could be arrested by the government and not be told why, the government didn’t have to press charges)
10. Free trade between states

Article II (dealing with the President)

1. There would be electors instead of a direct election
2. The president would have a salary (This was so anyone legally eligible to be a president could be the president without having to be rich or needing help from rich men)
3. An oath of allegiance to nothing in particular (The only reason the hand is put on the Bible is because Washington did it)
4. The president would be the Commander-in-Chief of the Army, Navy, and most importantly at the time, the Militia
5. Could be convicted of high crimes and misdemeanors (Not really defined besides treason and bribery)

Government 1A Lesson 71: The Freedom Philosophy, Part 11

In this lesson I learned about chapter 10 of The Freedom Philosophy titled, “Looking Out for Yourself.” This was originally a commencement address given in 1956 by Leonard E. Read. Before we get started, Dr. North wanted me to know that these speeches are meant to be uplifting, forward looking, and they must please both students and parents.

Read starts out by saying that they have just spent the last couple of years on formal pursuits, but that from tomorrow on they would have to educate themselves. With that said, most people, unless alerted, remain unaware of two opposed ways of life, collectivism and self-government.

The first way of life, collectivistic, goes by many tags, socialism, communism, Fabianism, Nazism, the Welfare State, the planned economy, or state interventionism. While it’s intentions are far clearer with those tags, Read notes that it is much harder to discern when promoted untagged by most politicians, business leaders, and even your best friends. What is collectivism? It is the idea that the collective, over the individual, is what matters. Of course, the “collective good” is not some known thing, it must be interpreted by a certain group, by “representatives” which brings us back to the second issue of government, authority. Immediately this issue is connected to the fourth issue of government, sanctions, in that whatever these representatives view is good for the collective is enforced with the power of the government. It was at this moment that Read broke the third unspoken rule of commencement speeches, by naming a list of collectivist activities that people in the audience would have supported. Since it’s too good I’m putting it here.

Russia is the world’s most pronounced example, but here at home we see the same thing rearing its head in the form of rent control, Valley Authorities, public housing, parity prices, acreage allotments, union monopoly, federal subsidies of every description, federal subventions to states and cities and districts, governmental foreign-aid programs, import quotas, tariffs, manipulation of money, such as the monetization of debt, and so forth.   ~Leonard E. Read

Having targeted a number of people in the audience he proceeded to never mention it again, instead focusing on lighting a candle rather than cursing the dark.

The second way of life, Read called “Looking Out for Yourself” because he remarked that, “That’s about as opposite as you can get from having the government looking out for you.” The government can only use force. With collectivism, it is permitted to use that force to take from people what they rightfully earned. Read’s view, much like Bastiat’s was that government’s force should be limited to protecting the rights of individuals. Force cannot constructively help someone, it can only clear out obstacles. Creativity comes from individuals, and no group of people can force someone to invent, discover, or create. If you limit the state’s force, creativity is allowed to flow.

While Read did acknowledge that the one who looks at all the clichés and catch-phrases will think of this system as one of non-cooperation, greed, and no concern for the well-being of others, he begins to combat this with a principle. That you cannot give to others what you do not have. Therefore you must advance yourself monetarily, intellectually, and spiritually to help others. He also points out that it is in our self-interest to have an interest in other’s well-being. We are living in one of the most specialized societies with one of the greatest divisions of labor. This allows out to go through so many goods and services a day that it would take us thousands of years if we were to make and perform all of them ourselves. Therefore it is also in our self-interest that we look out for other’s freedom and liberties to do what they do best with the least amount of resistance. Because the worse they do, the worse the product or service you can get from them.

It must also be noted that wealth is not an end in and of itself, and it should not be sought after for itself. Wealth is a useful tool, because it lifts man above from having to eke out an existence in the fields, to thriving and being able to turn his time towards developing his intellect and spirit.

Finally Read ended by saying that deviltry going on in today’s world is not caused by criminals. Rather he says this:

They originate mostly with the well-intentioned, those who wish to do good to others but who, lacking personal means, thoughtlessly see no harm in employing police establishments to impose their brand of good on the rest of us, to use the fruits of other persons’ labor to satisfy their own charitable instincts.   ~Leonard E. Read

Government 1A Lesson 70: The Freedom Philosophy, Part 10, Review of Parts 6-9

In this lesson I did a review. I also had to write a 250 essay on the following topic. Which promotes greater personal responsibility, the free market or the welfare state?

What does being responsible mean? It means taking charge of your own matters, being accountable for your own behavior, and generally having other people see you as trustworthy. As Uncle Ben said, “With great power comes great responsibility.” The more power you have the more responsibility you’re supposed to take on. So which system promotes the previous ideas? The free market, or the welfare state?

Let’s start by looking at the free market. The market being all the transactions that take place in a certain geographical area, and free being the ability to make whatever transactions you want. In this system, the government is prohibited from interfering in the market. In this sense the free market gives each individual great power, the power to be free, but it also comes with a great responsibility, to be accountable for your own actions. The free market gives you the freedom to enter into any agreement as long as both parties agree to it, but if the deal doesn’t work out for you, you are accountable, you are responsible. There is also the plus side that if something does go well, you are completely entitled to it, no government takes any of it for “protecting you.”

Now what about the welfare state? This is a system where the state helps certain individuals or groups. However I hold it that the welfare state causes more harm then help. If you allow to explain, I’ll show you why the welfare state actually promotes not responsibility, but irresponsibility. First of all it creates burdens on people that are not theirs. The providing all this “welfare” requires the state to put more of a burden on people, because the state has no way of spending money, or even acquiring it without taking it in some form from its citizens. How does the welfare state encourage responsibility by putting burdens on people that did not come as a result of their actions. Second of all, this “welfare” only goes to people who are not responsible. In the free market people who got themselves into a bad position had to be responsible for getting themselves out of it. The welfare state rushes in bailing people out, telling us that you can mess up all you want.

As I hinted at in the beginning, power has a lot to do with responsibility. The free market gives individuals a lot of power, but it also forces them to be responsible with it. The welfare state shifts power in the hands of government, discouraging responsibility. The way to describe it I guess would be, “with great state power comes great irresponsibility.”

Economics Lesson 74: Stages of Investing, Part 9: Capital Accumulation

In this lesson I learned about the capital accumulation stage of investing. Being future oriented is central to accumulating capital. You are saving for the future, you are saying to yourself, “I’d rather have this money tomorrow than today.” This requires a thrift mentality, which in turn requires self-discipline. Dr. North recommends to save 10% of your income.

Investing is an important part of accumulating capital that you should think about. However, piling all your money into passive investments won’t get you through old age comfortably. Dr. North says that you would have to put your money in a place where it would get compounded five or six percent each year after inflation, and he says that such an investment doesn’t exist. The only investment that can do that is real estate, and that involves active investing. He says the skill of thrift, even if it only counteracts tax and inflation is valuable in old age. Being able to live within your means is valuable no matter what your means are.

With that said Dr. North does present some advice for investing. You can invest two ways, you can learn the ins and outs of one investment or you can invest in many different areas with less knowledge about each. You can either specialize or diversify. Specialization is more risky, but it gets you more profits. Diversification is safer, but it nets you less profit. North says to bear more risks and make more profits when you’re young and you have the time to rebound should something go wrong, because you will be too scared, and rightfully so, when you’re older.

Finally you should work towards goals or targets that you set. You plan when you retire, what you leave behind, a possible second career, to have zero personal debt, and a passive income. Until then, be thrifty, be future oriented.

Economics Lesson 73: Stages of Investing, Part 8: Home Ownership

In this lesson I learned about the home ownership stage of investing. Home ownership has its costs and benefits. Husbands and wives have their own reasons for wanting a home. Men typically want to buy nice homes to reflect their hard work, despite the fact that they normally don’t get to see it during the day, and are only there to sleep at night. Women typically are more focused on the practicality of the home, if they don’t work, and normally like the homes to reflect their personality, so that guests may see when they invite them over.

Looking at the costs, home ownership is a capital investment of time and money. You have to get a mortgage and pour vast amounts of money into the house over a vast period of time. Not to forget the maintenance costs or if you want to make any improvements. Buying a house involves a lot of debt, and you want to make sure you can pay it off. The lower the interest rate the better the deal. The timing of the purchase also matters, the best time being during a housing crisis where homes are sold cheaply. Another factor to keep in mind is mobility. You lose mobility when you buy a house, because you’ve got to pay back the mortgage. Finally for costs, you want enough insurance to rebuild the house if something bad happens.

In terms of what you can do after you buy a house, you could trade up houses. You could sell a better home in a better location for two smaller homes in worse locations if you simply want rent. However always keep in mind the three most important words in real estate, “location, location, location.” Of course you probably want to buy a house in a good neighborhood for yourself, but also if you ever want to sell the house or rent it, people will want to live in a good neighborhood. There are also tax implications to keep in mind. Dr. North specifically said that if you buy a house and live in it until you are 55, if you then sell the house you don’t have to pay any income tax on the profits. You also don’t have to pay taxes on the money used to pay off a mortgage.

Economics Lesson 72: Stages of Investing, Part 7: Parenthood

In this lesson I learned about the parenthood stage of investing. Parenthood generally makes the parents future orientated. This is a time of increased responsibility, thinking ahead is necessary. That’s because parenthood is a very capital intensive stage of investing, lots more debt and insurance will be taken on by parents than by others. If you look at parenthood as an investment, it is very heavily front loaded, it may not be paid off in a long while. The insurance function shifts after a while, though with children taking care of their parents in their old age. The welfare function has shifted from family to the state over time. The state literally takes care of you like a nanny from womb to tomb.

The savings strategy changes drastically from marriage to parenthood. Costs could be majorly cut in marriage, but after there are kids the strategy is to invest in the children themselves, and hope they don’t bankrupt you before they get through college. That is the strategy. In terms of the legacy or inheritance, this is accumulated before and after the kids are around.

Finally since we must talk about insurance, Dr. North again repeats his suggestion to get life insurance on your children, having had his son die before him.