John Sexton at Breitbart:

CBS News President David Rhodes described what the “government” believed about the Benghazi attack the day after it happened, saying it was not just a “mob reaction” to a film. He also predicted the incident would quickly become part of a political battle between President Obama and Governor Romney.

. . . .

Rhodes interjected a parenthetical note about the “pretty alarming” situation saying, “Our government thinks that, you know, there’s a really good chance this was not just a spontaneous mob reaction to what some thought was an offensive film but actually a coordinated effort timed to the 9/11 anniversary.”

Yeah, but what does David Rhodes know about what the government thinks? Especially about Benghazi! It’s not like he has any connections to anyone in the administration, or at least anyone who would know anything about Benghazi!

Or . . . does he?

Ben Rhodes’s brother is of course David Rhodes, the president of CBS News — although, if you’re a CBS viewer, maybe I shouldn’t assume that you know that. . . . Two days later [after David Rhodes’s statement], Sexton reminds us, Ben Rhodes sent out an e-mail ahead of Susan Rice’s Sunday show appearances urging her “to underscore that these protests are rooted in an Internet video, and not a broader failure of policy.”

Oh.

Astute readers will remember my post this morning, in which I said:

I think the next step is to examine statements by people close to Obama — or even people close to people who are close to Obama — just after the attack, to see if they were letting it slip, accidental-like, that the attack was a planned terrorist attack.

Which then led, in this morning’s post, to an abrupt and startling transition to a piece about . . . David Rhodes.

Coincidence? You be the judge.

In comments to the gold standard blog post from this morning, a lot of people asked a question that I have asked from time to time in my life: why gold? You can’t eat it. You can’t wear it. Who cares if you have a little yellow metal or not? Who cares if the country does? If banks do? Etc.

It’s a natural reaction, but I think I have learned the basic answer in beginning to study Austrian economics. Beware: I am not an economist. Beware: I have read very little. Beware: A little knowledge is a dangerous thing. And so on and so forth. As always, I am throwing out these ideas to be discussed; this is not my area of expertise and I am happy to be corrected or to have my arguments improved upon. That said, I think I understand enough to contribute some insight into this question.

Before we get there, let’s take a step back and talk about the division of labor. (We’ll get to gold, but this is necessary background.)

As I have remarked before, the division of labor is the reason that we have a standard of living that would have been the envy of kings centuries ago. But it’s as simple as this: people specialize in those areas that they do best.

In providing examples of a very simple economy, economists love to cite Robinson Crusoe and Friday on a desert island, and who I am to try to improve on that? So: imagine a desert island where Crusoe and Friday each need 10 bananas and 10 coconuts per day to live. Crusoe can gather 10 bananas an hour, but only 4 coconuts per hour. Friday can gather 10 coconuts per hour, but only 4 bananas per hour.

If each is left to his own devices, he will work 3 1/2 hours per day: one hour gathering that which he is best at, and 2 1/2 hours gathering that which is he least efficient at gathering.

But if each spends two hours gathering what they are best at, Crusoe can get 20 bananas in two hours, and Friday can get 20 coconuts. Each trades half his supply for half of the other’s, and each has his 10 coconuts and 10 bananas, and each has cut his labor time from 3 1/2 hours to 2 hours.

It is this concept that allows you to live in a comfortable house you could never construct, drive a car that you could never build, and turn on the air conditioning even if you don’t have the slightest clue how it works.

So far so good. But in a more complex economy, it is difficult to barter your own commodities in kind, because the person from whom you need goods or services doesn’t always want what you have. So you want to try to trade your goods or services for something that more people will accept. That’s a “medium of exchange”: a commodity that everyone in the society (or nearly everyone) wants. People will accept that commodity in exchange for providing you with what you want — because they know they can turn around and provide it to someone else for what they want.

Different commodities have functioned as media of exchange in different societies. Some have used cigarettes. Some have used cocoa beans.

The more universally desired the commodity, the more valuable it is as a medium of exchange. Initially, there is competition among various commodities. But over time, people start to notice which are the more universally accepted commodities, and those commodities crowd out other commodities. Think about it. If two people want my services, and one is offering me cigarettes, and the other is offering me gold, I will provide my services to the person who can give me the medium of exchange that most other people will accept when I try to buy something.

With me so far? Good. Here’s the important part. A good medium of exchange should have several characteristics. (I’m not taking these from a textbook, but am rather going from memory, so cut me some slack if I miss some.)

It should be unchanging. Thanks for the fruit, but in two weeks it will be spoiled. Gold is inert — one of the “noble metals” that resists corrosion or oxidation.

It should be transportable. There are fascinating stories of cultures that use giant unmovable boulders as currency. Everyone knows that is Og’s boulder over there, even if Og can’t drag it to his cave. These cultures have been known to employ giant ships to move boulders from neighboring islands — and if the ship capsizes and the boulder sinks to the ocean floor, they don’t even sweat it . . . because, well, Dag’s boulder is the one at the bottom of the sea! That’s nice and all, but most societies tend to think that a medium of exchange should be transportable. A related factor is that it should be divisible, such that different amounts (weights) can be used to represent different values.

It should be rare, in the sense that, while you don’t always want a fixed amount, you don’t want to have a situation where one can easily double the supply. After all, when you increase the supply of a commodity, you decrease the demand and therefore the price. A medium of exchange that is rare, and cannot have its amount increased by multiples overnight, is one that preserves value (purchasing power) for all who hold the commodity.

There are other desirable characteristics that a successful medium of exchange should have. It should be recognizable, hard to counterfeit, easy to store, and have some intrinsic value. And so on.

Well, it turns out that, over time, humans have always gravitated towards gold and silver as containing the best mix of characteristics to serve as a medium of exchange. Silver has typically been employed for smaller transactions, and gold for transactions involving higher values (because gold better provides the mix of characteristics needed for a medium of exchange).

But the most important fact here is this:

GOLD IS A COMMODITY. It is a thing. It is tangible. It is a commodity used as a medium of exchange, but it is nevertheless a commodity. It has some intrinsic value in its beauty and use for ornamentation. But it is a thing, which just happens to be the best thing to use as a medium of exchange.

That answers the question. You can stop reading now if you want. But I have to keep writing.

CIRCLING BACK TO CURRENCY AND THE GOLD STANDARD: I now have to circle back around to paper (currency), because I know that people will object that in a modern economy, you simply can’t have rapid financial transactions occurring with people handing pieces of gold back and forth. That’s why you have to have pieces of paper or the equivalent (nowadays, it could even be computer code) — something that cannot be easily counterfeited, that represents your right to exchange it for gold if you so choose. Call it currency, call it a bank note, call it what you like.

The genius of Murray Rothbard is to compare these currencies to a warehouse receipt. Here’s the idea: again, GOLD IS A COMMODITY. So, you can’t always carry around your commodity. Business will arise that will warehouse your commodity for you, and give you a slip of paper (call it a bank note) which you can use to redeem for gold any time you like.

When these warehouses, which we call banks, begin to engage in “fractional reserve banking” — lending out more gold than they have — they are giving multiple people warehouse receipts to the same commodity. This is fraud. Let me repeat: THIS IS FRAUD. Giving multiple people warehouse receipts to the same commodity is fraud, because the receipt should entitle the holder to repossess his property whenever he so chooses (although this can of course be limited by a contract with the bank).

Although it’s fraud, it works great — unless and until people get suspicious that they can’t get their commodity back . . . and then you have a “bank run.” People line up to get their gold, because they are afraid they can’t get their gold back. And, if their bank is a fractional reserve bank, as all banks are these days, they are right. They can’t get their gold back, because the bank committed fraud the minute it promised the same gold to multiple people.

If society treated fractional reserve banking as the fraud that it actually is, and kept us on a strict gold standard, then maybe — just maybe — governments would not have the ability to borrow endlessly; to mask their debts and lessen their pain by causing runaway inflation; and to generally deprive people of the value of their savings.

I could go on and on, but hopefully this gives readers a better idea of why humans might value gold, why fractional reserve banking is dangerous; and why going off the gold standard unmoors us from any fiscal discipline.

Don’t say any of this too loud, though. People will think you’re crazy.

Ah, but the system of fiat money we have nowadays? The one that is about to drive us into the depression to end all depressions? That system? Yeah, that system is totally awesome. And stuff.

It’s the gold standard that’s crazy, we’re told. What we’re doing right now? Perfection.

Nothing gets you derided as a crank faster than talking about the gold standard. In the past, I have associated such arguments with lunatics.

But I recently read Murray Rothbard’s “What Has the Government Done to Our Money?” (available for free here), and it makes a lot of sense. I want to throw it open to the readership, then: why not the gold standard?

Clearly, we’re talking theory here, just like we are when we talk secession. Nobody is going back onto the gold standard when the government has most of the gold and has zero intention of cuffing its own hands and preventing runaway inflation — the very thing government will be forced to resort to when all other attempts to deal with the debt have failed.

We’re talking theory.

The traditional argument against the gold standard, I think, is summed up in two arguments, one theoretical and one historical. The theoretical one is that, due to the ever-growing population and thus ever-growing economy, we need a medium of exchange that will keep up with that growth. Otherwise we go into a deflationary spiral. Historically, people argue that countries’ going off the gold standard coincided with their getting out of the Great Depression: those that were never on it were fine, and those that were on it, suffered until they got off. The traditional view is encapsulated in this Planet Money podcast, and depends on the idea that it was scary to have a gold standard because when times got bad, everyone wanted to cash in their money for gold, and there wasn’t enough gold to go around.

Rothbard’s argument is too detailed to sum up in a single blog post, but I think it reveals the fallacy of the historical perspective: after World War I, countries weren’t really on the gold standard anyway. They were on a modified and fraudulent gold standard — one that, like fractional reserve banking itself, relied on the idea that people with pieces of paper representing gold (or deposits) weren’t actually going to cash them in. Rothbard points out that, if you don’t have the gold needed to redeem someone’s piece of paper, it was fraudulent to issue those pieces of paper to begin with.

When we had something much closer to a non-fraudulent gold standard, in the 1800s, we actually did pretty well.

As for the theoretical argument, I’m no economist, but I’m not as scared by deflation as some. Deflation happens in the home computer market, for example — prices are always decreasing for better goods — and somehow we all live. Deflation might be worrisome in a hampered market economy, where unions see to it that wages are fixed and can’t fall below a certain level, and other forms of regulation interfere with the natural operation of the market. But in our theoretical unhampered market economy, deflation doesn’t sound that scary to me; prices and wages might nominally be lower, but purchasing power is likely to be strong, and the economy will adjust.

Collectively, you folks know way more than I do. Today seems like a slow news day, so let’s talk about this. What are your thoughts?

OK then.

I think the next step is to examine statements by people close to Obama — or even people close to people who are close to Obama — just after the attack, to see if they were letting it slip, accidental-like, that the attack was a planned terrorist attack.

In an unrelated and sudden change of topic, here is Larry O’Connor at the Free Beacon from several days ago:

Missing from much of the coverage of yesterday’s revelations that Senior White House adviser Ben Rhodes coordinated an effort to obfuscate the truth behind the Sept 11 2012 terror attacks in Benghazi was a key detail about the insidious relationship between politics and media in Washington.

The brother of Ben Rhodes is David Rhodes, president of CBS News.

It isn’t enough for CBS News to mention the relationship as a parenthetical statement as they did in yesterday’s coverage. Larger questions deserve to be answered about the atmosphere and culture at CBS News and how open Rhodes is to any investigations into the Benghazi story and his brother’s involvement.

Sorry if that seemed like a dizzying and rough transition to a different topic. Talk to me again tonight.

[guest post by Dana]

#BringBackOurGirls

There is evil in this world and when it makes its insidious appearance, one offers quiet humble prayers of hope for those in need. It seems small and simple and in the big picture, likely is. But this is how it is. This is what we do, those of us who know and recognize the gift of peace we dwell in each and every day. Ours is indeed a privilege.

In mid-April, 276 school girls were abducted from the Government Girls Secondary School in Chibok, Nigeria, as they slept in their dormitories. Their attackers lit the school on fire, herded the girls onto waiting trucks, and disappeared into the darkness of night.

The kidnapped girls ranged in age from 15 and 18 years old and haven’t been heard from since April 14. However, of the 276 kidnapped, 53 were able to escape.

Their kidnappers are an extremist Muslim group called Boko Haram, whose name in the Hausa language means “Western education is a sin.”

The NYT has more,

These girls, ages 15 to 18 and Christians and Muslims alike, knew the risks of seeking an education, and schools in the area had closed in March for fear of terror attacks. But this school had reopened so that the girls — the stars of their families and villages — could take their final exams. They were expected to move on to become teachers, doctors, lawyers.

Instead, they reportedly are being auctioned off for $12 each to become “wives” of militants.

“We are now asking for world power countries to intervene,” the desperate father of a missing 18-year-old girl, Ayesha, told me by phone. He said that the parents had given up on Nigerian government officials — “they are just saying lies” — and pleaded for international pressure on Nigeria to rescue the girls.

Clearly, as each week passes without a word from the girls, the chances of finding them, and finding them unharmed, decreases.

The fate of the rest remains a mystery. Each passing day makes it more likely that the girls have been raped, and possibly killed, in captivity. Given Boko Haram’s name, which means “Western education forbidden,” and their agenda to wipe out secular society in mostly Muslim Northern Nigeria, it’s hardly a surprise that the group locks students inside schools and sets them on fire. This, to date, is their largest mass abduction. The girls were taken into the jungle to serve as sex slaves. Yet the abduction of these girls is about much more than finding “cooks and wives.” For Boko Haram, it is about dismantling the fragile existing society by attacking its essential institutions: schools.

This video was made by Louis King, a young Nigerian Director. His hope is to bring world attention to the ongoing situation. The voice you hear is the father of one of the kidnapped girls.

It must be said: When one compares the “Ban Bossy” campaign with the “Bring Back Our Girls” campaign, well, there really isn’t any comparison that can be made. In fact, one seems all the more ridiculous and pathetically self-indulgent.

–Dana

UPDATE: Fox News has updated the situation after viewing a video from Abubakar Shekau, leader of Boko Haran.

[T]he students “will remain slaves with us.” That appears a reference to the ancient jihadi custom of enslaving women captured in a holy war, who then can be used as sex slaves.

“They are slaves and I will sell them because I have the market to sell them,” he said, speaking in the Hausa language of northern Nigeria.

…

Shekau brushed off warnings that the abductions could be an international crime, saying in English, as if to reach his accusers in the international community: “What do you know about human rights? You’re just claiming human rights (abuses), but you don’t know what it is.”

An intermediary who has said Boko Haram is ready to negotiate ransoms for the girls also said two of the girls have died of snakebite and about 20 are ill. He said Christians among the girls have been forced to convert to Islam.

…

First lady Patience Jonathan fueled frustration Monday when a leader of a protest march said she ordered the arrests of two protest leaders, expressed doubts there was any kidnapping and accused the protest leaders of belonging to Boko Haram.

The first lady is also being accused of turning on protesting Nigerian women.

Mrs. Jonathan said the women “had no right to protest,” especially Nyadar, whom she identified as the deputy director of the National Directorate of Employment.

In a report on the meeting, Daily Trust newspaper quoted Mrs. Jonathan as ordering all Nigerian women to stop protesting, and threatening “should anything happen to them during protests, they should blame themselves.”

[guest post by Dana]

Last week, Patterico linked to an essay written by a Princeton student who spoke about the admonishment to check his privilege as a white male.

Students at Columbia University responded .

We decided that we had to respond to this op-ed, which completely misses the point and grossly misinterprets the meaning of privilege and the way it functions.

Tired of feeling like he has to apologize for being a white male, Fortgang is frustrated that his family history is rendered irrelevant by discussions which link skin color with privilege. But nobody is asking for personal apologies for historical injustices—that’s literally not the point.

To be clear, nobody wants, or needs, more nuanced understandings of race than people of color. The fact that family history and other factors that influence a person’s station in society are often ignored in favor of skin tone just speaks to how reductionist our understanding of identity can be.

Fortgang accuses those who tell him he’s privileged of toeing the line of racism. (Let’s forget for a minute the inherent contradiction in the idea of “racism against white people.”) His success, Fortgang argues, should not be diminished to a socially constructed narrative of white male privilege and ascribed to “some invisible patron saint of white maleness.” But what he fails to understand is that this “patron saint” of white maleness isn’t so invisible—historically, socially, and politically, institutions have protected and supported white men. Recognizing the fact that white men benefit from the kinds of racist and sexist structures on which American society is built isn’t meant to diminish his accomplishments. It’s meant to remind us that white men don’t have an inherent predilection for success—the odds have just been stacked in their favor.

Fortgang continues to criticize those who ask him to check his privilege, saying, “Furthermore, I condemn them for casting the equal protection clause, indeed the very idea of a meritocracy, as a myth, and for declaring that we are all governed by invisible forces (some would call them ‘stigmas’ or ‘societal norms’), that our nation runs on racist and sexist conspiracies.”

First of all, meritocracy is a myth. We are not all born with the same opportunities to succeed—and that is not a conspiracy.

But perhaps the most infuriating and telling part of Fortgang’s op-ed is its ending: “I have checked my privilege. And I apologize for nothing.” Except, he clearly hasn’t checked his privilege—because he doesn’t even understand what it is. The very act of writing a defense of white privilege (and a condemnation of those who point to it) is in itself an exercise of the very entitlement he refuses to acknowledge.

–Dana