Washington, DC (Thursday, January 21, 2016):  Gross output (GO), the new measure of U. S. economic activity published by the Bureau of Economic Analysis, slowed significantly in the 3rd quarter of 2015. And the Skousen B2B Index actually fell slightly in real terms in the 3rd quarter. Both data suggest the possibility of a mild recession developing in 2016.

Based on data released today by the BEA and adjusted to include all sales throughout the production process, real GO grew by only 2.5% in the 3rd quarter of 2015, almost half the rate in the 2nd quarter (4.6%), but more than real GDP (2.0%) in the 3rd quarter[1]   Adjusted GO reached $39.2 trillion in the 3rd quarter, more than double the size of GDP ($18.0 trillion).

In nominal terms, adjusted GO growth rate declined from 6.3% in Q2 to 2.3% in Q3. In the same period GDP fell from 6.0% to 2.7%, illustrating the higher degree of volatility of GO compared to GDP (see chart below).  The higher volatility indicates that GO might be a better indicator of economic activity than GDP, since GO includes economic activity that GDP leaves out.

Press_Release_2016-01-21_Graph_01_OriginalSupply chain activity varied significantly in the 3rd quarter: Mining activity continued to fall by 7.6% (on top of declining 26% in Q2), but utilities reversed course and rose 7.2%.   Most other sectors grew, led by construction, which was up 7.6%. However, the wholesale market fell 6.6%, while retail trade rose 7.4% in nominal terms. Overall, price inflation remained tepid, declining 0.1%.

GO and GDP are complementary statistics in national income accounting. Gross output (GO) is an attempt to measure the “make” economy; i.e., total economic activity at all stages of production, similar to the “top line” (revenues/sales) of an accounting statement. In April, 2014, the BEA began to measure GO on a quarterly basis along with GDP.

Gross domestic product (GDP) is an attempt to measure the “use” economy, i.e., the value of finished goods and services ready to be used by consumers, business and government. GDP is similar to the “bottom line” (earnings) of an accounting statement, which determined the “value added” or the value of final use.

GO tends to be more sensitive to the business cycle, and more volatile, than GDP. During the financial crisis of 2008-09, GO fell much faster than GDP, and afterwards, recovered more quickly than GDP. Still, it wasn’t until late 2013 that GO fully recovered from its peak in 2007. The fact that the adjusted GO is now growing slower than GDP suggests that the economic recovery is losing steam and may end up in a mild recession in 2016.

Real Business Spending (B2B) Suffers Slight Decline

We have also created a new business-to-business (B2B) index based on GO data. It measures all the business spending in the supply chain and new private capital investment. B2B activity rose only 0.2% in nominal terms in the 3rd quarter, down from 1% growth in the 2nd quarter, and actually fell in real terms by 0.1%. According to the Skousen B2B Index, business spending rose to $22.83 trillion in nominal terms compared to the 2nd quarter of $22.78 trillion. Meanwhile, consumer spending rose 1.1% (0.8% in real term) in Q3.


“The GO data and my own B 2B Index demonstrate that total US economic activity has slowed dramatically. A recession could develop in 2016, although I expect it to be mild,” stated Mark Skousen, editor of Forecasts & Strategies and a Presidential Fellow at Chapman University. “B2B spending is in fact a pretty good indicator of where the economy is headed, since it measures spending in the entire supply chain, and it indicates tepid growth and maybe even a downturn.”

Skousen champions Gross Output as a more comprehensive measure of economic activity. “GDP leaves out the supply chain and business to business transactions in the production of intermediate inputs,” he notes. “That’s a big part of the economy.

GO includes B2B activity that is vital to the production process. No one should ignore what is going on in the supply chain of the economy.”

Skousen first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). A new third edition was just published in late 2015, and is now available on Amazon.

Click here: Structure of Production on Amazon

The BEA’s decision in 2014 to publish GO on a quarterly basis in its “GDP by Industry” data is a major achievement in national income accounting. GO is the first output statistic to be published on a quarterly basis since GDP was invented in the 1940s. With GO and GDP being produced on a timely basis, the federal government now offers a complete system of accounts. As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”

Note: Ned Piplovic assisted in providing technical data for this release.

For More Information

The GO data released by the BEA can be found at under “Quarterly GDP by Industry.” Click on interactive tables “GDP by Industry” and go to “Gross Output by Industry.” Or go to this link directly:

For more information on Gross Output (GO), the Skousen B2B Index, and their relationship to GDP, see the following:

Mark Skousen, “At Last, a Better Economic Measure” lead editorial, Wall Street Journal, April 23, 2014:

Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”:

Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”:

Steve Hanke, Globe Asia (July 2014): “GO: J. M. Keynes Versus J.-B. Say,”

New: Mark Skousen, “Linking Austrian Economics to Keynesian Economics,” Journal of Private Enterprise, Winter, 2015:


To interview Dr. Mark Skousen on this press release, contact him at [email protected], or Ned Piplovic, Media Relations, 1-201-788-6623, or email him at [email protected]

# # #

[1] The BEA currently uses a limited measure of total sales of goods and services in the production process. Once products are fabricated and packaged at the manufacturing stage, the BEA’s GO only adds “net” sales at the wholesale and retail level. Its official GO for the 2015 3rd quarter is $31.6 trillion. But by including gross sales at the wholesale and retail level, the adjusted GO is $39.2 trillion. Thus, the BEA omits $7.6 trillion in business-to-business (B2B) transactions in its GO statistics. We include them as a legitimate economic activity that should be accounted for in GO. See the new introduction to Mark Skousen, The Structure of Production, 3rd ed. (New York University Press, 2015), pp. xv-xvi.





Crazy Economist Defies Gravity and Generates Infinite Returns!

"You should buy Lubrizol. It's in my Hedge Fund Trader....."

The Skousen Hedge Fund Trader ( may now hold the world’s record for best return in one day:  9,100%!  When Warren Buffett announced Monday morning that Berkshire Hathaway bought out chemical company Lubrizol (LZ) for $135 a share, our March $120 call options went from 15 cents to $13.80 almost immediately.
If you annualize it, the calculator can’t handle it; it says the return is “infinite”!

Here’s the full story:  We recommended Lubrizol last October, and were underwater on both the stock and the call options.  The stock was down 7%, and the March $120 calls had lost 97% of their value when Buffett bailed us out.  Subscribers who initially bought back in October made 20% on the stock, and 150% on the calls.  Not bad.

I don’t know if any subscribers bought the March calls (which were due to expire this Friday!) for 15 cents a week before, but if they did, they made 9,100% in one day!

Cheers, AEIOU,

A Year of Miracles — 1776

Personal Snapshots
Forecasts & Strategies
August 2002

“The cause of America is in great measure the cause of all mankind.”

— Tom Paine, Common Sense (1776)

A Year of Miracles

Like most Americans, I’ve always been fascinated by the events of 1776. It was a year of earth-shattering events that transformed forever the Western world.

It is, of course, the year the American colonies broke off relations with the Mother Country, declared political independence from monarchy, and established the words of Thomas Jefferson that “all men are born equal” and endowed with certain “inalienable rights.”

It is the year that Adam Smith’s monumental Wealth of Nations was published, a powerful declaration of economic independence. Smith proclaimed the establishment of a “system of natural liberty” and the “invisible hand” doctrine that private enterprise would benefit the public wealth.

It is the year the eminent British historian Edward Gibbon published the first volume of his classic history, The Decline and Fall of the Roman Empire. It was considered a scandalous book because it blamed the decline and fall of Rome after it adopted Christianity as its state religion. Through his review of the Roman world, Gibbon emphasized the principles of “liberty, virtue and courage.”

Last but not least, 1776 is the year Thomas Paine’s Common Sense was printed, and Paine, more than any other revolutionary figure, symbolized the Age of Enlightenment. Paine’s philosophy encompassed the entire compass of liberty. He was a radical who advanced democratic emancipation, individual rights, religious tolerance and competitive capitalism.

Just as Adam Smith, Thomas Jefferson, Edward Gibbon and Tom Paine were radicals of their day, so the Foundation for Economic Education and its supporters are the radicals of our day, supporting maximum political, economic and religious freedom.


The Origin of the 21-Gun Salute

Personal Snapshots
Forecasts & Strategies
July 2002

“Is anybody there? Does anybody care? Does anyone see what I see?”

— George Washington, 1776

The 21-gun salute is considered the highest expression of honor and respect, given to recognize the presence or the passing of a great military hero or political leader. What is the origin of the 21-gun salute? In ancient times, warships fired seven-gun salutes based on the lucky number seven. Seven is also an important biblical number — e.g., God rested on the seventh day.

In 1810, the War Department of the United States defined the “national salute” as equal to the number of states in the Union, at the time 17. This salute was fired by all U.S. military installations at 1 p.m. (later at noon) on Independence Day. Today 50 guns are fired when the president visits a military installation, or when a president or ex-president dies.

In 1842, the presidential salute was formally established at 21 guns. Why 21? Some say it is a multiple of three based on another significant biblical number. At Independence Hall in Philadelphia, tour guides report that the 21-gun salute reflects the founding of our country. Independence was declared on July 4, 1776. If you add up the numbers 1 + 7 + 7 + 6, what do you get? 21! In Las Vegas, “21” is a lucky number. Not only does it represent winning at Blackjack, but if you add the 1 and the 6 in 1776, you get 777, the lucky winning combination in slot machines. And my friend Bert Dohmen, a financial technical analyst, noted that “21” is a Fibonacci number, a number that is found often in nature (the numbers in a Fibonacci sequence are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, … where you add the previous number to get the next Fibonacci number). Fibonacci numbers are used frequently by mathematicians and technical analysts on Wall Street.

What Is the 1776 Club?

To honor our Founding Fathers and the Spirit of 1776, I’ve created the new 1776 Club. The purpose of the 1776 Club is to help deserving students learn the principles of free-market economics and the freedom philosophy in several ways: by attending seminars at FEE headquarters and other centers of liberty around the world; by attending on-campus lectures, regional seminars and international conferences; and taking accredited Internet classes in sound economics. (I’m working right now with Grantham University — — to create courses in investments, economics and finance, to be announced soon.)

We chose the 1776 Club as the name of this Foundation for Economic Education (FEE) program in honor of our Founding Fathers who declared economic, political and religious independence, and thus created the freest, most prosperous nation in the world.

At the FEE Fest 2002 in Las Vegas in May, we encouraged attendees to donate any amount of money using the numbers “76” or “1776” in them, from 76 cents to $1,776. So far we have raised nearly $15,000 in the 1776 Club. Please feel free to donate any amount, such as $76, $760 or $1,776, to this good cause. If you donate $1,776 or more, you become a Founding Member of the 1776 Club. Some of the first to become Founding Members are: Andrew Westhem, president of Westhem Grant Group of La Jolla, California; Mel Adams, president of Adams Bank in Nebraska; Bert Dohmen of Dohmen Capital Management of Hawaii; Conrad Denke, president of American Production Services of Hollywood, California; and our new FEE chairman, Ed Barr.

What are the benefits of being a Founding Member of the 1776 Club? First, you receive a lifetime subscription to our monthly publication, Ideas on Liberty. Second, you receive a complimentary copy of Leonard E. Read’s classic work, Government — An Ideal Concept. And third, you receive special discounts for our annual FEE Fest and other FEE seminars throughout the year. Most importantly, you share in the joy of helping young people learn the principles of sound economics.

Throughout the month of July, we are planning to ring FEE’s Liberty Bell in honor of all those who send in donations to the 1776 Club. If you send in a donation, we will ring the bell once. If you donate $1,776 or more, we will ring the Liberty Bell 21 times in your name as a way of showing our appreciation for your patriotism and support. Send your donation to the Foundation for Economic Education, 30 South Broadway, Irvington, New York 10533, call 800/960-4FEE, ext. 209, or go to

Can Money Buy Happiness?

Personal Snapshots
Forecasts & Strategies
April 2002

“I’m tired of Love: I’m still more tired of Rhyme. But Money gives me pleasure all the time.” —Hilaire Belloc

I came across a very interesting book the other day called Happiness and Economics: How the Economy and Institutions Affect Human Well-Being (Princeton University Press, 2002), by Bruno S. Frey and Alois Stutzer. It’s a very academic book, with lots of graphs and mathematical regressions, but the conclusions are pretty clear: “The general result seems to be that happiness and income are indeed positively related.” In other words, money can provide many benefits—more opportunities, higher status in society, the ability to travel, enjoy better food, housing, health care and entertainment, etc.

I remember the day I discovered that I would be financially independent. It was a summer day in the 1970s when I came home and presented my wife with more than a dozen checks from a mail-order business I had started. Within a year, we had bought our first home, with 20% down, and by 1984, we had become successful enough that we could move our entire family (with four children) to the Bahamas to “retire.” The experience of becoming financially secure gave Jo Ann and me an incredible feeling of satisfaction.

The graph shows the relationship between income and happiness across nations. In general, people in poor countries are less satisfied than people in rich countries. One reason is that poor nations are often more subject to violence and uncertainty. “Countries with higher per capita incomes tend to have more stable democracies than poor countries have…. The higher the income, then the more secure human rights are, the better average health is, and the more equal the distribution of income is. Thus, human rights, health and distributional equality may seemingly make happiness rise with income.”

But the graph also indicates that more money provides diminishing returns in happiness. Subjective well-being rises with income, but once beyond a certain threshold, income has little or no effect on happiness. That’s why many wealthy people are not any happier than middle-class people. In fact, some wealthy people are downright unhappy.

Four Elements of Happiness

I once read a sermon by a church leader on the “Four Sources of Happiness.” He spoke of work, recreation, love and worship. I think he’s right. You have to find rewarding and honest employment to be happy. Unemployed people, not contributing to society or themselves, are generally unhappy. At the same time, people who spend too much time at the office and can’t relax with their family or friends at home need to learn the joy of recreation with a hobby, sports, travel or other avocation. Some of my most memorable times have been at a county softball game or a pick-up game of basketball with my kids or friends.

Love and friendship are also key elements of happiness. Everyone needs someone to confide in, to spend time with, to learn from, to reminisce with, to love and be loved. For most people, love and friendship take time and effort. You have to work at developing friendships, but the rewards are never-ending.

Finally, worship. Developing one’s spiritual side is essential to happiness. Some of my friends say they don’t need religion, but they are missing out on one of the joys of life—listening to a great sermon, singing hymns, meditating on the word of God and praying for God’s help.

In short, there’s more to life than doubling your money on a hot stock (although that, too, gives a lot of pleasure).

What’s the Big Idea, Mr. Skousen?

Personal Snapshots
Forecasts & Strategies
March 2002

“We live in a ‘knowledge economy’—either you gain new knowledge, or your business and your investments die!” — Peter Drucker, World’s #1 management guru

Peter Drucker is right. Either you grow in knowledge and opportunity, or you and your business die. Either you correctly foresee the future, or your old investment strategy fails. You must always be on the lookout for change, and how it will affect your business, your portfolio and your personal life. My, have we learned this lesson in the past year as stocks have floundered and gold has flourished.

Last month I started putting together the best minds I could think of and asked them to join me for an unprecedented “pow wow,” a three-day intensive program of ideas and strategies on economics, finance, public policy and personal philosophy for the future. Since Sept. 11, 2001, we have all recognized that we live in a much more dangerous world than we could imagine—the growing threats of terrorism, mismanagement, depression, bear markets and trade wars. What will the future bring?

Here are just a few of the experts coming to this historic event, the FEE National Convention & 30th Anniversary Celebration of Laissez Faire Books, scheduled for May 3–5 in Las Vegas:

  • Charles Murray, #1 expert on government policy and controversial author of Losing Ground and The Bell Curve, on “The Growing Power of the State in the War on Terrorism, Drugs and Illegal Aliens.”
  • Robert Poole Jr., founder of Reason magazine, on “Is Air Travel Really Safe?”
  • Gerald P. O’Driscoll Jr., senior fellow at Heritage Foundation, on “The World Map of Economic Freedom—a Startling Revelation.” (You must see this unusual world map in person to appreciate its significance.)
  • Larry Abraham, author and editor of Insider Report, on “What Every Investor Must Know about the Middle East.”
  • Gary Hoover, author of Hoover’s Vision and entrepreneur extraordinaire (creator of Bookstop and Hoovers, Inc.), “The Right Stuff: What it Takes to Succeed in the 21st Century.” Gary will lead a special panel on newly developed management techniques.
  • Ben Stein, actor and social conservative, on “Why Bashing Big Business is Big Business in Hollywood.” He will give us an inside look into the dangers and opportunities in the entertainment world.
  • Congressman Ron Paul on “Danger Ahead: The Way Congress Really Works.”
  • Mike Ketcher, editor of The Financial Privacy Report, will lead a special panel on “How to Protect Your Assets and Privacy in this New Age of Big Government.”
  • Dinesh D’Souza, author of The Virtue of Prosperity and a Hoover Senior Fellow (and FEE spokesman on campus), on “Why They Hate Us.” This is a speech you won’t want to miss.
  • Madsen Pirie, president of the Adam Smith Institute and a privatization consultant to numerous governments around the world, on “The Outlook for Global Capitalism in a Terrorist World.”
  • Louis James, editor of, on “How to Spread Your Cause on the Internet.”
  • My brother, Joel Skousen, expert on geo-politics, bio-terrorism and survival techniques, “A Principled Approach to Liberty,” and “How to Survive the New World of Terrorism.”
  • Other speakers include: Richard Ebeling from Hillsdale College in Michigan, Parth Shah from India, Doug Casey from New Zealand and Manuel Ayau from Guatemala.

“Big Idea” to be Announced

Finally, I plan to take this opportunity to announce a blockbuster idea that will revolutionize the freedom movement, and maybe even stop the growth of government in its tracks. Don’t miss this opportunity to hear this “big idea” and how it will be implemented—with your help!

Last Chance for “Early Bird Special”

This the last month to take advantage of the “early bird special” at only $175 per person, $99 per student. After March 31, the price goes up to $225. This price includes everything: the Friday pre-conference FEE Course on Sound Money and Free Markets, the cocktail reception and speech by Ben Stein, all the sessions on Saturday and Sunday, entrance into the exhibit hall, and the Saturday night banquet & 30th anniversary celebration of Laissez Faire Books.

How You Can Change the Lives of Hundreds of Students

This is a conference for adults as well as students. If you would like to provide financial assistance to students, please buy a patron table at either the silver, gold or platinum level (call Tami Holland for specific benefits at each level; or go to the website). The FEE National Convention is sponsored by Reason Foundation, Young America’s Foundation, Hillsdale College, Heritage Foundation, Leadership Institute, and dozens of other top-ranked think tanks and colleges. See you in Las Vegas!

FEE Convention + Vegas Money Show = Big Payoff!

Personal Snapshots
Forecasts & Strategies
February 2002

“Skousen’s course on executive economics was ranked the #1 course we have ever had at the Learning Center.”— Wayne Fortun, president, Hutchinson Technology

Included in this issue is a brochure for the first FEE National Convention, which is scheduled for May 3–5, directly before the Las Vegas Money Show. I strongly urge you to attend this intellectual feast. In particular, I recommend you come early for the FEE Course on Sound Money and Free Markets, an executive economics course I teach, set for all day Friday at Bally’s in Las Vegas. This FEE course has changed people’s lives, and it could change yours. I’ve given this course before managers at Hutchinson Technology (HTCH, $22.67), and have been invited back six times! In this one-day course, you will learn:

  • How the economy really works
  • Seven popular economic myths since September 11
  • Will the Fed panic again? How to understand the mysteries of money and central banking, and how Greenspan & Co. can affect your business and your investment portfolio
  • Why Social Security and Medicare can’t work,” and why you must plan for alternatives to these government programs
  • The global battle for economic freedom and how it will affect your business and personal life

But this is only the beginning. On Friday evening, you’ll enjoy a sumptuous cocktail party and hear Ben Stein, actor, author and game show host, talk about “Why Bashing Capitalism Is Big Business in Hollywood.” Stein is one of the few social conservatives in Hollywood.

Beginning Saturday morning and running throughout the day and into half a day on Sunday, you will enjoy an unforgettable educational experience choosing from over 30 scholars in history, philosophy, economics, finance, business management and public policy. Hear Charles Murray, author of Losing Ground and The Bell Curve; Stephen Moore, president of Club for Growth and author of It’s Getting Better All the Time; and Dinesh D’Souza, author of The Virtue of Prosperity. Gary North, editor of Remnant Review, will speak on “The Most Dangerous Philosopher of Modern Times (You KANT be serious, Gary!),” and Robert Poole Jr., founder of Reason magazine, will address the question, “Can you really fly safely when the government is in charge?”

We are also planning sessions on “business strategies for libertarians and conservatives,” with Gary Hoover, founder of Hoovers, Inc., and other top CEOs who believe in the free market. There will be debates and panels.

On Saturday evening, we are planning a fantastic banquet, where we will hear from several distinguished speakers, including Nathaniel Branden, author of the classic The Psychology of Self-Esteem, as we honor Andrea Rich, who for the past 20 years managed Laissez Faire Books.

For full details, including online registration information, go to, or call Tami Holland at 888/565-8779, or e-mail her at [email protected] You can also call FEE directly at 800/960-4FEE, ext. 209.

NOTE: This conference is now FreedomFest. See for more information.

Announcing the First Leonard E. Read Book Award

I’m pleased to announce that Ken Schoolland, professor of economics and political science at Hawaii Pacific University, is the recipient of the first Leonard E. Read Book Award for Excellence in Economic Education for his insightful and entertaining satire, The Adventures of Jonathan Gullible: A Free Market Odyssey. The award is named after the founder of FEE. This is a very funny little book that teaches the basic principles of liberty. I urge you to buy a copy, available from Laissez Faire Books, 800/326-0996, or, for only $14.95 plus S&H. See why it has already been translated into 20 languages! Schoolland is a modern-day Jonathan Swift and Frederic Bastiat combined.

Schoolland will receive the award at the FEE national convention in May—$2,000 plus a 1-ounce American Eagle gold coin minted in 2001.

Here’s a Tax-Deductible Way to Honor an American Hero

December 2001
Forecasts & Strategies

by Mark Skousen

“A noble man cannot be lost in a crowd.” — Maori Saying

I just returned from my 25th appearance at the New Orleans Investment Conference. I know hundreds of you have been to this classic “granddaddy “of seminars. There’s a reason why this investment conference has lasted so long. Jim Blanchard, the founder, wanted to bring together investors who not only wanted to preserve their capital, but also cared about their country. As he used to say, “What’s the point of being a millionaire if you are on the Titanic?” His conferences always mingle solid investment advice with a hefty dose of sound money and free-market ideas. Last month we heard from Milton Friedman and John Stossel, among other giants in the freedom movement.

Jim was first and foremost a teacher (he used to teach high school in New Orleans), and he wanted his subscribers and conference attendees to know that inflation and the ups-and-downs of the economy were caused by government, not capitalism. He urged his followers to read Ayn Rand’s novels (he named one of his children Anthem!) He was one of the original goldbugs, and he devoted his entire career to the cause of liberty and sound money. In the early 1970s, he formed the National Committee to Legalize Gold. Because of Jim’s untiring efforts, in 1974 it once again became legal for Americans to own gold. Jim saw gold ownership as a fundamental human right, a hedge against government mismanagement.

Jim was also an entrepreneur who turned a $50 investment into a $115-million precious-metals coin business. He started the Blanchard group of mutual funds. He used his profits for many good causes, and his love of liberty led him to support pro-freedom forces and anti-Communist causes in Africa and Europe.

Finally, Jim overcame personal tragedy. He was nearly killed in an automobile accident at age 17 and was unable to walk. But his handicap only spurred him on. He became a powerful figure for liberty, entrepreneurship and sound money.

Tragically, Jim died of a heart attack in 1999 at age 55.His family issued a formal notice with the sentence: “James U. Blanchard III was a man who accomplished much against great odds, and changed more people’s lives than he ever knew.”

How to Honor Jim’s Life: The Blanchard Scholarship Fund

Since Jim’s untimely death, I’ve often wondered how we — untold numbers of friends and followers who were inspired by Jim’s example — honor our friend ’s memory. When I became the president of the Foundation for Economic Education (FEE), I thought of a way to honor Jim ’s life: to create the James U. Blanchard III Memorial Scholarship Fund. The scholarship fund will help teach students all over the world the principles of sound money and free markets. To qualify to become a Blanchard Scholar, students will be required to write an essay on inflation, sound money, entrepreneurship, limited government and other topics Jim advocated. Once chosen, Blanchard scholars will qualify to attend a weeklong course at FEE headquarters in Irvington-on-Hudson, New York, on free-market economics. We hold several of these seminars each summer (go to for the current schedule). Typically, it costs about $1,000 to pay for one student at a weeklong FEE seminar, including room and board, tuition, books and materials, and airfare. But through the generous support of the Blanchard Scholarship Fund, students will be able to attend and learn about the freedom philosophy. And their lives will be changed forever.

Jim, by the way, was a strong supporter of FEE, and read regularly the monthly magazine, The Freeman (now called Ideas on Liberty). He was a friend of Leonard Read, the founder of FEE. And FEE, by the way, is one of the few free-market organizations that favors a gold standard. It’s a perfect match.

So far the response has been incredible. Friends everywhere have come forward and made contributions. Will you join us? You can make donations by check, credit card, securities or other assets. All donations to the Blanchard Fund are tax deductible through the Foundation for Economic Education, which is an IRS-approved 501(c) 3 educational organization.(Rick Rule, one of my recommended brokers, has offered at no charge to assist anyone who wishes to donate stock — him at Global Resource Investments at 800/477-7853). For more information on FEE, go to our website, Send your donation to: The Foundation for Economic Education, 30 South Broadway, Irvington-on-Hudson, New York 10533. For donations by credit card, call 800/960-4FEE (4333). Be sure to designate “Blanchard Scholarship Fund,” which will be kept as a segregated account. Thank you!

P.S. Any donation above $100 will receive a complimentary one-year subscription to our flagship monthly publication, Ideas on Liberty. You’ll love it!

I Led Three Lives

November 2001
Forecasts & Strategies

by Mark Skousen

“It was a time for every man to stir.” — Thomas Paine

Westchester County, New York, where I now reside, is full of American heroes. Two are buried in Sleepy Hollow cemetery — Carnegie, the steel magnate (highlighted last month) and Samuel Gompers, the great labor leader. Another hero is Thomas Paine (1737-1809), the revolutionary writer, who owned a farm in New Rochelle. Paine is famous for writing Common Sense, the anonymous pamphlet that galvanized Americans into revolution in 1776. I read it as a teenager one summer and was overwhelmed by the candid, powerful case he made for separation from England. But there were actually three revolutions in 1776 — political revolution declared on July 4 by Thomas Jefferson’s Declaration of Independence; an economic revolution propelled by Adam Smith’s magnum opus, The Wealth of Nations (published on March 9,1776); and a cultural/religious revolution as expressed in Edward Gibbon’s best-seller, The Decline and Fall of the Roman Empire (the first volume published on February 23,1776). Thus, 1776 was a year of wonders.

The Age of Paine: A Supporter of Free Enterprise and a Hater of Taxation

Even more amazing, Tom Paine spoke out in favor of all three revolutions. In Common Sense, published on January 9,1776, he made the greatest case for political independence ever penned. “Government even in its best state is but a necessary evil; in its worst state an intolerable one …Nothing can settle so expeditiously as an open and determined declaration of independence.” He coined the name, “United States of America.” He hated the King and the privileged aristocracy that went with it. He referred to the idle nobility as “no-ability.” What mattered most to Paine was a man’s productivity, not his pedigree. Paine was also an unrepented follower of Adam Smith and laissez faire capitalism.

In The Rights of Man (1791) he defended individualism, property, business enterprise and Jeffersonian democracy. He favored a world in which political and social place would be determined by talent, merit and hard work — reliant individuals. He defended the rich and the businessman. His one villain: government. The invisible hand of merchants, manufacturers and bankers create a wholesome civil society; but the “greedy hand of government” oppressed and taxed citizens at home and waged war abroad. He was obsessed with taxation, a symbol of tyranny and corruption. Finally, Paine’s social and religious philosophy was in keeping with Gibbon’s. He favored free thought and freedom of religion, and was opposed to a state religion. He was an outspoken critic of slavery. He was cursed as an atheist and an infidel based on his sharp criticisms of the Bible in The Age of Reason (1794),but he was in fact a deist who strongly believed that “the hand of providence has …accomplished the independence of America.”

The Spirit of Paine Lives On

Some of the stirring words of Tom Paine seem modern to me. After the war on terrorism began, I thought of his words: “These are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph.” Long live the spirit of Tom Paine. That spirit lives on at the Foundation for Economic Education (FEE). I urge you to subscribe to our monthly publication, Ideas on Liberty.The cost is only $30 a year for 12 issues. To subscribe, call 914/591-7230. Ideas on Liberty would also make a great holiday or birthday gift.


Foreign Affairs, the premier establishment journal, loves AND hates my new history, just as it goes into a second printing! The October/September issue of Foreign Affairs calls The Making of Modern Economics “both fascinating and infuriating.” On the positive side, the book is “engaging, readable, colorful and entertaining,” on the negative side, it’s “credulous, disingenuous and tendentious.” My kind of review! Love it and hate it! I ’m also happy to report that the first printing is sold out and a second printing is now available from M.E. Sharpe Publishing, 800/541-6563. Be sure to mention you are a subscriber to Forecasts &Strategies, and you pay only $49.95 for the hardback and $24.95 for the paperback, plus S&H, a considerable bargain over the retail prices.

This Icon of Capitalism Had the Answers

October 2001
Forecasts & Strategies

by Mark Skousen

“The business career is a stern school of all the virtues. The business man pursues fortune.”— Andrew Carnegie

After moving to New York last month to become the president of the Foundation for Economic Education (FEE), I took the opportunity to pay my respects to an icon of capitalism, Andrew Carnegie (1835-1919). His body is buried only a few miles up from FEE headquarters in Sleepy Hollow cemetery. In three ways, Carnegie reflects the spirit of FEE — was a fierce defender of free-enterprise capitalism, he gave generously to good causes, and he worked hard for the cause of world peace and democracy.


As a joint creator (along with J.P. Morgan) of U.S. Steel, the first billion-dollar corporation in the world, Carnegie was a successful entrepreneur who benefited humanity by offering cheaper and better steel with which to build a modern world. He rejected the “robber baron “title. Capitalism was not a device to enrich the rich at the expense of the poor, as the Marxists contend; “Capitalism,” he said, “is about turning luxuries into necessities.” He started out as a poor Scotch immigrant, a classic Horatio Alger. He liked to be different; his favorite advice to young men was, “Attract attention.”

For him, there were other values in the world than just those of the business culture: He loved books and became friends with intellectuals, writers and statesmen such as Herbert Spencer, Mark Twain and William Gladstone. He was intensely competitive, even glorying in beating his friends in golf. In business, he drove down the cost of steel, even as he improved the quality. “Cheaper and better ” became the American way. “Watch the costs, and the profits will take care of themselves,” he explained in his book, The Gospel of Wealth, first published in 1900. He made no apologies for his ruthless competitive spirit, which he justified as a Darwinian form of “survival of the fittest “and as a fulfillment of Jesus ’s parable of the talents. Like an old-fashioned Hank Reardon in Ayn Rand’s novel, Atlas Shrugged, Carnegie wasn’t merely an apologist for anarchic individualism; he was its celebrant. Carnegie objected strenuously to the “progressives “who favored socialism and communism over individualism. He said communism had been tried, and failed.

“The Man Who Dies Rich Dies Disgraced.”

Following his retirement in 1901,the Man of Steel did not live it up with ostentatious mansions, limousines and hundred-dollar cigars, which Thorstein Velben labeled “conspicuous consumption “of the idle rich. Like The Millionaire Next Door, Carnegie spoke of the millionaire’s duty to live a “modest” lifestyle, shunning extravagant living and administering his wealth for the benefit of the community. To do otherwise, he warned, would encourage an age of envy and invite socialistic legislation attacking the rich through progressive taxation and other onerous anti-business regulations.

Carnegie practiced what he preached, giving away over $350 million in his lifetime. One of his first acts after U.S. Steel went public was to put $5 million into a pension and benefit plan for his workers. He was careful in his philanthropy, avoiding at all costs “indiscriminate charity.” He disdained the conventional practice of accumulating wealth solely to be bequeathed to heirs, which he regarded as “sterile” and even “perverse” if it resulted in profligate living. Instead, he spent millions building 2,811 public libraries, donating 7,689 organs to churches, and establishing Carnegie Hall in New York and the Carnegie Institution in Washington. He financed technical training at the Carnegie Institute of Technology, and established a pension fund for teachers through the Carnegie Foundation for the Advancement of Teaching. I cannot help but think that were he alive today, he would be a major donor to FEE!

“Democracy Means That Privilege Shall Cease.”

Finally, Carnegie devoted the rest of his life to promoting world peace and democracy. He was convinced that the United States surpassed Europe economically in part because Europe was constantly embroiled in wars with its neighbors while the United States largely avoided such conflicts.(If the U.S. must maintain a high defense budget to eradicate terrorism, it could severely retard economic growth.) He was a passionate believer in democracy, universal suffrage and equality of opportunity through free public education. But he opposed equality of property or ability, and argued that all citizens had the right to choose their own occupation and had the right to earn income in any amount and spend it as they wished. He expressed distaste for royalty, aristocracy and any form of state religion.

The Spirit of Andrew Carnegie Lives at FEE

Today I am happy to report that the world has a goodly share of modern-day Andrew Carnegies. As the new president of FEE,I have had the pleasure of becoming aware of these unique men and women of the business world who have not only added value to the global economy through their entrepreneurial efforts, but have sacrificed time and money to promote FEE and its mission. For example, last week Larry Reed, president of the Mackinac Center for Public Policy and a FEE trustee, told me about a FEE donor who spent half his life sponsoring FEE seminars on free-market economics in his hometown, often a considerable personal sacrifice of time and financial resources. Another individual, upon hearing that a FEE student seminar might need to be canceled due to a lack of attendees, stepped up and arranged for several dozen students to attend. The seminar turned out to be a great success. Hundreds of other FEE supporters have arranged conferences, raised funds and distributed copies of our flagship publication, Ideas on Liberty, to their friends and acquaintances. And with your help we are planning many new programs to spread of the gospel of FEE and to “attract attention,” as Andrew Carnegie would advise.

How to Help FEE

I am developing some new ways to help FEE teach Americans and the rest of the world the simple but powerful principles of economics. One goal is to dramatically increase the circulation of Ideas on Liberty. If you haven ’t subscribed yet, you should —$30 for a 12 subscription to: Foundation for Economic Education, Irvington on Hudson, New York 10533, telephone 914/591-7230. We are also spending money to create a top-notch interactive website at We are planning special seminars on “Fast Track Executive Economics Courses “at various investment conferences (Money Shows, New Orleans, Atlanta, etc) to explain the basics of the roller-coaster global economy. Plus we’re expanding our student and business seminars to teach future generations the benefits of the free market. If you give $100, you become a “Friend of FEE “and will receive many benefits. I look forward to hearing from you.