Friday, October 27, 2006


There is much trouble with what's been called the interventionist position: the notion that there is a fine balance between capitalism and socialism that we can create by intervening whenever the scale tips in either direction. Political interventionism would be the position of a general equilibrium of government. This is quite a popular position, particularly as professed by so-called "centrists". But this is not possible because you cannot have a system of free enterprise and government ownership of the means of production at the same time. These two things inherently clash. The system will tend to either move towards socialization or privatization of the means of production. The interventionist position inevitably faces the problem of the fact that an economy, a government and a society in general are not static. Things fluctuate: governments have a tendency to expand, the consumer's decisions on the market change, people create new innovations and technologies, political power shifts between different interest groups, etc. It is uncertain and unpredictable as to how exactly such things play out due to the subjectivity of people's value judgements and the limited capacity of our minds.

It is therefore impossible (and undesirable) to create an "equilibrium" - things are always in a state of flux to an extent, so even if you reached such an equilibrium, it would only last for a frozen snapshot in time before the advent of change skewed the results. Both a political and economic equilibrium cannot be made into realities because they require a static atmosphere, which is not possible. The closest way can get to achieving a static atmosphere would have to be though particularly heavy coercion and force, and therefore totalitarianism. But even the totalitarian state is not completely static (because people still naturally exist and therefore still have some capacity to act freely, despite the heavy erosion of their rights - a testament to the fact that freedom is natural rather than a government priviledge) and it eventually is overthrown by a revolution or usurper.

Kings are assassinated by competing families. Revolutions overthrow regimes. Political parties fluctuate in and out of power, and the parties themselves change in their leadership and principles. Various interest groups have numerous and utopian demands of priviledge. New ideas emerge, while old ones are disposed of. Others react to new ideas by trying to reinstate the old ways or old ruling class. Tax rebellions become realities. Wars occur and the post-war nation is never the same as the pre-war nation. One cannot avoid the fact of unpredictability and change. And the most important factor overlooked by the interventionist position is the nature of government itself: namely, to expand. The interventionist wishes to create an equilibrium, but in reality those who possess political power are not going to be particularly restrained. There is nothing the interventionist can do to stop the politician from greatly expanding government power, because a completely static atmosphere does not and cannot exist.

There is a trend that seems rather obvious: the government, generally, tends to enact both the left and right's positive (expansive) agenda while aschewing their negative (reductionist) agenda. Thus, it is fairly inevitable that in practise, interventionism will result in a move towards statism, even if the interventionist has the most libertarian of intentions. Government will not adhere to an equilibrium - it will inevitably be prone to going past our imaginary line. Governments always tend to seek more power. Power corrupts. This is why, by the very least, if we're going to have an imaginary line we better draw it further towards less government. We must truly make our imaginary line function as a limit on the government's power.

If I woke up one day and a magical faerie gave me the choice to live in a totalitarian communist state or a stateless (or heavily minimalist) capitalist society, I would always choose the stateless capitalism. I'm not an anarchist (not too far from it though), but if given such a one-dimensional choice, I choose anarchy. It's a blue pill/red pill situation at least at the dividing line. One has to make the general choice. One has to choose an answer to the question: which means of economic organization is better suited to provide for civilization and wealth, capitalism or socialism? And further, which of these two systems is more consistant with the individual's liberty? To me, these questions have long since been answered; particularly by Ludwig Von Mises, Carl Menger and other Austrian economists (but also by people from the more distant past, such as John Locke, who layed the foundations of these truths).

Capitalism (I.E. the economic economic freedom part of classical liberalism) is simply the most efficient and productive known means of economic organization, and socialism is an unproductive and inefficient system that will inherently fail and crumble. It is no coincidence that some socialist countries have started to de-statize - this is inevitable because a socialist system cannot economically sustain itself for too long. All of the short-term "benefits" that people trumpet become meaningless when the long-term consequences accumulate (and thus their currency crumbles into dust, they suffer from huge food shortages and each individual's upward mobility is reduced to pulp). In terms of individual liberty, the individual's freedom is the very essence of true capitalism (free contract, free exchange, free trade, free homesteading, etc.), while the socialist system seeks to cripple the individual in the name of the chimera of "the collective" - a socialist state inevitably uses the means of force and coercion against the individual to fit them into centrally planned "equality roles".

The interventionist that wants to create some kind of "balance" between these two forces does not seem to understand what private property genuinely means and implies. Certain people give it a different meaning than it initially implies. For example, Bush's plan to "privatize" social security wasn't privatization at all - it would have set up a government-buisiness relationship where people's SS funds are invested for them into the stock market by the government, and thus their investments would be chosen by the government. That's not privatization, that's the very essence of what I describe as being economic fascism: the property may be private in name, but it is then heavily regulated, centrally planned by the government. In short, the initial ownership of the property is doled out by the state in a planned and coerced heirarchy of sorts in which the buisinesses are a middle man between the commoner and the state (neo-mercantalism), and therefore this is not privatization at all.

True privatization of a good or service simply means that the ownership of the means of production in the given area are owned by private individuals; enterprenuers and producers. This requires that the ownership rise through production, exchange and homesteading - it must be justly aquired property rather than confiscation or land monopoly. If the ownership did not come into being through such natural methods as production and exchange, then it is not private property. If the government owns a significant chunk of the means of production, then no genuine capitalism exists, and the state is socialist.

But since the interventionist wishes to merge private property with socialism, they will tend to keep the means of production generally private (in name at least), but they will centrally plan who gets what property (thus violating the requirements of justly aquired property) in an imposed structure, while then heavily regulating the property that does exist. They will use government to artificially bolster buisinesses, unions and bereaucracies, and the bereaucracies will merge with the buisinesses. The interventionist state therefore will often tend to move towards economic fascism by merging the private sector with the state, having the state absorb private property. In communism, the state owns the means of production, so there is actually very little private property to regulate. In the interventionist state turned into a fascist state, since the state does not own the means of production (or too much of it), it will then heavily regulate it.

Alternatively, the interventionist state also faces the possibility of becoming just another democratic socialist state, such as many of the governments in Europe. Such governments may "only" own 15% or 20% of the means of production, and sometimes lesser percentages, but this is in truth a significant part of the means of production. It would be absurd to suppose that such an economic system is "four fifths capitalist"; they are socialist states. It would further be absurd to imply that there is any genuine element of capitalism when the remaining 80% or 85% of the means of production was heavily regulated on top of the socialization - it would truly be quite a totalitarian state at such a point, mixing different elements from socialism and fascism. Conclusively, interventionism, despite the intentions of the interventionists, is inevitably some form of statism in practise.

Monday, October 23, 2006

The Erosion of Moral Character

How Government Destroys Moral Character
Robert Higgs

"Thou shalt not steal" is a rule as old as human society itself. It must have been, else no complex human society would have proved viable.

We are all taught very early to respect what belongs to others: "Don't take your sister's toy away from her," your mother admonished, punishing you if you persisted in your toddler's larceny. By the time you were three years old, you understood the difference between mine and thine. If you didn't take the lesson to heart and persisted beyond your childhood years in treating everybody's property as something for you to take, so long as you could get away with it, then you were viewed as a sociopath, an enemy of decency and of civilization itself.
Government as we know it, however, rests entirely on this kind of sociopathy. Rulers take what does not belong to them and dispose of it to suit themselves.

When the government has only recently placed itself in a position of domination over a group of people, the people recognize full well that the government's taking amounts to looting. They pony up only because they are given the stark choice of "your money or your life," and they want to go on living.

When a government has been entrenched in a society for a long time, however, its exactions become a "fact of life," a matter of "just how things are," and people tend to lose their awareness that obtaining something from the government amounts to receiving stolen property because the government, having nothing legitimately its own, can give only what it has unjustly wrenched from others. Rulers, abetted by their kept intellectuals, go to great lengths to weave a cloak of legitimacy to disguise their theft, because by doing so they ease the difficulties of extracting wealth from the rightful owners.

In some cases, especially in societies with governments that attempt to justify their existence and their actions on "democratic" grounds, many people may be taken in by this ideological sleight of hand. They may actually believe that "we tax ourselves" so that the rulers "we choose" can dispose of the loot in ways that "we voted for," failing to appreciate the gulf that separates this pristine ideological vision from the sordid facts on the ground.

Once this sort of thinking becomes pervasive, however, it serves to sanctify specific forms of predation without any clear limit. People come to believe, or at least they work hard at convincing themselves, that anything the government might stand ready to give them, they thereby have a perfect right to receive. At this point, all contact with genuine morality has been lost, and because a society of sociopaths cannot remain viable in the long haul, the nation that embarks on this course has set sail toward its own ruin.

I thought about this matter for the umpteenth time when I read an October 15, 2006, Washington Post story by Gilbert M. Gaul, Dan Morgan, and Sarah Cohen, "
Aid Is a Bumper Crop for Farmers." The story concerns the widespread practice of farmers' receiving, first, subsidies to purchase crop insurance, then payments from that insurance when their crops fall short, and then, on top of that payoff, additional government payments denominated "disaster aid." Many farmers routinely collect large amounts of money from the public treasury by means of this double-dipping – altogether they've extracted almost $24 billion from taxpayers to fund crop-insurance and disaster-aid programs since 2000.

The reporters interviewed several farmers and others not only about the workings of these programs but also about their propriety. Although none of the recipients quoted in the article exactly gloated about his serial commission of the offense, none chose simply to condemn it, either. The prevailing attitude seems to be the one expressed by farmer Charles Fisher, of Tulare County, California: "Whether it's right or wrong, if they are offering it, you're foolish to turn it down."

In that single sentence, Fisher has encapsulated the rotten core of the welfare state, and he has concisely expressed how such a state destroys the people's moral character. The loot is there for the taking; you're a fool not to take it, notwithstanding that your taking it may be wrong. Financial gain trumps moral probity. Don't be a chump; take the money.

I don't know Charles Fisher, but if he is like a great many others who profit by despoiling their fellow man, with government acting as the facilitator of the crime, then I suspect that he is probably not the kind of man who would pocket his neighbor's wallet if he saw it fall to the ground unnoticed, and he is almost certainly not the kind of man who would wait beside the road to carry out an armed robbery of the first passer-by. Yet he will steal from countless strangers – in effect, a little bit from everyone who pays federal taxes – "whether it's right or wrong," simply to bulk up his income from farming. (Needless to say, the so-called disaster payments rarely go to anyone who has suffered a genuine disaster; like most of what the government does, this program is for the most part a sham from the get-go.)

It would be tempting to attribute this agri-plunder to some idiosyncratic moral defect caused by the farmers' spending too much time in the sun. We might recall, for example, H. L. Mencken's trenchant description of the American farmer: "No more grasping, selfish and dishonest mammal, indeed, is known to students of the Anthropoidea." Unfortunately, however, the farmers are morally the same as countless others; they are simply more politically successful than most of the others.

Sad to say, for every specific form of farmer swag, the government must open the door to a thousand other sorts of booty completely unrelated to agriculture. The moral rot is comprehensive, not confined to a few bad apples, and it defiles businessmen, doctors, lawyers, clergymen, students, retirees, and countless others along with the farmers. Virtually everybody has checked his morality along with his pistol at the entrance to the legislature.

"The state," Frédéric Bastiat told us long ago, "is the great fiction by which everybody tries to live at the expense of everybody else." If only the great man could see us now. Even he might be amazed, and appalled, by the heights to which this futile quest has been raised. In fact, this hoary fantasy arguably has become the central truth about government in our time.

I make these observations not because I hold myself to be an especially upright man; far from it. Yet one need not have earned an A+ in moral rectitude to understand that, however one may assess the morality of modern government's hypertrophied taking from Peter and giving to Paul, this activity bears a deadly fruit. Because it creates such widespread and powerful incentives for people to engage in government-facilitated predation, instead of production, it diverts great energies, intelligence, and other resources to the pursuit of privilege – to what the public choice analysts call "rent seeking." As more and more such diversion occurs, the society falls farther and farther below the full realization of its potential to create genuine wealth.

Eventually, everybody will be fighting to seize and consume the seed corn, and none will remain for planting next year's crop. There's a natural, unavoidable outcome of such action. Ask any farmer.

Sunday, October 22, 2006

The Science of Human Action

Praxeology is the science of human action. The term was first coined in 1890 by Alfred Espinas in the Revue Philosophique, but the most common use of the term is in connection with the work of the Austrian economist Ludwig von Mises and his adherents.

Mises attempted to find the conceptual root of economics. Like other Austrian and classical economists, he rejected the use of observation, saying that human actors are too complex to be reduced to their component parts and too self-conscious not to have their behaviour affected by the very act of observation. Observation of human action, or extrapolation from historical data, would thus always be contaminated by overlooked factors in the way that the natural sciences would not be.

To counter the subjective nature of the results of historical and statistical analysis (see Methodenstreit), Mises proposes that we look at the logical structure of human action (he entitled his magnum opus Human Action).

From praxeology Mises derived the idea that every conscious action is intended to improve a person's satisfaction. He was careful to stress that praxeology is not concerned with the individual's definition of end satisfaction, just the way he sought that satisfaction. The way in which a person will increase his satisfaction is by removing a source of dissatisfaction. As the future is uncertain so every action is speculative.

An acting man is defined as one capable of logical thought — to be otherwise would be to make one a mere creature who simply reacts to stimuli by instinct. Similarly an acting man must have a source of dissatisfaction which he believes capable of removing, otherwise he cannot act.

Another conclusion that Mises reached was that decisions are made on an ordinal basis. That is, it is impossible to carry out more than one action at once, the conscious mind being only capable of one decision at a time — even if those decisions can be made in rapid order. Thus man will act to remove the most pressing source of dissatisfaction first and then move to the next most pressing source of dissatisfaction.

As a person satisfies his first most important goal and after that his second most important goal then his second most important goal is always less important than his first most important goal. Thus, for every further goal reached, his satisfaction, or utility, is lessened from the preceding goal. This is the rule of diminishing marginal utility.

In human society many actions will be trading activities where one person regards a possession of another person as more desirable than one of his own possessions, and the other person has a similar higher regard for his colleague's possession than he does for his own. This subject of praxeology is known as catallactics, and is the more commonly accepted realm of economics.

Friday, October 20, 2006

Some Thoughts on Liberty: Part 1

Liberty is the fundamental idea that our democracy is based on but what does that truly mean?
There are four different kinds of political liberty. The first is National liberty; the second is the political liberty of representative government, economic liberty and individual liberty. The first two are obviously of a collective nature and pertaining to the group.
Political Liberty as Representative:
Liberty has been a war or words and swords throughout history, the idea of Liberty as Representative has come into being when a dictator of absolute power weakens and there powers become relatively limited and those that are governed acquire a form of representation, so the increase of the power of the people comes [all things being equal] when the dictators power decreases. Since all governments impose forms of restrictions wither by the powers of law or by the power of force on those being governed. It would be logical to assume that those that would govern themselves would allow themselves a great deal of liberty. This brings the question of what is self-government? Or even democracy for that matter? In a large direct democracy we are supposed to vote on every issue, which is likely impossible. Then it seems that the ideal of liberty or self-government cannot take the form of direct democracy in a large modern nation-state. The closeted we can get to that ideal arrangement is representative democracy with regular elections in which every citizen has a vote (only one) in which party or group they find suitable. There is no illegal party and the system is not rigged.
Economic Liberty:
This is usually understood as a freedom to be able to own private property, to buy and sell goods, and to sell ones labors/ skills. Can there be private property, contracts, or employment without government? This is a question I have struggled with for a long time. Many philosophers like Ayn Rand and Robert Nozrick equate the idea of economic liberty with capitalism as a central tenet. Many philosophers equate economic liberity as the most important of all the freedoms and in itself is a foundation of all other kinds of liberty. So that implies that systems like communism and socialism lack certain freedoms because of the restrictions on economic liberty.

To be continued…

Fascism and Neoconservatism

Chapter ? - Fascism and Neo-Conservatism


The word fascism is thrown around very often. It is usually used as a smear word for practically anything that one disagrees with. As a system of government, fascism is often given a somewhat false characterization, one of which is that it is on the opposite end of the spectrum of communism (implying that fascism is as far right as one can go and communism is as far left as one can go), and another being that communism and fascism are the exact same thing. But both of these characterizations are false; there are both clear differences and similarities between the two systems. These ideologies have been mischaracterized because of an erroneous one-dimensional view of the political spectrum. Therefore, we must establish what fascism actually is, where it stands on the political spectrum and how it came about.

One must go back in time, long before the advent of modern fascism, in order to set up the scenario. We must begin by establishing that, essentially from time immemorial; there existed an “old order”, the despotic ruling regime that stood for collectivism, militarism, imperialism, uniformity and force. In short, it was the classical form of despotism. Whether this old regime took the form of the oriental emperors, western kings or the Roman Republic is irrelevant in the sense that it was all generally the old ruling elites; pure and arbitrary power backed by force. For thousands of years, the common person lived under some varying form of this. One group of oligarchs and nobles, headed by one supreme ruler (pharaoh, king, queen, emperor, sultan, shaman, etc.), at the top of the structure, confined to a relative minority in comparison to the population at large, were the arbiters of power, the old ruling class.

Thus, from the very beginning, the true “class struggle” was between, on one hand, the state and those that were allied with it, and on the other hand, the common person that was subject to the state’s rule. Essentially, there were the rulers and the ruled. The “ownership class” was the king and the aristocracy and nobles that the king granted feudal privilege to. Feudalism, therefore, was not a naturally arising set of monopolies created by a free market economy, but rather it was a system of monopolies created as a special privilege of the state to those who allied with it. A given piece of property was confiscated by the state, and then it was distributed to the various nobles as their so-called “private property”. It must be realized that the feudal land was not it’s “owner’s” justly acquired private property to begin with, it was property that was given to them as a special monopolist privilege by the state. In short, it was private property only in name, not in actuality. Thus, the common characterization of feudalism as the inevitable culmination of private property in a free market is entirely false. True capitalism was nowhere near existence in the feudal monopolies of the past. Indeed, the places where any degree of capitalism managed to flourish in the past were precisely those places that were most decentralized, most far away from governmental reach. Karl Marx’s class analysis (which widely permeates political thought to this day), which characterizes capitalism as the advent of this feudalism and defines the class struggle as being between private property owners and workers, between capitalists and non-capitalists, is a total misconception. This confusion has lead to a widespread misunderstanding of history.

After a seemingly endless amount of eons of statism, during the renaissance and enlightenment period, there came to be a well-defined classical split in political philosophy. The ancient regime, the old order that believed in preserving the status quo were the “conservatives”, and were put on “the right”. The opponents of this regime, those who believed in revolution and change, in smashing the status quo, were the “liberals”, and were put on “the left”. The liberals were the party of optimism toward the future; they stood for liberty, individualism, cooperation and progress. The conservatives were the party of pessimism towards the future; they were reactionaries that stood for statism, collectivism, theocracy, and class exploitation. This is the classical alignment of the political spectrum. The advent of the American Revolution, French Revolution and English Civil Wars rushed in the first move in history towards classical liberalism, away from the status quo, reducing state power in a way that never was achieved before. However, it did not take very long for classical liberalism to fade away into something else. Classical liberalism declined over the course of the 19th century. There were a number of philosophical reasons for this change: The advent of socialism, romanticism and the abandonment of natural rights and natural law theory, causing a drift of various classical liberals towards utilitarianism. Some liberals essentially started becoming quasi-conservatives. But ultimately, the biggest nail in the coffin is that with the libertarian sentiment decaying from within, into the gap left by the decline of classical liberalism, stepped in the new movement of socialism.

However, it would be a mistake to consider socialism as a whole to be the diametric opposite of libertarianism. Conservatism, in the classical sense of the word, was always the polar opposite of liberty. As Murray N. Rothbard and Leonard P. Liggio have demonstrated, socialism, while it may be to the “left” of conservatism/statism in the classical sense, is a confused middle of the road doctrine. Rothbard takes note as follows in “Left and Right: The Prospects for Liberty”:

“In short, Russell Kirk, who claims that Socialism was the heir of classical liberalism, and Ronald Hamowy, who sees Socialism as the heir of Conservatism, are both right; for the question is on what aspect of this confused centrist movement we happen to be focusing. Socialism, like Liberalism and against Conservatism, accepted the industrial system and the liberal goals of freedom, reason, mobility, progress, higher living standards the masses, and an end to theocracy and war; but it tried to achieve these ends by the use of incompatible, Conservative means: statism, central planning, communitarianism, etc. Or rather, to be more precise, there were from the beginning two different strands within Socialism: one was the Right-wing, authoritarian strand, from Saint-Simon down, which glorified statism, hierarchy, and collectivism and which was thus a projection of Conservatism trying to accept and dominate the new industrial civilization. The other was the Left-wing, relatively libertarian strand, exemplified in their different ways by Marx and Bakunin, revolutionary and far more interested in achieving the libertarian goals of liberalism and socialism: but especially the smashing of the State apparatus to achieve the "withering away of the State" and the "end of the exploitation of man by man." Interestingly enough, the very Marxian phrase, the "replacement of the government of men by the administration of things," can be traced, by a circuitous route, from the great French radical laissez-faire liberals of the early nineteenth century, Charles Comte (no relation to Auguste Comte) and Charles Dunoyer. And so, too, may the concept of the "class struggle"; except that for Dunoyer and Comte the inherently antithetical classes were not businessmen vs. workers, but the producers in society (including free businessmen, workers, peasants, etc.) versus the exploiting classes constituting, and privileged by, the State apparatus. Saint-Simon, at one time in his confused and chaotic life, was close to Comte and Dunoyer and picked up his class analysis from them, in the process characteristically getting the whole thing balled up and converting businessmen on the market, as well as feudal landlords and others of the State privileged, into "exploiters." Marx and Bakunin picked this up from the Saint-Simonians, and the result gravely misled the whole Left Socialist movement; for, then, in addition to smashing the repressive State, it became supposedly necessary to smash private capitalist ownership of the means of production. Rejecting private property, especially of capital, the Left Socialists were then trapped in a crucial inner contradiction: if the State is to disappear after the Revolution (immediately for Bakunin, gradually "withering" for Marx), then how is the "collective" to run its property without becoming an enormous State itself in fact even if not in name? This was a contradiction which neither the Marxists nor the Bakuninists were ever able to resolve.”

Rothbard concludes:

“Having replaced radical liberalism as the party of the "Left," Socialism, by the turn of the twentieth century, fell prey to this inner contradiction. Most Socialists (Fabians, Lassalleans, even Marxists) turned sharply rightward, completely abandoned the old libertarian goals and ideals of revolution and the withering away of the State, and became cozy Conservatives permanently reconciled to the State, the status quo, and the whole apparatus of neo-mercantilism, State monopoly capitalism, imperialism and war that was rapidly being established and riveted on European society at the turn of the twentieth century. For Conservatism, too, had re-formed and regrouped to try to cope with a modern industrial system, and had become a refurbished mercantilism, a regime of statism marked by State monopoly privilege, in direct and indirect forms, to favored capitalists and to quasi-feudal landlords. The affinity between Right Socialism and the new Conservatism became very close, the former advocating similar policies but with a demagogic populist veneer: thus, the other side of the coin of imperialism was "social imperialism," which Joseph Schumpeter trenchantly defined as "an imperialism in which the entrepreneurs and other elements woo the workers by means of social welfare concessions which appear to depend on the success of export monopolism..."

This phenomenon of right-wing socialism is the seeds of modern fascism. Fascism is, in essence, right-wing socialism; it is the ancient regime trying to reassert itself in the industrial world. The advent of Fascism was the culmination of the drift towards right-wing collectivism. By the time it becomes the early 20th century, fascism is a full-scale phenomenon in various countries, most famously in Italy and Nazi Germany. Various business interests became attracted to fascism as opposed to left-socialism, as fascism provided a means by which business can be cartelized and married to the state apparatus; a system of special privilege for businesses and various special interests to unjustly block off their competitors. The true entrepreneur and free enterpriser, the true “free market capitalist”, does not function in this way, they work within the voluntary atmosphere of the market. On the other hand, the “political capitalist” gets the state to give them special favors. Indeed, the vast majority of subsidies are for businesses to get privileges that they could not acquire if they were functioning on the free market.

Thus, there are indeed differences between fascism and communism. Where Communism seeks to substitute the state for private ownership, fascism seeks to incorporate or co-opt private ownership into the state apparatus through public-private partnership. Secondly, fascism tends to be more nationalist, militarist and chauvinistic in nature, as well as anti-intellectual. Fascism particularly stresses allegiance to the state and/or one’s culture or ethnicity. Communism, in contrast, tends to be more internationalist and sometimes anti-authoritarian in nature; at least in its theory. There is a difference in emphasis in strategy between fascism and Communism in this respect. When faced with existing institutions that threaten the power of the state, the Communist impulse is generally to abolish them, while the fascist impulse is to generally to absorb them into the state. These contrasts should not be overstated, however. No matter how cosmopolitan in nature a communist regime may be in theory, they inherently tend to be just as nationalistic and authoritarian in practice as fascist regimes are. On the other hand, fascist regimes sometimes use quasi-liberal and cosmopolitan rhetoric as lip service to left-socialism. This, of course, is just the political use and abuse of language to achieve power. Fundamentally, what unites or likens communism and fascism is that they are inevitably authoritarian and statist in practice. Stalin and Hitler are not on opposite ends of the political spectrum; they are rather close to each other. There might be a dime’s difference between them, but not a quarter. What defines these two people and likens them to each other is that they are totalitarian in nature. On the other hand, what sets them apart to a certain extent is the underlying “rationales” and means that they used. Fascism is a counter-revolutionary movement; it establishes a set of frozen monopoly privileges onto society. Modern “state-capitalism”, therefore, is essentially fascism.

In order to apply our analysis to the 20th century American political scene, we must address a common myth of history that permeates rather widely to this day, with different interpretations by the left-wing and ring-wing camps. This myth goes approximately as follows: America was generally a haven of laissez-faire capitalism until the New Deal; then Roosevelt, influenced by "Fabian" and Communist "conspirators," engineered a revolution which set America on the path to Socialism, and, further on, beyond the horizon, to Communism. The modern conservative tends to believe something along these lines, and therefore tends to be considered an “extreme right-winger”. There are some grave flaws in this conception. The New Deal was not a sudden revolution in any real sense; its entire program was anticipated and preceded by Herbert Hoover during the great depression, and by the war-collectivism and central planning that pervaded America during WWI. Every single element in the New Deal program: central planning, creation of a network of compulsory cartels for industry and agriculture, inflation and credit expansion, artificial raising of wage rates, government regulation and ownership, all this had been anticipated and adumbrated during the previous two decades. This was not left-wing socialism, this was right-wing socialism; fascism, a marriage between big business interests seeking control beyond that which the open market could give them. Indeed, figures such as Woodrow Wilson and Herbert Hoover are more like proto-fascists then socialists.
A defining feature of a fascist economy is government cartelization and centralization of banking. This occurred in and in the time running up to 1913, when the Federal Reserve was instituted on the behalf of J.P. Morgan and other such big banking interests. From then on, a group of “private” central bankers were given the special privilege by the federal government to manipulate the money supply as they please, which means that they can “legally counterfeit”. Coupled with this inflationism, is usually the advent of the confiscation of the citizen’s gold, which both FDR and the Nazis did in the 30’s. In the fascist economy, the centralized banking system becomes a necessity in order to run the warfare state, the military-industrial-complex. Inflation provides a way to move towards a police state and engage in expansive warfare without directly laying taxes on the populace. The stronger the fascism gets, the more the military becomes merged with various industries. Thus, while in communism the government takes over the means of production, the fascist state is somewhat of a “mixed economy” in which the government allows private property to exist in name, but it heavily regulates this property and absorbs various businesses and unions.

Somewhat ironically, in 1934, the British Leninist theoretician R. Palme Dutt published a rather scathing analysis of the progressive era and New Deal as "social fascism"--as Fascism cloaked with a thin veneer of populist demagogy. Dutt wrote that the Roosevelt policy was to "move to a form of dictatorship of a war-type"; the main policies were to impose state-capitalism through the NRA, to subsidize or cartelize business, banking, and agriculture through inflation, and to the regulation and exploitation of labor by means of government-fixed wages and compulsory arbitration. Dutt concluded with a quote from an editor of the highly respected Current History Magazine: "The new America (the editor had written in mid-1933) will not be capitalist in the old sense, nor will it be Socialist. If at the moment the trend is towards Fascism, it will be an American Fascism, embodying the experience, the traditions and the hopes of a great middle-class nation." Essentially, the intervention by the federal government was designed, not to curb big business in the name of “the public good”, but to artificially create monopolies that big business, as well as some smaller businesses, had not been able to establish through the means of competition on the free market.

This was a conscious effort to mold the economy a cement of subsidy and monopoly privilege. Each particular economic interest group was being cartelized and monopolized; made to fit into its privileged niche in a hierarchical socio-economic structure. In another ironic and revealing note, Gabriel Kolko, a left-socialist, concluded about the pre-new-deal progressive era (roughly 1900-1920):

“A synthesis of business and politics on the federal level was created during the war, in various administrative and emergency agencies, that continued throughout the following decade. Indeed, the war period represents the triumph of business in the most emphatic manner possible... big business gained total support from the various regulatory agencies and the Executive. It was during the war that effective, working oligopoly and price and market agreements became operational in the dominant sectors of the American economy. The rapid diffusion of power in the economy and relatively easy entry virtually ceased. Despite the cessation of important new legislative enactments, the unity of business and the federal government continued throughout the 1920's and thereafter, using the foundations laid in the Progressive Era to stabilize and consolidate conditions within various industries ...The principle of utilizing the federal government to stabilize the economy, established in the context of modern industrialism during the Progressive Era, became the basis of political capitalism in its many later ramifications.”

Thus, the New Deal was really a continuation of what had already been started in the progressive era. The New Deal cemented the foundation for the welfare-warfare state that persists to this day. This kind of fascism came to bury itself in egalitarian promises and rhetoric. In those days, there was a relatively small but vibrant quasi-libertarian (with some full libertarians as well) opposition to the new deal that existed in the Republican Party. It was by no means the majority of the party, but a meaningful faction within it. But what this ended up eventually doing was provide the vast majority of non-libertarians, and quasi-fascists that existed in the Republican Party the rhetoric of liberty necessary to gain political support while implementing its opposite once power is attained. In the 1930’s, 1940’s, and 1950’s, the fascistic tendencies of the Democrats such as Wilson and Roosevelt became increasingly fused into Republican conservatism. Furthermore, there was a distinct “fusionist” movement in the 50’s and 60’s in which “me-tooism” (bi-partisanship in the name of the state) became the siren song of the day, where both the Democratic and Republican establishment came to a general consensus in terms of an alleged “need” for increased government intervention. Essentially, a fascistic model became the official consensus of the political status quo. Conservatives quickly became “Strict Wilsonians” and some even idolized FDR as an ultimate executive role model and statesmen. The conservative movement became proponents of heavy foreign intervention, increased domestic police powers, monetary manipulation, redistribution, and government cartelization of business. The only difference is that they do it while hypocritically claiming to be proponents of a more limited and decentralized government. Modern America in general has been drifting in the direction of fascism for a long time, and the modern neo-conservative movement is the extreme culmination of this drift. Thus, we must analyze the modern conservative movement; we must apply our analysis to the modern American political scene. We must provide a libertarian critique of conservatism and Republican politics in general.

Thursday, October 19, 2006

Billion Dollar Pot

A Billion Dollars a Year for Pot?
by Paul Armentano

American taxpayers are now spending more than a billion dollars per year to incarcerate its citizens for pot. That’s according to statistics released last week by the U.S. Department of Justice’s Bureau of Justice Statistics.

According to the new BJS report, “Drug Use and Dependence, State and Federal Prisoners, 2004,” 12.7 percent of state inmates and 12.4 percent of federal inmates incarcerated for drug violations are serving time for marijuana offenses. Combining these percentages with separate U.S. Department of Justice statistics on the total number of state and federal drug prisoners (BJS October 2005 Bulletin: “Prisoners in 2004” – NCJ 210677) suggests that there are now about 33,655 state inmates and 10,785 federal inmates behind bars for marijuana offenses. (The report failed to include estimates on the percentage of inmates incarcerated in county jails for pot-related offenses.)

Multiplying these totals by U.S. DOJ prison expenditure data (BJS June 2004 Bulletin: “State Prison Expenditures, 2001” – NCJ 202949) reveals that taxpayers are spending more than $1 billion annually to imprison pot offenders.

The new report is noteworthy because it undermines the common claim from law enforcement officers and bureaucrats, specifically White House drug czar John Walters, that few, if any, Americans are incarcerated for marijuana-related offenses. In reality, nearly 1 out of 8 U.S. drug prisoners are locked up for pot.

Of course, several hundred thousand more Americans are arrested each year for violating marijuana laws, costing taxpayers another $8 billion dollars annually in criminal justice costs.
According to the most recent figures available from the FBI, police arrested an estimated 786,545 people on marijuana charges in 2005 – more than twice the number of Americans arrested just 12 years ago. Among those arrested, about 88 percent – some 696,074 Americans – were charged with possession only. The remaining 90,471 individuals were charged with “sale/manufacture,” a category that includes all cultivation offenses, even those where the marijuana was being grown for personal or medical use.

These totals are the highest ever recorded by the FBI, and make up 42.6 percent of all drug arrests in the United States. Nevertheless, self-reported pot use by adults, as well as the ready availability of marijuana on the black market, remains virtually unchanged.

Marijuana isn’t a harmless substance, and those who argue for a change in the drug’s legal status do not claim it to be. However, pot’s relative risks to the user and society are arguably fewer than those of alcohol and tobacco, and they do not warrant the expenses associated with targeting, arresting and prosecuting hundreds of thousands of Americans every year.

According to federal statistics, about 94 million Americans – that’s 40 percent of the U.S. population age 12 or older – self-identify as having used cannabis at some point in their lives, and relatively few acknowledge having suffered significant deleterious health effects due to their use. America’s public policies should reflect this reality, not deny it. It makes no sense to continue to treat nearly half of all Americans as criminals.

Tuesday, October 17, 2006

Real Liberalism

Liberalism, Properly So Called
Albert Jay Nock

This essay was previously unpublished, written in 1933 or 1934.

I understand that what you want is not a publishable article but merely a conspectus or brief, which will aid the comprehension of two remarkable historical phenomena.

First, why is it that Liberalism is now motivated by principles exactly opposite to those which originally motivated it, and how did this change come about? Second, why has the spirit and temper of Liberals undergone a corresponding change, and how did this change come about?
The facts are clearly apparent. We now see on all sides the extraordinary spectacle of Liberals doing their best to destroy the cardinal freedoms and immunities which Liberals formerly defended, while all the forces which are historically and traditionally known as Tory or Conservative are arrayed in defense of those freedoms. Furthermore we see Liberals vehemently vilifying those who hold to the original basic principles of Liberalism, denouncing them as enemies of society, and doing all they can to discredit and disable them. These two are probably the strangest anomalies that recent history presents.

To understand them it is necessary to consider Liberalism's origin and rise in Britain, since it is only in this perspective that American Liberalism can be clearly seen and correctly assessed. British political Liberalism was a continuation of Whiggism, which as far back as the time of Charles II proposed to subordinate the royal power to the power of Parliament. Toryism, on the contrary held to the "divine right" theory of monarchy, with all its implications. Put in terms of general principle, the Tory held that obedience to established authority is unconditional; the Whig held that it is conditional. It is of the utmost importance to keep these two primary principles constantly in mind.

Toryism therefore contemplated a type of society organised around a system of compulsory cooperation. This system is best illustrated by the example of a conscript army. The individual soldier has no option about joining or leaving the service; nor has he any say about his duties, his maintenance or his pay. In all ranks throughout the service obedience is unconditional, and is enforced under coercion. The final intention is thus to bring and keep the many under rule of the few; and the service's rules and regulations are devised with a view to strengthening a highly centralised coercive military power over the many, and making them more easily manageable. This is the point to be kept in mind when considering the structure of civil society as Toryism would have it, and for some time did have it. As the Army, not the individual soldier, is the unit of ultimate value, so the civil structure with its system of fixed ascending subordinations, and not the individual member, was Toryism's ultimate criterion; and hence the regulatory laws, edicts, mandates, which Toryism set up were devised with a view to strengthening a highly centralised coercive civil power over the many, and making them more easily manageable.

Liberalism, on the contrary, contemplated a type of society organised around a system of voluntary cooperation; a system of original contract, free contract. This system is best illustrated by the example of an industrial concern like the Standard Oil Company. The individual need not work for Standard Oil unless he wishes to do so; he is not conscripted. His acceptance of the Company's rules is a matter of free contract; he is not coerced; he may leave if he does not like them. His wages, hours and conditions of labor are fixed by consent; if they do not suit him as proposed, he is free to refuse them. Under this system the individual is regarded as the unit of ultimate value. The logic of this position was that society as a whole would gain more from the aggregate initiative and enterprise of groups pursuing various ends in free association and by such means as of free choice should seem best to them, than it would from the efforts of groups pursuing prescribed ends under coercion.

Consequently the political design of Tory measures was uniformly to increase the coercive power of the government over the individual and enlarge its range of action. The design of Whig measures, and subsequently Liberal measures, was uniformly to decrease the government's coercive power and to reduce its range of action. This must be kept clearly in mind, for it is the fundamental distinction between Toryism in practice and Liberalism in practice. It furnishes the one and only test by which to determine whether a specific political measure should be classified as Tory or Liberal. No matter what political label the measure bears; no matter whether its direct object may be desirable or undesirable; its mark of identification is found only by addressing these questions to it: Does this measure tend to diminish or to increase the government's coercive power over the individual? Does it tend to narrow the range of the government's coercive power, or to widen it? Does it tend to diminish compulsory cooperation or to increase it? Does it tend to enlarge the area of conduct in which the individual is free to do as he pleases, or does it enlarge the area in which he must do as governmental agents please? If these questions can be answered by the one affirmative, then the measure is a Liberal measure, properly so called; and if by the other, it is a Tory measure; and it must be repeated that neither the desirability per se of the immediate end which the measure is designed to serve, nor its lack of desirability, has any bearing whatever on this decision.

Liberalism held that society's work should be carried on, its responsibilities met, and its difficulties dealt with, by the application of social power, not governmental power; social power meaning the power generated and exercised by individuals and groups of individuals working in an economy which is free of governmental interference – an economy of free contract. This follows logically from the conception of government inherited from Whiggism in opposition to Toryism's conception of it. Toryism held that the ruler derived his authority from God and distributed that authority to his agents in various degrees according to their function; therefore the agents exercised power by divine right ad hoc, responsible only to the ruler, who in turn was responsible only to God. Whiggism, on the contrary, regarded rulership as purely a civil institution established by the nation for the benefit of all its members, with no inherent power of its own, and responsible only to the nation.

The early Liberals inherited from the Whigs this conception of government as an agency set up by the nation and responsible to it, with no power of its own, but with certain coercive powers granted to it for exercise in sharply defined directions and in none other. They contemplated a government whose interventions on the individual should be purely negative in character. It should attend to national defense, safeguard the individual in his civil rights, maintain outward order and decency, enforce the obligations of contract, punish crimes belonging in the order of malum in se, and make justice cheap and easily accessible. Beyond these negative interventions it should not go; it should have no coercive power to enforce any positive interventions whatever upon the individual.

When the Whigs came into power they kept all the foregoing tenets in mind, and so did the early Liberals who succeeded them. They worked steadily towards curbing the government's coercive power over the individual; and with such effect, as historians testify, that by the middle of the eighteenth century Englishmen had simply forgotten that there was ever a time when the full "liberty of the subject" was not theirs to enjoy. In this connexion the thing to be remarked is that the Whigs proceeded by the negative method of repealing existing laws, not by the positive method of making new ones. They combed the Statute-book, and when they found a statute which bore against "the liberty of the subject" they simply repealed it and left the page blank. This purgation ran up into the thousands. In 1873 the secretary of the Law Society estimated that out of the 18,110 Acts which had been passed since the reign of Henry III, four-fifths had been wholly or partially repealed. The thing to be observed here is that this negative method of simple repeal left free scope for the sanative processes of natural law in dealing with all manner of social dislocations and disabilities. These processes are slow and usually painful, and impatience with them leads to popular demand that the government should step in and anticipate them by positive statutory intervention when anything goes wrong. The Liberals were aware that no one, least of all the "practical" politician, can foresee the ultimate effects, or even all the collateral effects, of such interventions, or can calculate the force of their political momentum. Thus it regularly happens that they bring about ultimate evils which are not only far more serious than the specific evils which they were meant to remedy, but are also wholly unexpected. American legislative history in the last two decades shows any number of conspicuous instances where the political shortcut of positive intervention has been taken towards remedying a present evil at the most reckless expense of future good. The Prohibition Amendment is perhaps the most conspicuous of these instances.

Towards the middle of the nineteenth century British Liberals turned their backs upon their historical principles and gave support to a series of coercive measures, continuously increasing both in number and particularity, from the poor-laws, the Factory Acts, and the subvention of school house building in the 'thirties, down to the proposals set forth in the Beveridge Report of last year. It is hardly possible to conceive of a more complete volte-face on fundamental doctrine. Three circumstances bearing on this change may be noticed.

First, the period from the third quarter of the eighteenth century to the second of the nineteenth was one of wars; and as always in a war period, it was one of savage governmental coercions of all kinds. As always, again, the general structure of society reverted from the more advanced type contemplated by Liberalism, the type marked by voluntary cooperation, to the more primitive type contemplated by Toryism, the type marked by enforced cooperation. The normal development of a society is always from the primitive closely-organised militant type towards the loosely-organised industrial type; that is to say, from organisation in mass to organisation in group. Hence this mutation of type was a retrogression; and in consequence, as invariably happens, the mind and spirit of the people underwent a considerable readjustment. From their adjustment to the terms of pre-war "liberty of the subject," they became largely readjusted to the terms of a slave-status.

Second, as is usually the case, the period almost immediately succeeding the period of war was one of great general distress and serious civil disturbances. "The Hungry 'Forties" was on its way to become a by-word. This state of things brought heavy pressure on the government; and the pressure for positive interventions of one kind and another was much increased by the readjustment just now mentioned. To understand the attitude of Liberals in these premises, one must keep clearly in mind the fact that nothing is more natural than to regard a remedied evil as an accomplished good, and to forget entirely the all-important differentiation of the means by which the good was accomplished; and therefore to conclude that the thing to be aimed at is the direct accomplishment of a present good, or what it presumed to be a good, rather than the consistent employment of a means contemplating far larger measures of ultimate good.

Thus it was natural for Liberals to say, "The government intervened to accomplish that great good, and that and that; why should it not intervene to accomplish this and this?" The cardinal fact that in the one case the intervention was negative while in the other it must be positive, was lost sight of or disregarded. The questions of principle which early Liberalism would address to any proposal of intervention were no longer put; the only questions now put were those of expediency and practicability. In this way the later Liberalism progressively abetted the lapse of British society into a mode of State-servitude quite as rigid and unconditional as the mode contemplated by Toryism, and marked by far greater particularity.

Third, the later Liberalism was confirmed in its digression by the spread of a new doctrine of society fathered by Bentham in England and on the Continent by Comte. This doctrine made a slight side-approach to Toryism in holding that society is the unit of ultimate value; rather than the individual, as early Liberalism had held; hence "the greatest good to the greatest number" is the thing to be aimed at, for the individual will find his greatest advantage and happiness in a society controlled by this principle. The consequent justification of expediency is obvious; and the extent to which the later Liberalism has been affected by Benthamite doctrine is well known.
Passing now to consideration of Liberalism and Liberals in the United States, there is hardly anything to be said which is not clearly implicit in the foregoing. We once had a short-lived political party led by Henry Clay and known as Whigs, but it had nothing in common with British Whiggism. It was formed in opposition to Jackson's stand on the National Bank and on nullification, and took the name of Whig only as an anti-Roosevelt party today might do. It came into power in 1840 for four years, and went to pieces some ten years later.

Liberalism in this country never had a political organisation, nor has it ever had anything in common with earlier British Liberalism. It was never formulated in definite terms, even according to the broad original British formula which defined a Liberal as "one who advocates greater freedom from restraint, especially in political institutions." Thus it has had no tradition, unless one might say that it has perhaps come more or less into the degenerate British Liberal tradition of Benthamite and Comtist expediency; but this is no doubt a matter of coincidence rather than design.

Hence we see that those who call themselves Liberals proceed on no fixed principles whatever, and their action in any given premises is notoriously unpredictable. Their title is usually self-chosen, in virtue of an interest in some one special enfranchising or humanitarian cause like freeing slaves, universal suffrage, "social security," improving the conditions of labour, raising the status of Negroes. This interest is often exclusive; the absence of fixed principle is apparent in the Liberal's active opposition to other causes which stand on a logical footing with the cause he favours; as when, for example, many Liberals were rabidly against withholding the suffrage from Negroes and equally against giving it to women.

But the determining factor in the honest Liberal's attitude is his indifference towards the essential nature of the means employed to further the cause in which he is interested. There is here no implication against the honest Liberal's moral character. Nor is there an implied charge that he is acting in black ignorance of history; the charge is only one of stark incompetence with history. Having all history to guide him, he nevertheless fails to look beyond the immediate effect producible by a measure bearing on his cause, and thus fails to see that the ultimate sum-total of effect may be to produce a much worse state of things than the one which it was meant to remedy, and perhaps did remedy.

I have purposely refrained from illustration, since any one with ordinary knowledge of history can readily supply a dozen for every point I have raised. I shall make one here, however, partly to clear the point of the last paragraph, and partly as in a general way typical.

Twelve years ago, when a government made up of professing Liberals proposed a largescale positive bureaucratic intervention to relieve distress, and by use of the taxing-power brought all citizens into enforced cooperation with it, Liberals were in favour of it. They regarded only the immediate end – the relief of distress -- and not at all the nature of the means; and the means did actually serve that end, though in a most disorderly and wasteful fashion.

The true Liberal, the Liberal of the eighteenth century, would at once have looked beyond that end and asked the great primary question which finally judges, or should judge, all political action: "What type of social structure does this measure tend to produce? Does it tend to improve and reinforce the existing type, or to bring about a reversion to the primary militant type? Does it tend towards advance or retrogression, towards progress in civilisation or towards re-barbarisation?" Let us take the measure apart, and see.

The subordinate questions would then follow: "Will this measure increase the government's coercive power over the individual and widen its scope?" Clearly so. "Will it, through taxation, confiscate social power and convert it into State power?" Yes, to an incalculable extent. "Will it diminish voluntary cooperation and increase compulsory cooperation?" Yes, greatly. "Are the directions and the driving force of this measure's political momentum at all determinable?" No, not even a conjecture is worth making.

If the true Liberal had subjected the proposed relief-measure to these tests twelve years ago, he would have said at once, "This is in no sense a Liberal measure. There is not a suggestion of Liberalism anywhere in it. On the contrary, it exactly meets every specification laid down by the most hide-bound Toryism, and for that reason I oppose it."

This illustration brings us in sight of reasons why the self-styled Liberal of the present day vehemently defames the representatives of historic Liberalism. But we should make a distinction here by leaving out of account those who are Liberals for revenue only; those of the rice-Christian kind, who take this title with a view to personal gain, as a convenience for getting political jobs, prestige as journalists, essayists, commentators, prestige in one-or-another order of society, or for acquiring some other modicum of advancement or distinction. Such as these meet opposition by the political method technically known as smearing; that is, by applying terms which are irrelevant to the matter in hand, and which are therefore neither descriptive nor meant to be so, but are merely terms of opprobrium. Terms such as Fascist, Naziist, economic royalist, antiSemite, are now conspicuously the property of persons who call themselves Liberals for the sake of personal profit, as rigger-trader and rigger-lover were a century ago, and as bolshevik was in the days following the Russian revolution. Such persons obviously stand outside any serious discussion of Liberalism.

Another order of persons, quite in the majority, style themselves Liberals in all good faith, but being ignorant of Liberalism's principles and history, they understand neither what they say nor whereof they affirm. They conceive of themselves as on the side of progress, enlightenment, a larger measure of welfare and happiness all round, and they regard the content of Liberalism as made up of whatever matters seem compatible with this view. Whether or not they are actually compatible with Liberalism can be determined only by analysis, which they do not attempt to make. To them, whatever social or political end attracts their allegiance is a Liberal desideratum; and whatever means will attain it is, by consequence, a Liberal means.

These usually, and in quite good faith, meet opposition by attributing to the opponent opinions which he does not hold; opinions perhaps which he has often openly disavowed. In my own case, for example, an old friend, a member of the Administration and a self-styled Liberal (but of this second order) describes me as an anarchist because I hold to the theory of government maintained by the eighteenth-century British Liberals, by Mr. Jefferson and Thomas Paine. Nothing could be in more violent contrast with the spirit and temper of the early Liberals. They and the Tories each at least knew what the other's opinions and principles were, and could state them in specific terms. My friend, I regret to say, is wholly ignorant of both.

Again, this ignorance sometimes leads to conclusions prejudicial to an opponent's character; and in a time of popular excitement it quite regularly does so; and I repeat, in all good faith. Here also I may take my own case by way of example. When I questioned the policy of governmental poor relief twelve years ago, on sound Liberal principles, I was met with the question, "But would you let Americans starve?"; and as it happened, the question was pressed hardest on me by persons who called themselves Liberals. As professing Liberals, it meant nothing to them that the exigency clearly called for the application of social power, not governmental power; that there was plenty of social power available, and plenty of social agencies available for its distribution; and that a Liberal government's duty was to stimulate and encourage this application, but not in any way to supplant or supplement it.

I think that now, in the main, the anomalies which are the subject of this inquiry have been accounted for. Enough has been said to show how and why it is that persons calling themselves Liberals are now, many in good faith, some in despicably bad faith, advocating a coercive totalitarian type of government, a recession from the advanced type to the primitive, from the more nearly civilised to the more nearly barbarous; and are also denouncing as reactionary and anti-social those who adhere to the historical principles of Liberalism.

Sunday, October 15, 2006

Taxes, Spending and Debt

Taxes, Spending, and Debt are the Real Issues
by Ron Paul

In Washington we hear a lot of talk about tax cuts, but the rhetoric does not always match the reality. For most Americans, taxes remain too complex and too high. After the tumult of the upcoming midterm election, it is imperative that Congress gets back to basics and addresses our terrible tax system.

Lower taxes benefit all Americans by increasing economic growth and encouraging wealth creation. I’m in favor of cutting everybody’s taxes – rich, poor, and otherwise. Whether a tax cut reduces a single mother’s payroll taxes by forty dollars a month, or allows a business owner to save thousands in capital gains and hire more employees, the net effect is beneficial. Both either spend, save, or invest the extra dollars, which helps all of us more than if those dollars were sent to the black hole known as the federal Treasury.

Many conservatives have touted the Fair Tax proposal as an issue in the upcoming election. A pure consumption tax like the Fair Tax would be better than the current system only if we truly did away with the income tax by repealing the 16th amendment. Otherwise, we could end up with both the income tax and a national sales tax. A consumption tax also provides more transparency and less complexity. But the real issue is total spending by government, not tax reform. In other words, why change the tax structure if spending stays the same? Once we accept that the federal government needs $2.7 trillion from us-- and more each year-- the only question left is from whom it will be collected. Until the federal government is held to its proper constitutionally limited functions, tax reform will remain a mirage.

I apply a very simple test to any proposal to overhaul the tax code: Does it reduce or eliminate an existing tax? If not, then it amounts to nothing more than a political shell game that pits taxpayers against each other in a lobbying scramble to make sure the other guy pays. True tax reform is as simple as cutting or eliminating taxes. No studies, panels, committees, or hearings are needed. When reform proposals seem complicated, they almost certainly don’t cut taxes. Congress should simply focus on cutting existing taxes and reducing spending, instead of complicated overhauls of the system.

The question to ask yourself is this: What would I do with the money withheld from my paycheck each month? The answer is simple: you would spend, save, or invest the money, all of which do more for the economy and society than sending it to Washington. Thanks to the deception of income tax withholding, however, some people actually look forward to tax time and a much-anticipated refund. Imagine how quickly Americans would demand lower taxes and spending if they had to write the federal government a check each month!

Tax relief is important, but members of Congress need to back up tax cuts with spending cuts- and they need to vote NO on every wasteful appropriations bill until we start over with the federal budget. True fiscal conservatism combines both low taxes and low spending.

Cutting spending would not be hard if Congress simply showed the political will to tackle the problem. I’m not talking about cutting the rate at which government spending grows, but cutting the actual amount of money spent by the federal government in a single year.

If federal spending grows at 5% rather than 7% one year, that’s hardly a great achievement on the part of Congress. The current federal budget of around $2.7 trillion could be cut to $2.5 trillion quite easily. The vast majority of Americans would not even notice. But we must begin chipping away at the federal budget if we hope to address the underlying problem of government debt.

Saturday, October 14, 2006

Law and The General Welfare

What does "the general welfare" clause in the constitution mean? It is the most commonly used and referanced to part of the constitution; a great bulk of federal laws are legally "justified" based on it. But what does it actually mean, both logically and constitutionally? What were the general purposes of the constitution and the bill of rights within it? What are the 9th and 10th amendments for?

From a pure logical standpoint, the general welfare, emphasis on the word general, means that which benefits everyone in some way. So, in order for something to qualify as the general welfare, it has to be proven that it is mutually beneficial to everyone affected by it. But obviously there are many things that are not beneficial to everyone; things that benefits only particular interests or groups, don't benefit anyone at all or take away the welfare of everyone or a particular interest or group. There is an inherent degree of conflict between what individuals and groups consider to be their personal welfare and happiness. It should be clear, therefore, that most if not all government actions that are legally backed by claims of the general welfare are absurd.

It is entirely subjective to the individual as to what their personal welfare and happiness is - the steel worker has a different welfare than the farmer does, and if you subsidize one or the other in the name of "the general welfare", their interests are going to clash to a degree. For example, if you subsidize the agriculture industry, it will be at the expense of the steel workers and all of those in general who are not involved in agriculture, and therefore to claim that this is for "the general welfare" is an absurdity. Then, lets say that the steel industry demand a subsidy for themselves then. It's still not the general welfare, for it's at the expense of all non-steel industrialists. It soon becomes apparent that instead of these things being for the good of everyone, they are at the expense of everyone only to bestow some kind of perk on a special interest group.

If we take the case of a corporation or farm that wants to have the government subsdize them or put up a tariff to block their competitors, these types of things are commonly legally backed by a claim of the general welfare. The arguement essentiatially first claims that a tariff or subsidy will be beneficial to the general population (which is totally false under any sound logical and economic analysis), and therefore doing what amounts to giving special priviledge to particular industries and corporations is "for the general welfare". Anything from military-industrial projects to wars to welfare giveaways are all deemed as legitimate under the general welfare. It should be clear that none of such things truly are mutually beneficial to everyone. "The general welfare" has become nothing more then a mechanism for special interests to get priviledges and redistributions by equating their individual self-interest with the welfare of everyone. Thus, from a conceptual and logical standpoint, the notion of the general welfare is absurd. There is only one general welfare: the individual's rights.

Constitutionally, the legally positivist establishment generally takes an expansive and omnipotent view of the general welfare. The constitution is essentially "interpreted" to say: the government can do whatever it wants in the name of promoting the public good (which is the ultimate tyranny of utilitarianism, where any action is "justified" by claiming that it maximizes utility or functions for "the collective" - one may very well achieve utility for themself by robbing another person, but it would remain as a truth that it would be unjustified). But this is simply not what the clause was intended to mean and be. "The general welfare" is simply the constitutionally enumerated powers of the federal government - not some arbitrary extra powers that are vague and up in the air.

If the general welfare truly means what people tend to think it means, that the government can promote whatever it wants as long as it's for a vaguely defined "public good", there would be no point in having a bill of rights or a list of enumerated congressional powers. There are no extra governmental powers beyond that which is listed in its enumerated powers. There is no general welfare government power beyond enforcing the duties that have been enlisted to it already. The general welfare clause is thus merely a restatement or clarification that the government must attend to its already defined enumerated powers.

There is no logic in listing all of what congress can do, and then saying that congress can do whatever it wants in the name of the public. There would be no point in listing powers - if congress can do whatever it wants in the name of the general welfare, then any listing of powers and limits becomes null and void. The whole point of listing congressional and presidential powers was to define precisely what the bounds of government powers are, and therefore anything not listed is not a power. The whole point of the bill of rights was to expressly list what the government cannot do. The whole point of the constitutional contract was to limit the government's powers by expressly listing them, declaring that the federal government must carry out those powers (the point of the general welfare clause) and declaring that they cannot go beyond those powers, that they cannot breach a particular list of rights (the point of the bill of rights) and cannot take any action at all in violation of other unlisted rights that do not conflict with the enumerate powers (the point of the 9th amendment).

Obviously, since they couldn't list every single right and political issue in the world, they adopted the 9th and 10th amendments to expressly clarify that the government cannot claim any powers beyond that which is enumerated to it - and that it cannot legitimately lay claim to any new powers by pointing to the fact that a particular right is not listed in the bill of rights. The whole point of the 9th amendment is to ensure that there indeed are extra, common sense natural rights that the government cannot violate, and thus the government must restrict itself to the powers enumerated to it. In other words, for example, under the 9th and 10th amendments, the government couldn't constitutionally bug random american citezen's homes with spy equipment, just because the bill of rights doesn't say the word "privacy". These basic constitutional definitions become meaningless and in the back-burners as soon as we accept that the government can do things beyond its enumerated powers for "the general welfare". Afterall, the main positivist arguement used in favor of federal drug prohibition is actually the general welfare and commerce clause. Pretty much anything one may oppose that the federal government does is "backed" by either a commerce clause arguement or a general welfare arguement.

It is often countered that the courts are the final arbiters and we have to accept their decisions. Others say that the constitution is a "living, breathing document" that has no set meaning. But the proper role of a court is not to tell you what the law means (ipso facto legislate), but to apply the law that already exists to individual situations. What is elastic is not the law itself, but the situations that the law is applied to. But if we grant courts the power to arbitrarily tell us what the law is (I.E. make up new meanings for a law, I.E. make new laws, I.E. courts legislating), to elastically stretch the law into the arbitrary, then we have no reason to support the court's "authority" when it is acting outside of the legitimate bounds of that authority. "The general welfare" is generally the lightning-rod that allows this to happen.

It must be said that the constitution is not a blank canvas for us to arbitrarily paint on, it is an already finished work of art that, while most certainly imperfect and thus flawed, has a definite function, intent and meaning. By conceding to the courts the power to ipso facto legislate, by using the constitution as a piece of wax to empower the government to do anything it wants so long as the general welfare is the intent, you have broken the constitutional chains on the government. It should be obvious that "the general welfare" can be abused to push for things that the constitution does not enumerate. To not aknowledge this at all, to simply "trust" the government and the courts to function well while having the power to make "the general welfare" mean whatever they want it to, is suicide. The result is that the courts can now make up new laws (instead of applying the already existing laws, which is what the courts are supposed to do) by appealing to a vague and subjective general welfare.

Put it this way: Lets assume that the government can do anything to "promote the general welfare". Then, lets say that the government itself defines what the general welfare is. Well, as a logical consequence, the government can say "killing red-heads promotes the general welfare", or anything of that sort, and get away with it. But you see, our constitution has unemerated powers that it cannot go beyond. It should be obvious that if the federal government has the "power" to take any action with the intent of the "public good" and to determine what the "public good" is itself, it not only will inevitably favor itself in determining the "public good", and it not only will inevitably side with particular special interests in the public over others, but the government can now do anything it wants under an abuse of the general welfare clause.

Using a broad and vague "general welfare" for nearly everything usurps the constitutionally enumerated powers of the government. Having congressional powers listed is pointless if the general welfare clause truly means what the positivists insist it does. If we accept this statist juxtoposition of the general welfare, than the constitution quickly becomes a dead letter. I will repeat this one more time: The constitutional meaning of "the general welfare" is that congress must fulfil its already defined constitutionally enumerated powers. It does not give new powers. If we allow the government to act beyond those powers in the name of "the general welfare", we give omnipotent power to the government, no joke.

Further, in all of this, people rarely take the time to look at the 10th amendment. The 10th amendment reserves all powers that are not enumerated to the federal government either to the states or to the individual people themselves. This essentially means that anything beyond congress's enumerated powers under Article I Section 8 of the constitution is defacto unconstitutional. This was a very wise Jeffersonian addition to the constitution that has long since been completely obliterated by positive laws derived from erroneous and expansionist arguements about "the general welfare" and commerce clause.

In short, by giving the government such open and broad powers to "interpret" its own powers under "the general welfare", the government will inherently be inclined towards an expansive interpretation of its own powers. Any (correct) view of a limited interpretation will be rejected. Thus, the legally positivist interpretation of the constitution effectively nullifies both the 10th amendment and Article I Section 8 of the constitution. As a result, not only are the states and localities completely usurped, but the government in general has now been broken free of the chains of constitution itself. The federal government can now expand and make new laws as it pleases so long as "the general welfare" is the intent.

Lastly, in the spirit of Lysander Spooner, it must be noted that at a certain point, even the constitution becomes meaningless and a dead document not only in the sense that it is not enforced as a contract anymore, but also in the sense that there is ultimately a natural law that even the constitution cannot usurp. If the constitution said the opposite of what it says in the 1st amendment, that a state religion could be established or that the government could control the press, it would still be wrong. It is not constitutions themselves that are where rights and just laws comes from - good constitutions are merely reflections of the natural law. They are never perfect documents, and thus there are times when even something that is "constitutional" or generally legal under the positive law is absolutely "illegal" by the natural law, by common sense ethical standards. Thus, while the good restraints imposed by the constitution are beneficial and should be preserved, all positive law is ultimately subject to an outside ethical standard and must be judged in such a way. The positive law must always be judged by the standards of reason and ethics, no matter how popular or legally established of a precedent it may be.

Thursday, October 12, 2006

What Has Government Done To Our Money?

Murray Rothbard on the details of a free market in money.

II.Money in a Free Society
8. The "Proper" Supply of Money

Now we may ask: what is the supply of money in society and how is that supply used? In particular, we may raise the perennial question, how much money "do we need"? Must the money supply be regulated by some sort of "criterion," or can it be left alone to the free market?

First, the total stock, or supply, of money in society at any one time, is the total weight of the existing money-stuff. Let us assume, for the time being, that only one commodity is established on the free market as money. Let us further assume that gold is that commodity (although we could have taken silver, or even iron; it is up to the market, and not to us, to decide the best commodity to use as money). Since money is gold, the total supply of money is the total weight of gold existing in society. The shape of gold does not matter—except if the cost of changing shapes in certain ways is greater than in others (e.g., minting coins costing more than melting them). In that case, one of the shapes will be chosen by the market as the money-of-account, and the other shapes will have a premium or discount in accordance with their relative costs on the market.

Changes in the total gold stock will be governed by the same causes as changes in other goods. Increases will stem from greater production from mines; decreases from being used up in wear and tear, in industry, etc. Because the market will choose a durable commodity as money, and because money is not used up at the rate of other commodities—but is employed as a medium of exchange—the proportion of new annual production to its total stock will tend to be quite small. Changes in total gold stock, then, generally take place very slowly.

What "should" the supply of money be? All sorts of criteria have been put forward: that money should move in accordance with population, with the "volume of trade," with the "amounts of goods produced," so as to keep the "price level" constant, etc. Few indeed have suggested leaving the decision to the market. But money differs from other commodities in one essential fact. And grasping this difference furnishes a key to understanding monetary matters. When the supply of any other good increases, this increase confers a social benefit; it is a matter for general rejoicing. More consumer goods mean a higher standard of living for the public; more capital goods mean sustained and increased living standards in the future. The discovery of new, fertile land or natural resources also promises to add to living standards, present and future. But what about money? Does an addition to the money supply also benefit the public at large?

Consumer goods are used up by consumers; capital goods and natural resources are used up in the process of producing consumer goods. But money is not used up; its function is to act as a medium of exchanges—to enable goods and services to travel more expeditiously from one person to another. These exchanges 3%3 are all made in terms of money prices. Thus, if a television set exchanges for three gold ounces, we say that the "price" of the television set is three ounces. At any one time, all goods in the economy will exchange at certain gold¦ratios or prices. As we have said, money, or gold, is the common denominator of all prices. But what of money itself? Does it have a "price"? Since a price is simply an exchange-ratio, it clearly does. But, in this case, the "price of money" is an array of the infinite number of exchange-ratios for all the various goods on the market.

Thus, suppose that a television set costs three gold ounces, an auto sixty ounces, a loaf of bread 1/100 of an ounce, and an hour of Mr. Jones' legal services one ounce. The "price of money" will then be an array of alternative exchanges. One ounce of gold will be "worth" either 1/3 of a television set, 1/60 of an auto, 100 loaves of bread, or one hour of Jones' legal service. And so on down the line. The price of money, then, is the "purchasing power" of the monetary unit—in this case, of the gold ounce. It tells what that ounce can purchase in exchange, just as the money-price of a television set tells how much money a television set can bring in exchange. What determines the price of money? The same forces that determine all prices on the market—that venerable but eternally true law: "supply and demand." We all know that if the supply of eggs increases, the price will tend to fall; if the buyers' demand for eggs increases, the price will tend to rise. The same is true for money. An increase in the supply of money will tend to lower its "price"; an increase in the demand for money will raise it. But what is the demand for money? In the case of eggs, we know what "demand" means; it is the amount of money consumers are willing to spend on eggs, plus eggs retained and not sold by suppliers. Similarly, in the case of money, "demand" means the various goods offered in exchange for money, plus the money retained in cash and not spent over a certain time period. In both cases, "supply" may refer to the total stock of the good on the market.

What happens, then, if the supply of gold increases, demand for money remaining the same? The "price of money" falls, i.e., the purchasing power of the money-unit will fall all along the line. An ounce of gold will now be worth less than 100 loaves of bread, 1/3 of a television set, etc. Conversely, if the supply of gold falls, the purchasing power of the gold-ounce rises.

What is the effect of a change in the money supply? Following the example of David Hume, one of the first economists, we may ask ourselves what would happen if, overnight, some good fairy slipped into pockets, purses, and bank vaults, and doubled our supply of money. In our example, she magically doubled our supply of gold. Would we be twice as rich? Obviously not. What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor and capital. Multiplying coin will not whisk these resources into being. We may feel twice as rich for the moment, but clearly all we are doing is diluting the money supply. As the public rushes out to spend its new-found wealth, prices will, very roughly, double—or at least rise until the demand is satisfied, and money no longer bids against itself for the existing goods.

Thus, we see that while an increase in the money supply, like an increase in the supply of any good, lowers its price, the change does not—unlike other goods—confer a social benefit. The public at large is not made richer. Whereas new consumer or capital goods add to standards of living, new money only raises prices—i.e., dilutes its own purchasing power. The reason for this puzzle is that money is only useful for its exchange value. Other goods have various "real" utilities, so than an increase in their supply satisfies more consumer wants. Money has only utility for prospective exchange; its utility lies in its exchange value, or "purchasing power." Our law—that an increase in money does not confer a social benefit—stems from its unique use as a medium of exchange.

An increase in the money supply, then, only dilutes the effectiveness of each gold ounce; on the other hand, a fall in the supply of money raises the power of each gold ounce to do its work. We come to the startling truth that it doesn't matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of the gold-unit. There is no need to tamper with the market in order to alter the money supply that it determines.

At this point, the monetary planner might object: "All right, granting that it is pointless to increase the money supply, isn't gold mining a waste of resources? Shouldn't the government keep the money supply constant, and prohibit new mining?" This argument might be plausible to those who hold no principled objections to government meddling, thought it would not convince the determined advocate of liberty. But the objection overlooks an important point: that gold is not only money, but is also, inevitably, a commodity. An increased supply of gold may not confer any monetary benefit, but it does confer a non-monetary benefit—i.e., it does increase the supply of gold used in consumption (ornaments, dental work, and the like) and in production (industrial work). Gold mining, therefore, is not a social waste at all.

We conclude, therefore, that determining the supply of money, like all other goods, is best left to the free market. Aside from the general moral and economic advantages of freedom over coercion, no dictated quantity of money will do the work better, and the free market will set the production of gold in accordance with its relative ability to satisfy the needs of consumers, as compared with all other productive goods.

Gold mining is, of course, no more profitable than any other business; in the long-run, its rate of return will be equal to the net rate of return in any other industry.