Blogroll Category: Current Affairs
I read blogs, as well as write one. The 'blogroll' on this site reproduces some posts from some of the people I enjoy reading. There are currently 507 posts from the category 'Current Affairs.'
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That the Laffer Curve exists is a mathematical certainty. The difficult question is where is the point that tax revenue starts to fall as rates rise, where would lower rates produce more revenue?
What complicates this is that each and every tax, in each and every different economic set up, will have a different rate at which this is true. For example, the EU's own investigation into the financial transactions tax showed that a rate of 0.01% on trades would be revenue losing. We would rather assume that an income tax, or VAT, rate of 0.01% could be raised quite substantially before it became revenue losing.
We do also have examples of where lower rates have led to higher collections. Russia did away with the Soviet era income tax system and replaced it with a 13% flat tax upon incomes - collections rose substantially. NY raised cigarette taxes so much that revenue fell. And now we have an interesting potential addition to the list:
George Osborne’s controversial tax raid on Britain’s most expensive homes has triggered a dramatic slump in stamp duty revenues.
Sales of properties worth more than £1.5million fell by almost 40 per cent last year, according to analysis of Land Registry figures provided to the Daily Mail.
This has caused the total amount of stamp duty collected by the Treasury to fall by around £440million, from £1.079billion to a possible £635.7million.
We would not insist, at this stage, that this is a pure Laffer effect. Rather more research would be needed for that. But it's most certainly a possible incident of the Curve striking back.
At which point could we just register our lack of surprise? That it would be George Osborne among Conservative Chancellors who would hit that Laffer Curve peak going the wrong way?
President’s Day was this week, and there was no better way to celebrate than making the case for abolishing the position. As Ryan McMaken noted, history has vindicated the fears of the Anti-Federalists that were concerned that the position vested too much power into the hands of a single ambitious politician. This abuse of power looks to continue with the Trump administration, as Sean Spicer announced plans to continue the executive branch’s war on federalism. While we are unlikely to see Trump give up his new personal office in the next four years, we could settle for abolishing a number of executive agencies whose time has come. We could also do without the central banks that help empower the Emperor-of-the-day, as Karl-Friedrich Israel notes their existence is power politics rather than economic reason.
On Mises Weekends, Jeff was joined by Dr. Kevin Gutzman to discuss who may have been America’s most radical president — Thomas Jefferson. Dr. Gutzman has recently released a new book on the man considered to be one of the most libertarian individuals to assume the office, covering all the many ways in which Jefferson shaped American government, society, and higher education as we know it.
The Mises Institute is excited to be in San Diego this weekend, discussing the Strategy for Liberty. We will be joined by Patrick Byrne, Tom Woods, Michael Boldin, Nomi Prins, and many more! If you can’t attend the event in person, watch it live at Mises.org/live, or on Facebook Live.
And in case you missed any of them, here are this week's articles from Mises Wire:
- Trump to States with Recreational Pot: Drop Dead by Ryan McMaken
- The "Washington Monument Syndrome" Strikes Again as Trump Imposes Hiring Freeze by Tate Fegley
- Justice and "Social Justice" Are Two Very Different Things by Gary Galles
- Minouche Shafik: Apologist for the Experts by C.Jay Engel
- Why Government Spending Matters More than the Size of the Deficit by Frank Shostak
- Will the United States Survive to 1984? by Ralph Raico
- Mises on Political Compromise by Carmen Elena Dorobăț
- Four Agencies to Abolish along with the Dept. of Education by Ryan McMaken
- Which is Worse — A Trade Surplus or a Trade Deficit? by Antony P. Mueller
- FOMC Minutes: More of the Same by C.Jay Engel
- We Need Hope by Matthew McCaffrey
- Five Reasons for Central Banks: Are They Any Good? by Karl-Friedrich Israel
- Billions Gone: 2016 Olympics Venues in Brazil Are Now in Ruins by Alice Salles
- Alan Greenspan Admits Ron Paul Was Right About Gold by Ryan McMaken
- Break Up the USA by Llewellyn H. Rockwell Jr.
- What's In Store for the Next Four Years? by Allen Mendenhall
- Abolish the One-Man Presidency by Ryan McMaken
- Why the "Experts" Can't Agree About Fed Rate Hikes by Jay Engel
- The Economic Evil of Eugenics by Matthew McCaffrey
- Our Huge Hidden Tax: Government Regulations by Scott Powell
- Nietzsche and the State by David Gordon
- Democracy, the God That's Failing by Jeff Deist
- The Great Gatsby and the Fed by Louis Rouanet
In a recent television interview, Aetna CEO Mark Bertolini, head of one of America’s largest health insurers, commented that selling insurance across state lines is “an outdated concept” in these days of the Affordable Care Act (ACA). Bertolini went on to explain the rationale for his statement: “Insurance products are now tightly aligned with networks, so buying an insurance product from another state, that’s tied to a network in another state, really doesn’t work for people seeking care.”
The sale of health insurance as interstate commerce is often cited as a pillar of healthcare reform by proponents of market-based solutions. In fact, I offered up this idea in a previous article as one of the ways to return empowerment and control to Americans seeking quality, affordable healthcare in the aftermath of Obamacare. While there are a number of issues that would need to be resolved in order to make healthcare across state lines work, they are not insurmountable, nor is the concept outdated.
At one time, nearly all individual health insurance was regulated at the state level. Each set of state regulations established insurance mandates requiring plans within the state to cover a specific set of treatments. With the passage of the ACA, the federal government usurped health insurance regulatory control from the states making the individual mandate even more onerous. As the last year of Obamcare demonstrated, insurance mandates raise the cost of premiums. Younger, healthier individuals are forced to pay more for insurance due to mandated coverages they do not need or want. If individuals were able to purchase insurance across state lines and tailor their coverage, costs would decrease and, in time, create more competitive insurance markets. Some speculate that the interstate commerce of health insurance may even draw individuals currently enrolled in employer-sponsored plans — Aetna’s bread and butter — in favor of less expensive out-of-state individual plans. In order for any of this to occur, however, the repeal of Obamacare must return regulatory control of health insurance to the states.
Once regulatory control is returned to the states, insurers in those states could begin to craft offerings which reflect the desires of the marketplace. It’s here that Mr. Bertolini’s statement regarding provider networks comes into play. How could a woman in Oregon purchase health insurance, allowing her to see her local doctor, from an insurer in Ohio with ties to a network of Ohio doctors? The answer is: She couldn’t — for now.
Networks are established when health-insurance companies contract with healthcare providers in order to serve their policy holders. Building provider networks is a time-consuming process and will not happen overnight, but it will happen. While a nationwide solution would be ideal, it is likely that the health-insurance market would evolve slowly at first, focusing around large metropolitan areas near state lines. The proximity of eastern Pennsylvania, metro New York, and New Jersey, as well as eastern Maryland, Washington, D.C., and northern Virginia, serve as examples. The next evolution in across-state-lines health insurance would likely be the emergence of a handful of larger regional insurers offering a variety of plans across multiple states. As provider networks grow and risk pools and product offerings increase, more individual Americans will enjoy greater healthcare choice, access, and affordability.
Crossing the line with American’s healthcare is not for the impatient, but unlike the Edsel, disco, or rotary phones, the idea of pursuing greater market-based reforms in our healthcare system will never be outdated.
In 1850, French economist Frédéric Bastiat published an essay that is misunderstood, or more often, unread, titled, “That Which is Seen, and That Which is Not Seen.” Bastiat brilliantly illustrated, through the parable of the broken window, the destructive effects of unintended consequences that result from government intervention in the economy.
Unfortunately, because of misplaced belief in government benevolence, even the most powerful and successful members of the American citizenry often miss the point and the true magnitude of these consequences.
According to Reuters, Ramin Arani, a co-portfolio manager of the $25 billion Fidelity Puritan fund, said while discussing his current bullish stance of gold, “In terms of unpredictability, there is a tail risk with this administration that did not exist with the prior. … There is a small but present possibility that government action is going to lead to unintended consequences.”
Arani’s overall bullish stance on gold is sound. Given the political climate, gold is attractive “insurance” for equity exposure. The problem doesn’t lie in his financial analysis, but rather in the seemingly innocuous comment that followed.
“There is a small but present possibility that government action is going to lead to unintended consequences.”
To suggest the chances of unintended consequences are merely “small” is extremely naïve.
Notwithstanding myriad examples of government action leading to unintended consequences, including, but certainly not limited to, minimum wage laws, rent control, social security, and the disastrous war on drugs, there are countless examples of unintended consequences brought on by government action that should resonate with a multi-billion-dollar portfolio manager. Yet they seem to have fallen on deaf ears.Unintended Consequences of Gold Confiscation
Besides being theft, gold confiscation didn't work. The price of gold was increased from $20.67 to $35.00 per ounce, a 69% increase, but the domestic price level increased only 7% between 1933 and 1934, and over the rest of the decade it hardly increased at all. FDR’s devaluation provoked retaliation by other countries, further strangling international trade and throwing the world's economies further into depression.
Looking for government action that led to the unintended consequence of literally worsening the worst depression in world history? Check.Unintended Consequences of the Community Reinvestment Act
In 1977, Congress passed a piece of legislation called the Community Reinvestment Act. The evolution of this act played a significant role in establishing the lowered lending standards that contributed to the 2008 housing crisis. Combined with the Federal Reserve artificially lowering interest rates, Fannie Mae and Freddie Mac taking on the “philanthropic” effort of improving homeownership of low and middle class families, and many other factors, the unintended consequences of government action raised the rate of foreclosure by 225% from 2006 to 2009.
Looking for government action that led to the unintended consequence of close to a million American families losing their homes? Check.Unintended Consequences of the Affordable Care Act
The first half of Arani’s statement speaks to rising unpredictability under the Trump administration relative to the Obama administration. It has been barely a month since President Trump was inaugurated, but one would be remiss to speak on the Obama administration as if it was the bastion of predictability.
Without examining the disparity between Obama’s foreign policy campaign rhetoric and his unpredictable drone-happy administration, there is a glaring example of an unintended but extremely foreseeable consequence stemming from his signature health care law.
In September 2013, President Obama said the following in a speech on the Affordable Care Act:
In the United States of America, health care is not a privilege for the fortunate few — it is a right. And I knew that if we didn’t do something about our unfair and inefficient health care system, it would keep driving up our deficits, it would keep burdening our businesses, it would keep hurting our families, and it would keep holding back economic growth.
The most predictable consequences of passing the Affordable Care Act came to the surface. A large spike in premiums, increase in taxes, millions of Americans losing their plans, and job losses, just to name a few.
Looking for government action that led to literally 100 unintended consequences throughout the health care system? Check.
Mr. Arani is correct about gold, but to minimize the severity and predictability of unintended consequences brought on by government action as a “small but present possibility” is disingenuous.
A disciplinary hearing for Los Angeles Episcopal Bishop Jon Bruno has been set for March 28-30 in Pasadena.
In the days following the 2016 election, there were already worrying signs that the Trump administration didn't merely view the War on Drugs as a useful source of rhetoric to please some Conservatives. With the appointment of Jeff Sessions — who appears to be a true believer in the War on Drugs — the threat to federalism, states's rights, and local control was all too real.
The fears continue to be stoked by the administration itself, and yesterday White House spokesman Sean Spicer announcing that "I do believe that you'll see greater enforcement of [federal law against marijuana]."
So, in an administration where Trump's promised health care reforms are anything but a done deal — and which is plagued with leaks and conflict with the US intelligence establishment — Spicer suggests the administration has enough extra time to ramp up prosecutions of American citizens for smoking a joint. The fact that 81 percent of all drug arrests are for simple possession means that yes, increasing federal enforcement is about arresting and prosecuting small-time users.
Spicer justifies this with the well-worn claim often made by Conservatives that "There is still a federal law that we need to abide by ... when it comes to recreational marijuana and other drugs of that nature."
At the core of this statement is the same hypocrisy that infects the entire right wing on the Drug War issue.
Conservatives like to talk a good game about states's rights and local control when it comes to issues like gun laws and Obamacare, but federalism and the Constitution go right out the window on the drug issue.
This has long been obvious, and was solidified in federal court when Trump's nominee to head the EPA, Scott Pruitt, sued Colorado in federal court when he was attorney general of Oklahoma. Pruitt and the GOP attorney general from Nebraska both attempted to get the federal court to render Colorado's drug laws null and void — which would have essentially destroyed what's left of federalism and states's rights down to its foundations. Pruitt, however, was making this same argument at the very same time he was arguing that the states had the right to override Obamacare mandates.
But the hypocrisy does not stop there. Conservatives love to talk about following the "original intent" of the US Constitution and demanding the federal government do nothing that is not authorized by the Constitution. That, of course, is then conveniently forgotten on the drug issue.
Although Sean Spicer certainly won't admit it, the "federal law we need to abide by" is not some federal statute passed by Congress about drugs. The law we need to abide by is found in the US Constitution — specifically the Tenth Amendment — where it clearly states that "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
So does the Constitution delegate to the United States government the power to regulate what sort of plants people eat, smoke, or grow? Here's a hint: No, it doesn't.
This refrain of Drug Warriors that those who don't like the Drug War need to "change the law" before they can complain requires a willful ignorance of the law contained in the US Constitution itself.
Indeed, in more honest times, everyone knew the Constitution did not allow federal control of such matters which is why most everyone accepted that a Constitutional amendment was necessary to authorize federal prohibition of alcohol. It was only later that politicians realized they could just forget about all that Constitution stuff and pass federal statutes banning various substances at will.
Of course even if the Constitution did authorize such things, it would be worthy of being ignored, just as federal laws and Constitutional provisions protecting slavery were always worthless and should have been ignored by everyone everywhere.
Spicer then went on to make other fact-free claims in his attempt to connect marijuana use to recent surges in opioid deaths. Lizzy Acker in The Oregonian reports:
"I think that when you see something like the opioid addiction crisis blossoming in so many states around this country," Spicer said, "the last thing that we should be doing is encouraging people."
Though Spicer drew a connection between opioid use and marijuana, there is no known connection between the two. According to the Centers for Disease Control, in 2015 more than 33,000 people died from opioid overdoses, which includes both heroin and prescription painkillers, "more than any year on record."
The CDC reported that "nearly half of all opioid overdose deaths involve a prescription opioid."
Marijuana overdoses account for no deaths, according to the Drug Enforcement Administration. In fact, a study reported in "Time" in 2016, said that "when states legalized medical marijuana, prescriptions dropped significantly for painkillers."
As Mark Thornton shows, the problem of opioid deaths can be traced back to the mainstream medical profession's frequent use of prescription painkillers, and has nothing at all to do with marijuana:
One class of prescription drugs is directly related to the heroin epidemic, on which I have recently reported. To recap, drug companies that make opiate pain killers have influenced the American Academy of Pain Medicine to change their guidelines for prescribing pain killers. The changes in the guidelines have made it much more likely for doctors to prescribe pain killing opiate drugs such as Oxycontin and Vicodin for things like ordinary injuries and surgeries. The DEA, FDA, and the AMA monitor prescribing behavior of doctors, so they are more likely to follow such guidelines to avoid risk of sanction.
These drugs are highly effective for pain, but can be addictive and deadly themselves (16,000 deaths in 2015 alone). When the injuries heal, addicted patients can no longer get refills for the drugs. For those who have become addicted their choices are going cold turkey, enter an addiction treatment program, or obtain the drugs on the black market. In other words, they have no good choices.
And, while Spicer suggests arresting some pot users might somehow miraculously do something to cut down opioid use, the FDA is approving opioid use for 11 to 16 year olds, thus encouraging greater use on children. If the Trump administration is in the mood to crack down on somebody connected to the opioid addiction problem, there's no need to go out to Colorado or Oregon to do it. Trump can just drive over to the FDA headquarters in Maryland.
And finally, this is just the latest indication that the Trump administration's priorities are not where they need to be. Earlier this month, David Stockman complained that Trump is letting himself get sidetracked from the important business of freeing up the economy. Stockman was apparently more right than he knew.
When asked about drug issues in far-off states that have legalized recreational marijuana, Spicer could have simply said "we're concentrating on repealing Obamacare right now" or "we're really focused on helping small business people make a living" or "we're focused on finding peaceful solutions to pressing international issues right now, as in Syria." All of those issues require immense focus, time and effort from Trump himself and his advisors. But no, the administration decided to declare war on seven US states instead.
There are only so many hours in the day. Trump might want to take a closer look at how he uses them.
Dr. Kevin Gutzman is a history professor at Western Connecticut State University, a New York Times best-selling author, and one of the leading Constitutional scholars in the country today. He and Jeff talk about his new book, Thomas Jefferson—Revolutionary: A Radical's Struggle to Remake America. Dr. Gutzman discusses some of the overlooked ways Jefferson shaped America, and how his radical views are often underplayed by many academics today. Jefferson’s views on self-governance freedom of conscious, and rejection of centralized control made him perhaps the most libertarian Founding Father — one whose ideas are still relevant today.
What is the theological basis for the sexual revolution? Wilberforce Academy Director Dr Joe Boot explains in this overview that the radical revolution we see today is "rooted in the self-creating illusions of Marxism, with its visceral hatred of both God and the family."
Joe highlights how Marxist ideas and radical feminism have sought to recreate reality and oppress all who uphold God's good creation order. Look out for God's positive response in part 2 next week.
In this article, Kathy Gyngell, co-editor of The Conservative Woman, interviews Dr Elaine Sugden, one of the authors of Wilberforce Publications' new book, Talking About Dying.
9 in 10 UK universities are now restricting free speech in some way, according to a survey by online magazine Spiked.
Almost two thirds (63.5%) now actively censor speech, and 30.5% stifle speech through excessive regulation, indicating a steady rise in censorship over the past three years.
Just imagine: these life forms conserve as much as they destroy.
They protect the environment on which they depend for their survival.
And they have drawn up a system of rules that protect the most vulnerable and respect universally accepted rights. They call this rules system the Pan-Galactic Convention of Universal Life Rights.
Their leaders always tell the truth and are chosen by mass assemblies of all life forms on the planet. Political debate is conducted in accordance with legally-defined parameters: all statements made must be capable of scientific proof, and any insults aimed at those holding differing views render the insulting individual ineligible for public office.
There's just one problem: I don't know where to buy a ticket to go and live there. (I'm assuming they have immigration rules that allow all well-intentioned aliens to settle on their planet. After all, why wouldn't they?)
These planets are, in astronomical terms, our next door neighbours, a mere 39 light years away, which translates -- I think -- into just 234,000,000,000,000 miles (I've rounded up to the nearest trillion). If I jumped on a rocket tomorrow, I could be there in, oh, something like 700,000 years. So, at least, I'm assured by the BBC's estimable science editor David Shukman.
The star around which the planets orbit is known as an ultra-cool dwarf, which means they are bathed in life-giving warmth and the light of a perpetual sunset. Three of them are in the so-called 'Goldilocks zone', neither too hot nor too cold, where liquid water, and therefore life, could exist.
I think planets 1e, 1f, and 1g all sound quite delightful, but if I were allowed to choose, I'd head for 1f, on the basis that I always try to avoid extremes. And if I indulge my inner fantasist, it is because the planet on which we currently exist is in such a God-awful mess that hopping on an inter-stellar bus to relocate a couple of hundred trillion miles down the road seems a supremely sensible course of action.
To take just one, miserable example: according to the United Nations, more than 20 million people on our planet -- specifically in Nigeria, South Sudan, Somalia and Yemen -- are now facing famine or risk of famine over the coming six months. If you're one of my most faithful readers, this won't come as a surprise to you.
After all, last November, I reported from north-east Nigeria: 'The UN has warned that up to 75,000 children could die within the next 12 months unless more help arrives urgently ... As many as 14 million people could soon be in need of help.'
And nearly three years ago, I reported from South Sudan: 'It is happening again. Twenty years after the genocide in Rwanda, 30 years after the famine in Ethiopia, Africa's twin scourges are back. This time it is a single country facing a double disaster. South Sudan, the world's newest nation, not yet three years old, is on the brink of catastrophe.'
Other reporters, responding to ever more desperate appeals from relief agencies, also sounded the alarm. We might as well have been reporting from one of those newly-discovered planets. Conferences were convened and pledges were made, but some of them, like the UK government's promise this week of £100 million of 'new support'for South Sudan, were simply repeats of earlier pledges. Playing with numbers while people die. Nice.
For much of my adult life, life on Planet Earth has appeared to be getting steadily more agreeable. The shadow of nuclear armageddon in the 1950s and 60s slowly gave way to arms reduction agreements in the 1970s and 80s, and then the Cold War ended in 1989, democracy took hold all across Europe, and we seemed destined for a future of stability and freedom.
But then came the wars in the Balkans, the genocide in Rwanda, the 9/11 attacks and everything that followed. Now, with Donald Trump in the White House, and Britain trying to find a way to extricate itself from the European Union, we face a future of deep uncertainty and great danger.
So will you join me on my rocket trip to the constellation Aquarius? Or should we stay put and hope the current political spasm will pass?
After all, UKIP didn't win the Stoke by-election, so maybe that spasm has already passed. On the other hand, Labour lost in Copeland, so its long slide into oblivion continues.
Conclusion? I'm on my way to the inter-stellar ticket office. See you there.
The Bank of England treats us all to a statement of the obvious here:
Bank of England: Our economic forecasts will always be wrong
The Bank of England will "probably not forecast the next financial crisis" as economic forecasting can never be completely accurate, top officials have warned.
The Bank has poured resources into economic forecasting since the financial crisis when its predictions were utterly wrong.
There are three entirely independent reasons why that next crisis - and there will be one - won't be predicted. The first is as the Bank says, economic models of the economy aren't all that good. It's a complex, chaotic, system and we don't model those well and further, as Hayek pointed out, we're never going to be able to assemble the information to even know in detail what has happened, let alone what is or will.
This is why planning an economy does not work.
The second is that efficient markets hypothesis. Markets process extant information efficiently (do note that's all the theory says, it's nothing to do with trying to assert that markets are always the efficient method of doing something) and thus move only when new information arrives. We cannot predict new information, that's the very reason that it is in fact new information.
The third is much more basic in its logic. Imagine that we do manage to, through the fog of misinformation, note that something which is likely to be problematic is about to happen. Thus we act to stop it being a problem, don't we? In which case there is no crisis as we've been able to predict it.
The BoE is quite right that they won't predict the next crisis but that's a comment about the nature of the beast, not some failing of the BoE.
Recently, Harvard political theorist Danielle Allen wrote in the Washington Post of “The most important phrase in the Pledge of Allegiance” — “with liberty and justice for all.”
Allen recognized that justice required “equality before the law” and that freedom exists “only when it is for everyone.” But she confused democracy — defined as progressives “build[ing] a distributed majority across the country, as is needed for electoral college victory” — with liberty, which is very different. Similarly, she replaced the traditional meaning of justice (“giving each his own,” according to Cicero) with a version of “social justice” inconsistent with it. And her two primary examples of rights — “rights” to education and health care — were inconsistent with both liberty for all and justice for all.
Americans cannot have both liberty and this type of social justice — under whose aegis one can assert rights to be provided education and health care, not to mention food, housing, etc. Positive rights to receive such things, absent an obligation to earn them, must violate others’ liberty, because a government must take citizens’ resources without their consent to fund them. Providing such government benefits for some forcibly violates others’ rights to themselves and their property.
The only justice that can be “for all” involves defending negative rights — prohibitions laid out against others, especially the government, to prevent unwanted intrusions — not rights to be given things. Further, only such justice can be reconciled with liberty “for all.” That is why negative rights are what the Declaration of Independence and the Constitution, especially the Bill of Rights, were intended to protect. But those foundational freedoms continue to be eroded by the ongoing search to invent ever-more positive rights.
Echoing John Locke, The Declaration of Independence asserts that all have unalienable rights, including liberty, and that government’s central purpose is to defend those negative rights. Each citizen can enjoy them without infringing on anyone else’s rights, because they impose on others only the obligation not to invade or interfere. But when the government creates new positive rights — which require extracting resources from others — these new “rights” violate others’ true unalienable rights. In other words, people recognize these positive rights as theft except when the government does it.
Almost all of Americans’ rights laid out in the Constitution are protections against government abuse. The preamble makes that clear, as does the enumeration of the limited powers granted to the federal government. That is reinforced by explicit descriptions of some powers not given, particularly in the Bill of Rights, whose negative rights Justice Hugo Black called the “Thou Shalt Nots.” Even the Bill of Rights’ central positive right — to a jury trial — is largely to defend innocent citizens’ negative rights against being railroaded by government. And the 9th and 10th Amendments leave no doubt that all rights not expressly delegated to the federal government (including health care and education) are retained by the states or the people.
Liberty means I rule myself, protected by my negative rights, and voluntary agreements are the means of resolving conflict. In contrast, assigning positive rights to others means someone else rules over the choices and resources taken from me. But since no one has the right to rob me, they cannot delegate such a right to the government to force me to provide resources it wishes to give to others, even if by majority vote. For our government to remain within its delegated authority, reflecting the consent of the governed expressed in “the highest law of the land,” it can only enforce negative rights.
Our country was founded on unalienable rights, not rights granted by Washington. That means government has no legitimate power to take them away. However, as people have discovered ever-more things they want others to pay for, and manipulated the language of rights to create popular support, our government has increasingly turned to violating the rights it was instituted to defend. And there is no way to square such coercive “social justice” with “liberty and justice for all.”
On Monday, January 23rd, President Trump announced a hiring freeze on federal workers, with an exception for jobs that are ostensibly related to national security or public safety. The exception includes uniformed military personnel, but does not include the military’s civilian support staff, which already numbers around 750,000.
This has led to somewhat of a brouhaha regarding two major US Army bases – one in Fort Knox, Kentucky and the other in Wiesbaden, Germany — that have sent out memos to soldiers informing them that child care services would no longer be provided by the Army, specifically claiming that the closure is due to the hiring freeze. On its face, such a cut seems like a great burden to put on military families and may lead one to question whether this hiring freeze is really worth it. And that is precisely the intention.The First Rule of Budget Cuts: Cut the Most Popular Programs First
If one takes any time at all to consider the options Army bases have for cutting expenses, it requires an extreme form of naiveté to think that they had no choice but to cut child care. Don’t just take my word for it: go to the Garrison Wiesbaden website and look at the recreational opportunities that remain funded. A family on base may no longer receive complimentary child care, but they can attend Zumba, yoga, German, English as a Second Language, and money management classes (to name but a few) for free. And the kids aren’t left out either. Every Friday they can still attend “Play Morning” where they can interact with other children while their parents learn about child development and parenting skills.The Washington Monument Syndrome
Of course, cutting any of these other programs would not have been newsworthy nor caused much outrage, as it’s harder to feel much sympathy for someone losing access to their Zumba classes provided at taxpayer expense. Rather, the decision to cut child care is simply the latest example of a long-running phenomenon called the “Washington Monument Syndrome,” in which government bureaucrats facing pressure to cut their budgets choose to eliminate the most visible and/or popular services they provide in an effort to create a public outcry.
We saw this during the 2013 budget sequestration when the National Park Service apparently had no choice but to turn away park visitors (how much money this saved is anyone’s guess), but did have the spare money to create large metal signs to inform frustrated travelers that it was the sequestration’s fault. At the same time, the Department of Homeland Security, knowing that outright abolition of the Transportation Security Administration would likely be an extremely popular move, threatened to make travelers wait for hours to get through airport security, no doubt in order to convince them of the horrors of budget cuts.
There are of course the more mundane examples at the local level. For whatever reason, when budget cuts are on the way, teachers seem to be on the chopping block before any administrator is. Some police officers are apparently so confident that the public will support them no matter what kind of job they do, that they openly advertise on billboards how many homicides they failed to prevent in the hope that public will be convinced that their benefits should not be cut. The almost universally adored fireman is also such a popular target for budget cuts that an alternative name for the Washington Monument Syndrome is the “firemen first principle.”
Don’t be fooled. In times of fiscal crisis, you would never expect a bureaucrat to consider it his patriotic duty to resign and find work in the private sector in order to decrease the fiscal burden on his countrymen. So why would you expect him to quietly cut the fat from his budget when there are opportunities to stoke pity or outrage among the public?
Minouche Shafik of the Bank of England recently spoke to the Oxford Union in defense of the monetary Experts. The “Experts,” she pointed out, “have come in for a great deal of criticism of late.” She suggests this phenomenon may have something to do with the 2008 financial crisis. She also mentions various currency manipulation and interest rate scandals as possible motivations for public outrage. We applaud her keen insight.
However, she warns, it was due to the Experts that we have “gained about 20 years of life expectancy since 1950,” essentially eradicated polio, seen massive increases in world incomes, experienced a plunge in global poverty, and so on. She also brings up sanitation, roads, and education. Thus, it shouldn’t be surprising that so many decisions have been delegated to experts. Even Caesar (that bastion of freedom) turned to the experts to help him manage the empire.
More specifically to monetary problems, we learn that governments have created independent central banks full of Experts to decide on monetary policy. This was to protect the monetary policy decision making from the influence of politics. Politicians couldn’t adequately run an effective monetary system, so they outsourced it to the Experts. Seriously.
Of course, there’s no mention of how the “experts” got it wrong in 2008, or why we should keep trusting them. We do get some dismissal that the whole thing was a simple “failure of collective imagination of many bright people… to understand the risks to the system.” Presumably, these “bright people” are the experts and one wonders how self-blinded they are to overlook the fact that they caused the very risks they don’t even understand!
The lesson we simpletons are to take from all this is that the experts have everything under control. They are the ones “who sift through all the information and make informed judgments," according to Shafik. We just need to trust them, to keep the faith. Sort of like one of those “let go and let God” kind of things, except the god in this case would be the Experts.
Now, if the reader thinks referring to this special class of officials as “The Experts” is a little creepy, the entire tone of the speech reads the same. She has a self-labeled “agenda” to communicate and speak to the frustrations of the masses in a way that will make them more trusting of what the experts have in store. On one hand, it's the same ancient need of the regime to maintain control via propaganda. But on a more optimistic note, perhaps these speeches are signs of a concerned regime that is aware of an angry populace.
We don't want their expertise, thank you very much. In the words of Mises:
There is no other planning for freedom and general welfare than to let the market system work. There is no other means to attain full employment, rising real wage rates and a high standard of living for the common man than private initiative and free enterprise.
Budget deficits are often in the media spotlight. The budget deficit is defined as the difference between what the government spends and what the government collects. When the government spends more than it collects, a budget deficit exists. When the government collects more than it spends, a budget surplus emerges.
The conventional view is that one can show that budget deficits reduce national saving. National saving is typically defined as the sum of private saving (the after-tax income that households save rather than consume) and public saving. When the government runs a budget deficit, public saving is negative, which reduces national saving below private saving.
By generating surpluses, so it would appear, the government creates real wealth, thereby strengthening the economy’s fundamentals. This argument would be correct if government activities were of a wealth-generating nature.Government Spending Doesn't Create Wealth
This is, however, not the case. Government activities are confined to the redistribution of real wealth from wealth generators to wealth consumers. Government activities result in taking wealth from one person and channeling it to another.
Various impressive projects that the government undertakes also fall into the category of wealth redistribution. The fact that the private sector didn’t undertake these projects indicates that they are low on the priority list of consumers.
Given the state of the pool of real wealth the implementation of these projects will undermine the well-being of individuals since they will be introduced at the expense of projects that are higher on the priority list of consumers.
Let us assume that the government decides to build a pyramid that most people regard as low priority. The people who will be employed on this project must be given access to various goods and services to sustain their life and well-beings.
Since the government is not a wealth producer it would have to impose taxes on wealth producers (those individuals who produce goods and services in accordance with consumers’ most important priorities) in order to support the building of a pyramid.
Whenever wealth producers exchange their products with each other, the exchange is voluntary. Every producer exchanges goods in his possession for goods that he believes will raise his living standard.
The crux therefore is that the exchange or the trade must be free and thus reflective of individual’s priorities. Government taxes are, however, of a coercive nature: they force producers to part with their wealth in exchange for an unwanted pyramid. This implies that producers are forced to exchange more for less, and obviously this impairs their well-being.
The more that pyramid-building that is undertaken by the government the more real wealth is taken away from wealth producers. We can thus infer that the level of tax, i.e. real wealth, taken from the private sector is directly determined by the size of government activities.
Observe that by being a wealth consumer, the government cannot contribute to savings and to the pool of real wealth. Moreover, if government activities could have generated wealth then they would have been self-funded and would not have required any support from other wealth generators. If this were otherwise then the issue of taxes would never arise.The Effects of Surpluses on Inflation and the Money Supply
The essence of our previous analysis is not altered by the introduction of money. In the money economy the government will tax (take money from wealth generators) and disburse the received money to various individuals that are employed directly or indirectly by the government.
This money will give these individuals access to the pool of real wealth that is the total stock of goods and services. Government-employed individuals are now able to exchange the taxed money for various goods and services that are required to improve their lives.
What then is the meaning of a budget surplus in a money economy? It basically means that the government’s inflow of money exceeds its expenditure of money. The budget surplus here is just a monetary surplus. The emergence of a surplus produces the same effect as any tight monetary policy.
On this Ludwig von Mises wrote,
Now, restriction of government expenditure may be certainly a good thing. But it does not provide the funds a government needs for a later expansion of its expenditure. An individual may conduct his affairs in this way. He may accumulate savings when his income is high and spend them later when his income drops. But it is different with a nation or all nations together. The treasury may hoard a part of the lavish revenue from taxes, which flows into the public exchequer as a result of the boom. As far and as long as it withholds these funds from circulation, its policy is really deflationary and contra-cyclical and may to this extent weaken the boom created by credit expansion. But when these funds are spent again, they alter the money relation and create a cash-induced tendency toward a drop in the monetary unit's purchasing power. By no means can these funds provide the capital goods required for the execution of the shelved public works.1Government Spending — Not Surpluses and Deficits — Is What Matters Most
Thinking that government spending is a wealth generator in itself, some will argue that the proper response to a government surplus shows there is no need to reduce spending, and that taxes should simply be reduced. But, a budget surplus — i.e. a monetary surplus — does not "make room" for lower taxes. Only if real government outlays are curtailed (i.e. only when the government cuts the number of pyramids it plans to build) can tax effectively be lowered. Lower government outlays imply that wealth generators will now have a larger portion of the pool of real wealth at their disposal.
On the other hand, if government outlays continue to increase, notwithstanding budget surpluses, no effective tax reduction is possible; the share of the pool of real wealth at the disposal of wealth producers will diminish.
For example, if government outlays are $3 trillion and the government revenue is $2 trillion then the government will have a deficit of $1 trillion. Since government outlays have to be funded this means that the government would have to secure some other sources of funding such as borrowing, printing money or new forms of taxes. The government will employ all sorts of means to obtain resources from wealth generators to support its activities.
What matters here is that government outlays are $3 trillion, not that the deficit is $1 trillion. For instance, if government revenue on account of higher taxes were $3 trillion then we would have a balanced budget. But would this alter the fact that the government still takes $3 trillion of resources from wealth generators?We Must Build Wealth Before We Can Spend It
The critics of a smaller government will react that the private sector cannot be trusted to build up and enhance the nation’s infrastructure. For instance, the US urgently requires the building and upgrading of bridges and roads.
There is no doubt that this is the case. However, can Americans afford the improvement of the infrastructure? The arbiter here should be the free market where individuals, by buying or abstaining from buying, decide on the type of infrastructure that is going to emerge.
If the size of the pool of real wealth is not adequate to afford better infrastructure then time is needed to accumulate real wealth to be able to secure better infrastructure. The build-up of the pool of real wealth cannot be made faster by raising government outlays. As we have seen, an increase in government spending will only weaken the pool of real wealth.
The government can force various non-market chosen projects. The government, however, cannot make these projects viable. As time goes by the burden that these projects will impose on the economy through higher ongoing levels of taxes is going to undermine the well-being of individuals and will make these projects even more of a burden.Spending Reductions Must Come With Tax Cuts
What about the lowering of taxes on businesses – surely this will give a boost to capital investment and strengthen the process of real wealth formation? This is what President Trump is being rumored to be considering. As long as this lowering of taxes is not matched by a reduction in government spending this will encourage a misallocation of capital.
The emerging budget deficit is going to be funded either by borrowings or by monetary pumping. Obviously, this amounts to the diversion of real wealth from wealth generating activities to non-wealth generating activities. Various capital projects that emerge on the back of such government policy are likely to be the equivalent of useless pyramids.
We have seen that one of the ways of securing the necessary funds by the government is by means of borrowing. But how can this be?
A borrower must be a wealth generator in order to be able to repay the principal loan plus interest. This is, however, not the case as far as the government is concerned, for government is not a wealth generator – it only consumes wealth.
So how then can the government as a borrower, producing no real wealth, ever repay its debt? The only way it can do this is by borrowing again from the same lender – the wealth-generating private sector. It amounts to a process whereby government borrows from you in order to repay you.
We can conclude that the only meaningful contribution the government can make to the pool of real wealth, and hence people’s living standards, is by focusing on a reduction in real outlays – not whether there is a surplus or a deficit. This in turn means the government must remove itself from business activities and permit wealth generators to get on with the business of wealth generation.
- 1. Ludwig von Mises Human Action Scholars edition chapter 31 p793
The title of this talk, as some of you will know, is taken from a recent book by the heroic Russian dissident intellectual, Andrei Amalrik, Will the Soviet Union Survive to 1984?1 What is implied is not that things will suddenly go kaput in 1984 — that would be too much of a coincidence — but that, in terms of the present discussion, for the next generation and the foreseeable future a pessimistic prognosis is in order; to put it briefly, that it is fundamentally over with the noble American experiment. What I have in mind by this is that element in the make-up of the United States which Lord Acton referred to when he said, of the cause of liberty in mid-18th century Europe:
Europe seemed incapable of becoming the home of free states. It was from America that the plain idea that men ought to mind their own business, and that the nation is responsible to Heaven for the acts of state, burst forth like a conqueror upon the world they were destined to transform under the title of the Rights of Man.
There have been, God knows, other features in the history of the United States, but there was always this also, and it has continued to serve as a reference point and refuge for the libertarian-minded in each generation; it has served to keep the United States a relatively free country.
It is the possibility of the continuation of this ideal in any meaningful sense that I am pessimistic about. This is not to say that there are not contrary signs — very important is that it seems improbable that the United states will be able to engage in more far-away military actions such as the Indo-China War for a couple of decades; to that extent, American imperialism has become politically difficult and will for a time have to retrench. So the signs are somewhat ambiguous. But considering the domestic political situation — although it would provide a contemporary H.L. Mencken with material for unending satire on all fronts — from the point of view of libertarianism, there is little cause for anything but pessimism, in regard to the Left, to the Right and to the Middle.
At first, it seemed as if the New Left held out a good deal of promise to a libertarian, particularly in the student movement. It was anti-authoritarian and individualistic; much of its background was provided by the '50's popular sociological works such as Whyte's Organization Man and Riesman's Lonely Crowd, which were basically individualistic and communicated the fear of uniformity and control of individuals by the sheer mindless weight of crowds. It was pacifistic. Not that pacifism is an unconditional principle; but in view of the propensity of governments to go to war at the drop of a hat (think of the thousands and millions who have died for "essential" national causes in the Crimea and against the Boers, in Flanders fields and in Viet Nam), pacifism is quite a good rule of thumb. The slogan of this earlier New Left was that everyone should be left to do his own thing — and with all the instant obsolescence of the ideas and catchphrases of the '60's, it would be good if this one somehow survived. Essentially, this is what Hayek was talking about in his Constitution of Liberty, although he phrased it somewhat differently.
But although a libertarian such as Thoreau was a major hero of the New Left in its earlier phase, the radical students seem never to have taken to heart the libertarian spirit that Thoreau showed in such a passage from Civil Disobedience, as the following:
the people must have some complicated machinery or other, and hear its din, to satisfy the idea of government which they have. Governments show thus how successfully men can be imposed on. It is excellent, we must all allow. Yet this government never of itself furthered any enterprise, but by the alacrity with which it got out of its way. It does not keep the country free. It does not settle the West. It does not educate. The character, inherent in the American people has done .all that has been accomplished; and it would have done somewhat more, if the government had not sometimes got in its way.
Instead, the leftist students have become statists, and Marxist statists for the most part. The enemy for them is not primarily the State, or those who make use of the State to give them an advantage over others in the give-and-take of the market, but the market and the private sector themselves. Here they simply take over and even exaggerate the ideas of the Old Left — on the omnipotence of advertising, the shamelessness of searching for a profit, the evil inherent in exchanging goods rather than giving them away, all the tedious Galbraithian pseudo-wit on consumer habits — adding the ecology business. Almost all bright students one runs across are against commerce and the principle of exchange; it often takes real courage to defend these things against the astonishing aggressiveness of many of the leftist students (more than against their professors, who to some degree continue to respect argumentation).
This was, however, more or less to be expected. Marxism is the most thoroughly elaborated left-wing ideology, and it comes — one might almost say — like second-nature to anyone who begins reflecting on social affairs from an unorthodox point of view. Once set out on the waters of opposition to "the System," the radical students wound up with Marxism almost inevitably.
This has been enormously helped along by the simultaneous emergence to wide-spread public notice of a "new sort" of Marxism — that is based on the idea of "alienation," an idea which, by its vagueness and utopianism seems to have been tailor-made for the new leftists. Everything unpleasant that exists — from political apathy to sexual frustration, from the slightest inconvenience to the limiting conditions of life itself (for instance, that men must work to live) — can be ascribed to the "alienation" caused by capitalism and the class society.
The early emphasis of the New Left on individualism has been eclipsed by a concern for ''community." As Richard Zorza, a student who has written about the Harvard strike of a couple of years ago, states: the important thing is "the right to say 'we'; that right is more precious than all others to this confronted generation. It is a right that gives us an identity and allows us dignity." In a sense, of course, there is nothing in this incompatible with individualistic libertarianism, the essence of which is anti-statism, not anti-societism. But one suspects that with many young leftists attracted by the "we" idea, it will ultimately be the political community, backed by force and revolutionary ideology, to which they will look to realize the "right to say 'we'."
Very often, the young New Left is much worse than the old line leftists were and are. A good example is a recent book by the husband of Joan Baez, David Harris; the book is titled Goliath, and is now in paperback. (Since Soul on Ice has sold two million copies — in our repressive fascist society — it is not unlikely that Harris's book will sell at least a half million copies — although Harris was imprisoned for a less interesting crime than Cleaver's, and does not benefit from that really great name.) In Goliath, in the chapter on "The Myth of Property," we read of the dichotomy of property and need:
Property dictates that we pursue ownership. The pursuit of need follows a logic of use. When you need something, you use it. Instead, of using things, America demands they be controlled. ... In fact, the person who owns a resource owns the lives of all who must use it. ... If the world were shaped according to our need of it, then its resources would be available as a function of that need: the hungry would eat, the homeless would build homes. (italics added)
And when Harris states that: "Property is the negation of the common conglomerate man," I think I can detect a strong direct or indirect influence from the Economic and Philosophical Manuscripts of 1844.
With this sort of mentality there is obviously no arguing, as there was with the old-line leftists. Property — whether private or public — is the right to dispose of things, generally material things. How the things of the world could conceivably be left up to the claims of needs is not broached — the very suggestion that a problem might exist is disgusting and unmasks the questioner as one who does not share in the mystical community of the well-intentioned. I would guess that there are not ten facts — ten hard facts — that Harris knows about the American economy, or capitalism at large. This sort of work — and it's an example in print of the kind of mindless thought that goes on among millions — is based simply on the undigested and unexamined personal impressions of the wide world on the part of the "thinker." The pathetic thing is that the model for all of economic activity — for all the things that keep people alive and keep them above the animal level — is the friendly communal passing of a joint. People like this want to legislate for the nations of the world.
A similar sort of thoughtlessness has become increasingly evident among churchmen, more recently among the Catholic clergy. Their social position, of course, has become difficult in the extreme; no one takes their religious claims seriously anymore, not even they themselves for the most part. The rationalization of the world, in Weber's sense, has proceeded too far for that, for good or bad. But the momentum of ecclesiastical institutions within society naturally continues, at least for the time being; such social formations do not suddenly disappear, simply because the ground has been taken from under them. Moreover, there are vast endowments and thousands of sinecures involved. So, deprived of their traditional raison d'être, the clergy increasingly take to politics; here they carry over the mental habits of dogmatism, contempt for rational discussion and moral authoritarianism that have always marked them as a class. Their commanding instincts are paternalistic — thus, it is only natural that their concern, as far as domestic politics go, is directed to taking the under-privileged under their wing. They are sure to prove particularly useful to the leftist mainstream in connection with the creation and dissemination of guilt, guilt for the possession of any wealth above some undefined "decent" minimum. Past masters in the art of generating guilt, the clergy will be valuable allies in the cause of transforming the traditional American pride in economic success into an anxiety-ridden defensiveness. Thus, the Christian churches, which entered modern history as the "desperate foes" of the free society — in Lord Acton's phrase — will be able to close their eyes happy in the knowledge that their old enemy has not survived them.
The out-and-out revolutionaries, the violent ones, are even worse than the people I have been considering. It is difficult not to put a bad interpretation on Bernadine Dohrn's praise of Charles Manson (whom she, and the other people of the "Movement" who consider him to be a hero, assumed to be guilty of the Tate murders). It is clear enough at this point that those who call for a violent revolution in the United States at this time do not have the interests of the American people at heart, whatever else they may be aiming at. In this connection, I think it's a good thing that my friend Murray Rothbard has given up his support of revolution. Considering the state of opinion among would-be revolutionaries, and their only potential mass-base — liberal arts students and the black under-class — there is not the slightest chance for a libertarian-oriented revolution in the foreseeable future.
(This is not to say that because a revolution is an illusion, then every law is sacred; there are obvious cases, such as Selective Service, where the existence of the law constitutes no presumption whatsoever that the law should be obeyed.)
But everywhere the radical Left is in distintegration and disarray. The gushing of the totalitarian romantics over the Cuban experiment is drying up, since it is increasingly difficult to deny its failure even in its own terms; and it doesn't seem likely that anyone on the Left will be able to secrete much enthusiasm for the incipient whitecollar and university-professor dictatorship in Chile.
By and large, it appears that the American leftist radical movement will evaporate simply into a re-enforcement of the old New Deal demand for "more programs" to deal with our problems. This will become the "compromise" solution that will demonstrate the "responsibility" of those who will still feel entitled to call themselves "radicals" simply because they push for more and larger budgets, and never let up on the hysterical note of the pain and suffering existing side by side with color TV's, motor boats, etc., etc. (The logical implication of this line of thought — of emotion, really — is that an American auto-mechanic ought to feel guilty about drinking a beer, when there are Pakistani children who go without milk, and are actually starving to death. But the people I'm talking about never carry the argument beyond a step or two. Actually, there is no argument involved here at all.)
This accommodation with New Dealism has already occurred in the case of Charles A. Reich, the celebrated author of The Greening of America, who recently wrote in the New York Times Op-Ed section:
The first affirmative requirement of a new society is a system of planning, allocation and design. Today there is no control over what any organization may invest, produce, use up, distribute. The need for planning has been obvious since before the New Deal, but we have refused to see it. It is time for us to grow up to acknowledge that the great forces of technology cannot be left the playthings of corporate expansionism and personal ambition.
Reich adds, however, that: "Planning cannot be left to the planners," and goes on to recommend a sort of long-range comprehensive planning that will still be compatible with immediate, direct decision-making by people in small groups. How these two ideals would be reconciled doesn't begin to be a problem for Reich.
Similarly, Jack Newfield of The Village Voice, writing on "The Death of Liberalism" in the current Playboy, finds the "remedies" that "are as obvious as they are radical in Galbraith's concise and precise words," which are that "the cures lie in 'taxing the rich, regulating private enterprise and redeeming power and policy from military and civilian bureaucracy!" (This last — the attack on bureaucracy — is Galbraith's concession to the Zeitgeist.) This is pretty much of a perfect example of what I'm talking about: a self-styled radical, writing on the "Death of Libertarianism" finds the cures for our problems to lie in the thought of — of all people — the old ADA'er and hater of the world of private relations!
Having accommodated themselves to the great statist mainstream of the twentieth century, these "radicals" will find their natural candidate in Ted Kennedy; all but the most "alienated" will flock to him. The Kennedy administration, if it comes into being, would probably enact a system of National service for young men — Kennedy's stated goal. Possibly the system will be extended to young women, as well; just as there are Gay Liberationists who demand the "right" to serve in the People's Revolutionary Army, or even the right to be drafted into the State's army, it may be possible for the image-builders to present the conscription of young women as a concession to Women's Lib. Thus, a labor draft for people in their late teens and early twenties — conscription into social work, nursing, as forest rangers and to eradicate oil slicks. It's hard to think what could be a more ironic ending for a movement that began by invoking Thoreau and the sacredness of the individual personality.
If we consider the Right in America, the prospects are about as dim. In regard to the mass-base, there is still some residual hope in the rhetorical opposition to Big Government and High Taxes on the part of sections of the middle and upper-middle classes. But the Rightist mass-base that the author of the Emerging Republican Majority — and those who, before the last election, listened to him — pins his hopes upon, is obviously useless to libertarians, or pretty much so. A possible ray of hope here is provided by the fact that the Catholic ethnic groups which are to furnish a crucial part of this majority do not, for the most part, share the ethic of service and moral uplift that is so important to mainstream left-liberalism. (As Edward Banfield points out, in The Unheavenly City, this is largely a WASP and Jewish trait in American politics.) It may be that these ethnic groups are more healthily materialistic, and will tend to prefer lower taxes to government programs that lack any evidence of a reasonable possibility of succeeding. The idea that we must do something — in spite of the fact that there is no reason to think that the proposed "something" will do the trick, and although similar "somethings" in the past have done more harm than good — the idea that we must do this, or fail in our duty to our own social consciences, may exert little influence on the Catholic ethnics. But the not-so-very hidden idea behind the notion that a grand Republican coalition can be formed has nothing to do with libertarianism. Rather, it banks on dislike of Negroes and impatience with the "outrageous" culture of students and liberal professionals, a dislike and impatience that will draw together Southerners, Northern working-class whites and rural types. Kevin Phillips, the author of The Emerging Republican Majority — where he outlines this strategy — has expressed his disgust that obsolete "laissez-faire" economics continues to interfere with the realization of his grand design.
Then there are the conservative intellectuals. I do not deny that some of them have a few good instincts; some of these may be activated at times, as they are with Buckley when he debates leftists. But the conservatives are neither dependable on the question of liberty, nor particularly helpful.
In the first place, because they continue to fight silly and useless battles. The very paradigm of this is Russell Kirk's little feud, in the pages of National Review, with masturbation, which he persists in calling "onanism," against scholarship — since that wasn't Onan's sin, and no doubt in order to suggest the connection of his thought on this with the Great Tradition, not to say with the Great Chain of Being itself. Their refusal to take the obvious libertarian position on the legalization of drugs and their priggish literary harassment of pornographers are further indications of this, as is National Review's obsession with the unspeakable abomination of homosexual acts. All these Puritanical views are supposed, in their ideology, to flow from their Christian commitment. But it is a not very well kept secret among those who know anything about the American conservative movement, that by rational, if not by orthodox, standards, the Christianity of these conservative intellectuals is bogus. It is not only that they have little in common with the Gospel of Jesus, but, beyond that, that many of them show that extra nastiness and viciousness in debate that seems to be common to the Right-Wing the world over, for reasons on which Wilhelm Reich had certain ideas. ( I would strongly suggest to libertarians who might suppose, because of their familiarity with the usual run of American conservatives, that Christianity has nothing of importance to offer them, to take a look at some of the writings of a real and highly intelligent Christian, C.S. Lewis — particularly his essay, The Abolition of Man and his basically libertarian novel, That Hideous Strength.)
The conservatives are of little use, also, because they have no real sense of the meaning of the market economy, of the dignity of the act of exchange and the injustice inherent in replacing exchange by force. For them, any property that happens to be in the possession of individuals is true private property. They are bitter about welfare, but not about the proposed subsidy to Penn Central — which was evidently stopped, not by any of the conservatives in Congress, but by the old populist, Wright Patman of Texas. Conservatives have never begun to make the obvious argument against most government programs — the "Chicago" argument — that they are instruments for taking money by force from the relatively poor to give it to the relatively rich. They cannot bring themselves to make this sort of argument, because for them the fact that a person is relatively rich is already near-proof of his soundness and respectability, and thus of his right to be the recipient of government money and privileges. The position of libertarianism is much more realistic here. Classical liberalism — in the form of British classical political economy — began with an attack on government privileges for the rich: an attack on the system known as "mercantilism." "Sinister interests" and "monopoly" were the names that Adam Smith, the Philosophical Radicals and the Manchesterites gave to the wealthy and powerful who used the State to exploit the rest of society. The concept of "class conflict," in this sense, is part of the libertarian's intellectual inheritance, and it helps him to make much more sense of the contemporary world than the conservative is able to do.
The attraction that power in the hands of the upper classes exerts on conservatives is shown also by their approval of exploitative military and "feudal" regimes in other, countries, particularly in the Third World. It is difficult to conceive why on earth anyone friendly to liberty should support the Brazilian and Greek dictatorships, and approve of American support of them. The bogusness of the conservatives' Christianity is evident here, too: the Brazilian dictatorship has been censured both by the Vatican and the bishops of Brazil for its systematic use of torture against political opponents, but I don't recall a single word in the American conservative press on what conservatives theoretically should regard as a vicious infringement of human dignity.
Finally, and most obviously, the conservatives cannot be depended upon by libertarians because they are almost invariably nationalists and militarists. But this is so clear that I don't think it needs any elaboration.
What then of the "Middle"? Of those who share none of the traditional ideologies, neither Marxist nor left-anarchist, conservative nor libertarian?
All indications are that the Middle will increasingly dominated by the New Class — in the sense of the French scholar, Raymond Ruyer, who applies the term comprehensively to a social phenomenon that bridges the division of the world into socialist and so-called "capitalist" countries. This is the class that lives, directly or indirectly, from government programs and subsidies — the class that has gone beyond the market and come to rest in a fairly comfortable economic position. Included in this New Class, in the United States, are the NASA scientists and engineers (temporarily on the wane); H.E.W. sociologists and psychologists; those who have received the $500,000,000 that Congresswoman Edith Green says has been spent since 1965 by the Office of Economic Opportunity on "studies conducted by experts on research and evaluation of the poor." Also included would be municipal urbanologists; the recipients of government "cultural" subsidies, which are sure to increase to European proportions and beyond; and that great portion of the bourgeoisie that has an intimate relationship to the State — through defense contracts, of course, but also by way of programs such as urban renewal, highway and mass-transit programs, and foreign aid; also forming part of the New Class would be the Medicare and Medicaid doctors and dentists.
In addition, and this should be emphasized, because it has very serious ideological implications, there is the element of the educational and mental health bureaucracies. (The second has been brilliantly treated by the psychiatrist and libertarian, Thomas Szasz, in a number of books; the most recent, The Manufacture of Madness, I strongly recommend to you.) The budgets for these, as is well-known, are sacred, taboo. One is half way to mental illness already, if one wants — like Reagan — to cut down on the mental health budget. There are parallels between education and psychiatry in contemporary America that are sociologically most interesting. In both of these fields we are witnessing the creation of a vast class of state-subsidized intellectuals (or near intellectuals), who lack any accountability to the "consumers" of their "products," and who make use of this lack of accountability to promote their own cultural ideals — which are usually those of the State, as well. Of course, they always promote these personal or social ideals in the name of "culture" or "sanity" per se. It is only the know-nothings or the emotionally disturbed who could possibly doubt the burning need for the transfer of money and power to the educators and state-psychiatrists. When the two groups are allied, the result is spectacular. This has happened, for instance, with the issue of sex-education in the public schools, and here the two groups mutually reinforce the purity and absolute unquestionableness of their cause to such a pitch to remind one of John Lindsay, or even of Woodrow Wilson himself. To them it seems perfectly obvious that the public school teachers, who have succeeded in rendering poetry an object of hatred to millions of their subjects, should now have a go at sex.
- 1. This talk is unpublished as far as we can find and no date or other information was attached. Raico cites a "recent" book by Andrei Amalrik, Will the Soviet Union Survive to 1984? This book was first published in 1970. The talk has been edited for typos only.