The Movement and Future Of Freedom

"If we are to succeed in the great struggle of ideas that is under way, we must first of all know what we believe.  We must also become clear in our own minds a to what it is that we want to preserve if we are to prevent ourselves from drifting."  From the introduction to F.A. Hayek's The Constitution of Liberty

Hayek wrote these words in 1960.  He wrote Constitution in the United States, his last place of residence preceded by two decades in Great Britain and a youth and life in his native Austria.

He also dedicated the book to the following:

"To the unknown civilization that is growing in America."

Reading the introduction in light of the current place and future of freedom in America places significance on this otherwise enigmatic dedication.

What civilization, in 1960, was growing in America?  Given Hayek wrote Constitution, an exhaustive and "ambitious and perhaps presumptuous task of approaching [economic problems] through a comprehensive restatement of the basic principles of freedom" (his words), he saw both the danger and potential for American life.

Would American civilization build on the basic principles of freedom and thus continue on the path of prosperity and civilized progress, or would it abandon the genesis of its prosperity and greatness, freedom, and give over to the collectivist and socialist siren call like so many erstwhile free and prosperous countries in the West?

Since 1960 we can fairly say the pendulum has swung significantly to and fro.  JFK boasted the virtue of income tax relief, that Americans are due to keep more of the fruits of their labor.  This was an encouraging step forward since he was the first Democrat to occupy the Oval Office since Truman, a New Deal hanger-on.   LBJ, though, had his turn at accelerating the welfare state by initiating a flurry of redistributionist legislation, Medicare, Medicaid, and the like.

Things again looked up with the election of Nixon, at least a vocal devotee of limited government and freedom.  Things soon looked dour, however, as this Republican imposed wage and price controls onto the market, signed into law the creation of the EPA, drummed up an ill-guided and wasteful War on Drugs, and told Congress, "I am a Keynesian now."

Then there was Carter, faithful to the welfare state.  Then Reagan, bringing a renewed faith in America and freedom, but not enough so to put freedom at the fore of American political and social life.

Bush 41 made little mark, then Democrat Clinton made the tremendous declaration in his 1996 State of the Union Address, "The era of big government is over." 

Whoa.  That sounds like a major shift in favor of freedom.

But, alas, it was not, and the era of big government is with us and growing.  The Republicans who looked to reorient the political cosmos of The Beltway with their Contract With America proved only to tease the public with promises of a return to a freer country.  They did achieve welfare reforem but he best they could muster for the 1996 election was Bob Dole, not exactly a proponent of reigning in government spending and its influence in our lives, as his career in the senate proves.

So we trotted along, not fully devoting ourselves to an outright redistributionist regime, nor reinvigorating a fidelity to freedom by pulling back the tentacles of government overreach in our lives and property.

It seems appropriate, then, that Bush II was the successor of this political double-mindedness.   Galloping into town the champion of limited government and less spending, he jetted out of town leaving a 60% increase in federal spending, coming in just under LBJ's 66% increase.  He also set the table for our current bailout mania and pushed through the trillion dollar TARP.

And now we have 19 months of Obama and a Democrat Congress under our belts.  Looking back on the last Democrat president's statement about the end of big government, that seems like a headline right off The Onion.

So what is the "unknown civilization" in America?  Are we fully culminating in a society that embraces or rejects individual freedom?

Taking a step back to survey the wider social landscape in America, it cannot be said America is embracing collectivism.  Watching elites trying to annex America to western Europe is like watching an irrationally resolute infant trying to cram a round peg into a square hole; it can be done but not without coercion and an ugly fit.  And it just begs the adult in the room to set it right.

True, we've witnessed vast new growth of government, most notably the groundwork for government run health care being set.  True, the supposed opposition party to this agenda has not given the voting public any reason to vote for them other that "we're not them."

But also true is the continuing grassroots resistance to government growth, spending, and redistribution.  The larger the push for concentration of power in government and less freedom, the bigger the social push-back has been.  Largely viewed as the Tea Party movement, such resistance has only gained momentum and influence since it began in the spring of 2009.  Primary candidates, for example, with Tea Party backing are having success.

The movement's basic message is an insistence on limited government, fiscal restraint, and a return to a freer and prosperous society.  (See the Contract From America)

The concomitant, and thus greatly encouraging, revival of interest in the Constitution, American history, basic rights, and reading of the books that explain, defend, and promote freedom is a social indicator that we are meeting Hayek's concern to know what it is we are preserving, and that we are not drifting.

Interest in freedom has been awakened, revived, and set anew.  There is a movement afoot, and it is not restricted to organized protests and rallies.  It has moved to living rooms and kitchen tables and pubs and water coolers (or on both sides of filtered water bottles, at least).

The historical record of the political parties is clear enough: we cannot and should not place our hope in them.  They must be made to listen to the freedom movement and act accordingly.

Echoes appear and disappear in direct proportion to how long and how strong the voices are that create them.  Eventually, public opinion echoes in the halls of legislatures, but only if the voices creating them remain consistent and strong.

A movement based on the principles of freedom can create those echoes and bring about a policy of freedom.

And that's the policy befitting a free civilization.

Ignorance is Bliss: Knowledge, Progress, and Freedom

"All political theories assume, of course, that most individuals are very ignorant.  Those who plead for liberty differ from the rest in that they include among the ignorant themselves as well as the wisest."  F.A. Hayek, The Constitution of Liberty

It seems counter-intuitive to suggest that the preservation and progress of civilization depends on a great amount of ignorance.

But it does.

As Hayek points out in chapter two of Constitution, The Creative Powers of A Free Civilization, societies should take seriously the Socratic admonition that ignorance is the beginning of wisdom.  Doing so leads to the practical conclusion that freedom in society is the genesis of the advances in civilization we've come to take for granted.  Freedom is also the best policy to ensure we preserve the progress already made and continue to progress and flourish.

For an individual to take the Socratic approach to wisdom, he or she recognizes they are ignorant about a great deal of life and do not presume to act upon knowledge they do not have. "I know what I do not know" is an excellent way to walk a path to greater understanding and avoid the trappings that await those less humbled by their ignorance. 

As a society, it would greatly behoove us to admit so much and recognize that civilization has not made advances through carefully planned strategies and some guiding hand of experts endowed with accumulated knowledge.  Believing so leads to the erroneous conclusion that there is a fixed amount of ignorance that can be conquered with the advance of science and that human activity can, and should, be efficiently arranged and ordered, and that society should be less free to go about in an uncoordinated way pursing respective self-interests through competitive capitalism. 

Hayek reminds us:

"It is for this reason that those intoxicated by the advance of knowledge so often become the enemies of freedom." 

Even a cursory view of the brutal totalitarian regimes of the twentieth-century are chilling historical testaments to the lengths to which such intoxication can lead.

Individually we benefit a great deal from the workings and knowledge of countless other individuals in society.  I, for instance, am very much ignorant as to exactly how the bag of coffee beans I conveniently bought two miles from my home arrived there for me to purchase.  How were they harvested, roasted, packed, shipped, distributed, trucked, promoted, sold, bought, arranged, etc., etc., etc.?  And how does every business involved in this process operate, and how many other businesses and people are involved in how they respectively operate?

I don't know. 

But I ignorantly bought and enjoyed he beans anyway, all because many, many people out there in society are individually pursing their own self interests and utilizing the knowledge they have and I do not.  Multiply that one bag of coffee beans and the many people it required to deliver it to a shelf two miles from my house by the countless goods and services and countless more people and respective knowledge it requires to provide the current high standard of living for 300+ million Americans enjoy.

That is a lot of individual, respective knowledge spread out over a lot of people, and that equals a lot of collective ignorance as to how society has generated the advances we have come to take for granted.

What central board of experts could possibly command so much information?  What person could possibly control just coffee beans?

Hence embracing ignorance and allowing for a maximum amount of liberty in society is the only way to preserve and ensure progress:

"Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen."

Accidents are things we do not and cannot plan for.  They are unseen and result in spite of our most carefully arranged plans.  In a free society, these accidents are the discoveries and advances of civilization that government interferences, dictates, and regulations did not and cannot ever plan for.   

As we face a future where our health care and personal property are headed for increased control by the federal government, it would be best to remind ourselves and Capital Hill there is a lot they do not know and a lot we know individually about what's best for our own health, lives, retirements, etc.  Greater restrictions on our freedom to maintain the health of our bodies and the fruits of our labors would be societal regress, not progress consistent with the preservation of civilization.

If government is limited according to how much it does not know, and we are free order the welfare of our lives, we can confidently proclaim that ignorance, in this context, is a good thing.

You might even say it is bliss.

Liberals, Now and Then, Continued

I've been perusing the net for appropriate videos to follow up the last Chalk Talk.  I have not found exactly what I was looking for.  The video below is brief and is accompanied with thrasher-metal music, but it touches on the topic.

I am looking for video material that focuses on the switch in the term "liberal," occurring during the progressive era prior to the New Deal.  Essentially, progressives took ownership of the the term "liberal" and applied to it the opposite of it meaning: a focus on the primacy of the individual, free trade, free markets, and limitations and decentralization of government power.  There is some reading in Freedom 101 about this switch, but I wanted to pull in some outside material.

Recommendations are always welcome!

Back to the video.  Disclaimer: I don't know what the author of this video is all about, I am simply interested in the part of his video that hinges on the switch in the understanding of the term "liberal."  The author suggests "taking back" the term.  Presently, I do not use "liberal" to describe policies that mean their opposite, nor do I use the term to apply to myself.  Maybe I will in the right circumstance and stir up a good conversation.

Liberalism, Now and Then

Liberal and conservative, Left and Right, Republican and Democrat, Libertarians, Progressives, Klingons, Druids, Hobbits....

What do all the labels mean?

Presently the term "liberalism" is a generic description of a preference of government-run solutions to problems, real and contrived. Government-run health care, for example, is the solution to health care costs and inefficiencies. Government is the primary answer to most any question of policy and social issues. Liberal policies, therefore, are those that place primary importance of government power, government growth, and government involvement in more and more of the lives of Americans.

This wasn't always what a good liberal preferred.

“Classical Liberalism” was a movement of the 18th and early 19th centuries that stressed the primacy of the individual over the state and individual rights secured through limiting the power of  government.  Competitive free market capitalism and free international trade was the economical fruition of this thought, acknowledging that social welfare and advances in living standards come from freedom in the marketplace, not the dictates of central governments. Furthermore, international peace, it was argued, was more probable through free trade among peoples of respective nations, therefore punitive tariffs damaged whatever degree of both domestic and international tranquility that could otherwise be attained in an imperfect world.

The Founding Fathers are widely viewed as classic liberals.  The Constitution, with its limitations on government powers and protections of individual rights, fits the description quite well.  Also, the Declaration of Independence, our founding document, states in assertively plain terms a clearly classically liberal view of man, government, and justice. Jefferson’s Declaration—with its insistence that governments derive their legitimate powers from the consent of the people—reads like a footnote to John Locke’s Second Treatise, is another lodestar of classic liberalism.

The term, liberal in today’s sense means the opposite of what it originally meant. Modern defenders and apologists for classical liberalism such as Milton Friedman refused to relinquish the title liberal.  From Capitalism and Freedom:

"In the name of welfare and equality, the twentieth-century liberal has come to favor a revival of the very policies of state intervention and paternalism against which classical liberalism fought.  In the very act of turning the clock back to seventeenth-century mercantilism, he is fond of castigating true liberals as reactionary!" [Emphasis added.]

Ludwig Von Mises, in the introduction to the English version of his book, Liberalism: The Classical Tradition,  explains that liberalism today means the opposite of the liberalism he is setting forth to defend:

"In England the term 'liberal' is mostly used to signify a program that only in details differs from the totalitarianism of the socialists.  In the United States 'liberal' means today a set of ideas and political postulates that in every regard are the opposite of all that liberalism meant to the preceding generations."  

So here comes the skull cramp: Roundly speaking, people today identified with "conservatism" are actually trying to conserve liberalism.  Conserve liberalism, there you go. 

Today’s conservatives believe, generally, in the primacy of the individual, individual freedom, and free markets.  They are suspicious of government activities beyond national defense and the judicial system, and stress the importance of constitutional limits on government power. 

Today’s liberals believe in further government intrusion in the market place, in the affairs of our lives, believe elites in powerful positions are better equipped to order society and our lives than individuals bandying about, willy nilly, in an unplanned free market environment.

How did the term "liberal" come to be interchanged with the opposite of its true meaning?

Discussing that question helps us understand much of the political rhetoric that fills the news.  And that we will save for the next Chalk Talk. 

And then there are the terms "progressive" and "libertarian"...

"Nobody Knows"

Barney Frank is right. It was "dumb" to believe a handful of people could predict the unemployment rate. (Click here for the video of the entire interview. The "dumb" remark begins at the 3:20 mark)

If only the chairman of the House Financial Services Committee would exercise that bit of economic humility every time he and his colleagues attempt, and continue to attempt, to legislate the economy into the image of their choosing.

"In the first place, nobody knows..." (Emphasis added.) Now that Mr. Frank realizes the futility of predicting unemployment rates, let's hope he realizes the futility of controlling the economy in general.

Historians and economists who take history and the lessons of basic economics seriously take considerable time trying to convince us that "nobody knows" enough information to command and control economies. The lesson of history is this: Since there has never been a person or group of experts endowed with both the intellectual powers and angelic nature it would require to wisely and justly plan the choices before millions of people seeking to buy, produce, and create wealth, the market is better left unplanned by central authorities, politicians, and bureaucrats.

When politicians take it upon themselves to order the economy through excessive regulation and historically short-sighted legislation, consumers and producers in society (the rest of us) become less free to interact in our respective self-interests. When this happens the overall productivity and dynamics of the market suffer because the capital in the market is not efficiently directed where it should be.

Thomas Sowell reminds us: "The efficient allocation of scarce resources which have alternative uses is not just an abstract notion of economists. It determines how well or how badly millions of people live." (Basic Economics: A Citizen's Guide To The Economy)

Who, then, "knows"? Who is capable of making these decisions that determine the material welfare of millions of people?

You know. You neighbor knows.  That cousin whose name you cannot remember when you see him every seven years at a family reunion knows. We, the market, know best.

When politicians express no confidence in the "private sector" or "the market" and attempt to regulate the economy in the direction of their choosing, they are presuming to have the knowledge it requires to do so; they are distrusting We The People of The Market with the freedom it requires to function a diverse market economy.

True, "nobody knows" what the unemployment rate will be in six months, but somebody does know how to run the market. And that somebody is us, uncoordinated and pursuing our respective self interests, not a group of preening economic divines inside the Beltway.

In his classic work, The Road To Serfdom,  F.A. Hayek carefully explains that the central characteristic of the authoritarian regimes of twentieth-century Europe was an outright rejection of the unplanned, free market activities of nineteenth-century classical liberalism.  This authoritarianism resulted from the desire to move all decision-making of the market to government central planning boards.

(Hayek also wrote a book devoted solely to the fallacy of central planning by a group of elites, properly titled, The Fatal Conceit) 

In chapter 5, Planning and Democracy, Hayek explains:

“That our present society lacks such ‘conscious’ direction toward a single aim, that its activities are guided by the whims and fancies of irresponsible individuals, has always been one of the main complaints of its socialist critics.”

The more our "whims and fancies"--freedom, that is---annoys the elites in Washington, the better.  The more they act on their annoyance, the worse off we become, materially and politically.

The more of the economy that is diminished by government control, the less free we are as the market to determine our respective welfare. And the less free we are individually, the less prosperous we become as a society.

This much history tells us, and this much we know.  Acting contrary to this knowledge would be just plain "dumb."

Video: Free Market v/s Political Distribution

In this video clip from Freedom Watch, Judge Napolitano and Walter E. Williams discuss how the free market provides for the needs of society versus how government distributes provisions to society.



At the 5:18 mark the Judge summarizes the fundamental difference in how the market produces wealth and how government consumes wealth; how producers seeking profit must please the wants of the voluntarily consuming public and how government needs not care about the wishes of the public as it has the "bottomless pit" of tax payer funds at its disposal.

We would hasten to add that profits, in a free market uncorrupted by government-enforced monopolies formed through subsidies and burdensome regulations, are secured by pleasing consumers through voluntary cooperation and free exchange.  Government distribution of property occurs without the consent of the taxpayer.

Williams calls this the "morality of the market."

These points are also detailed in Ludwig von Mises' book The Anticapitalistic Mentality, wherein he explains that free market exchange (what we call capitalism) turned masses of serfs and slaves into the buying public for whom profit-seeking businesses seek to please.

Williams comments on the concept of one dollar one vote.  Mises calls the serfs-turned-consumers through freedom in the market the "sovereign consumer."  When the market is free to provide for the wants and needs of public, consumers vote every day millions of times a day with their dollars.

As opposed to politicians, profit seekers must be reelected every day.  With every transaction,the market pleases every consumer; every vote cast with a dollar brings to the consumer what the consumer desires.  Political elections yield to the general desires of the majority, leaving the minority's wishes unfulfilled.

Reducing freedom in the market equals disenfranchising the consumer.

A Book Recommendation, and A Lesson

Below is a book written by Thomas DiLorenzo, one that will indeed go to Book Reports and be used in future Chalk Talk and In Real Time posts:

How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present
This book is an excellent resource on the real economic history of America.  DiLorenzo communicates the basic principles of real free market capitalism--what it is and what it is not--and how it has unfolded in American history, from the Pilgrims to the Great Depression to the present.  He does a very good job of separating the real workings of capitalism and historical fact from the fables and myths that pollute the education system and common public discourse.

DiLorenzo writes crisply and persuasively, sparing those of us without PhDs in economics the graphs and jargon we often associate with economics.  Without reservation I recommend this book to elevate your appreciation of American history and to better understand the impact of today's government policies.

For this Chalk Talk we will pluck one lesson from DiLorenzo's book: Correctly remembering Herbert Hoover and the Great Depression.  (Chapter nine is titled, Did Capitalism Cause the Great Depression?)

This was the topic of a past Chalk Talk, quoted in part here:

"What is the standard public perception of President Herbert Hoover and the Great Depression? Is runs something like this:

'President Hoover deserves the blame for the Great Depression because he did
nothing while the country fell deeper into economic misery. He favored laissez-faire economics and refused to use the government to intervene in the economy, leading to higher unemployment and a deepening of the depression. It required the interventionalist policies of President FDR to recover the economy and save capitalism.'

None of the Hoover-was-doggedly-laissez-faire lore is true. The general script on Hoover is part of the fable that plagues the history of the Great Depression. Revisiting the historical record sheds truth on the matter and gives us deeper insight into what did actually cause the Depression to be so Great.

In truth Hoover deserves blame for the depression because he intervened too much and set the table fore the hyper interventionalism and meddling of the New Deal.

Hoover was a interventionalist across the board. He was anything but a proponent of "laissez-faire" economics. To that point in history (1929-1932) Hoover set all the records in relation to government intervention in the economy, only to be eclipsed by the dizzying manipulation of the market by his successor, FDR.

Here are some examples, from an excellent book on economic history, How Capitalism Saved America, by Thomas J. DiLorenzo. (When I finish reading the book I will submit it to Book Reports.)

• As Commerce Secretary under President Coolidge, Hoover disliked open competition in the market and favored government-sponsored competition, calling it "cooperative competition." This laid the groundwork for FDR's National Industrial Recovery Act and the National Recovery Association, a noxious system whereby businesses were forbidden from competing below price levels. Policies were set by business cartels supervised by government, and enforcement was provided by the government.

• As president he pushed for and signed the Smoot-Hartley tariff act. This high tariff cut off trade with consumers around the world, set off retaliatory tariffs from other countries, and greatly depressed domestic production of agricultural and manufacturing goods.

• Hoover was an enthusiastic proponent of public works. As DiLorenzo points out, by 1931 (FDR was not president until 1933) total government expenditures on public works was as high as any other year in the decade! This is astounding when we consider the millions FDR put on the public payroll with his myriad of works programs. Hoover also encouraged state governments to increase spending on public works.

• By 1931 Hoover's spending created a $2 billion deficit.

• He pushed through the largest tax increase in history, to that point in time. Income, corporate, surcharges, estate, and gift taxes all went up.

• Hoover created the Agricultural Marketing Act, creating another government-created cartel of large corporate interests in the form of the Federal Farm Board. This board colluded production interests that reduced production and drove up prices of agricultural goods. This was the predecessor of FDR's Agricultural Adjustment Act.

• He created the Reconstruction Finance Corporation (RFC). This board used tax payer funds to prop up uncreditworthy with credit, leading to the watering down of free market pressures and forces in lending and finance. This effectively steered capital investment away from productive ventures and job-creating businesses, skewing the market and depressing wealth creation and, therefore, job creation.

Decidedly not laissez-faire, all.

And all these gross interferences in the market occurred during the depression, paving the way for the Great Depression:

• When the market needed more freedom, not less, to create wealth and jobs, Hoover intervened.

• When people needed to save more of their own property in the form of savings, Hoover increased taxes.

• When entrepreneurs and businesses needed more certainty in the market in order to invest and plan for the future, Hoover rocked the boat with interventionalism.

• And when the country could least afford deficit spending, Hoover piled it on.

Setting the record straight on Hoover sheds much light on the actual causes of the Great Depression.  Capitalism---true, free market capitalism free from government collusion and manipulation---did not cause the Depression.  Excessive government meddling did.  That is, making the market less free, not more free, during the Hoover administration kept the economy down and set the table for more than a decade of economic misery during the New Deal.

Freedom works.  Government central planning does not.  Hoover proved so much.

And Thomas DiLorenzo reminds us so much.

Some of Us and Others of Us

All societies require some element of government coercion--what Milton Friedman calls "the command principle--to maintain order and make possible the peaceful transactions of its citizens.  No society could expect civilized order without the rudiments of order provided by some level of government coercion. When it comes to the economy and the choices allowed us, however, if government assumes the command principle it restricts our choices (freedom to choose) and greatly reduces our prosperity.

To paraphrase Friedman in Free To Choose, when the tax code, legislation, or regulation is used to limit our choices and alter our behavior, there are some of us commanding others of us what to do and what not to do, all through the coercive and punitive power of government.

"A predominantly voluntary exchange economy, on the other hand, has within it the potential to promote both prosperity and human freedom.  It may not achieve its potential in either respect, but we know of no society that has ever achieved prosperity and freedom unless voluntary exchange has been its dominant principle of organization." (p.11)

Here is another concise statement on the subject: 



Americans seem to have an intuitive reaction against having an elite few in government encroach upon our freedoms.   

History suggests so much: The first waves of socialism in the country via the Progressive Era needed couched in freedom-friendly terms.  Woodrow Wilson labeled his hostility to individual liberty and a limited Constitution, "The New Freedom".   (Wilson’s idea of freedom was indeed new as it was a rejection of the Founders’ view.)

FDR’s New Deal was sold as the only viable way of protecting Americans’ freedom from want.   (Like a good progressive, Roosevelt inverted the meaning of freedom by promising Americans a freedom from want, fear, joblessness, etc. rather than the freedom to do with one’s life what one wishes in the absence of intrusive government.  During the New Deal Americans were made criminals for owning gold and were not free to pick their own chickens at the butcher shop, but FDR still marketed himself as a champion of freedom.)

Progressives understood, as they understand now, they just cannot attain “dominion over men’s minds” by being open about their pro-government growth, anti-freedom objectives.  This roadblock to statism will remain so long as most Americans continue to be suspicious of intrusive government because they understand what it is the progressives--some of us--are intent upon.
 
There remains a need to build on the town hall and Tea Party momentum and affect an enduring cultural preference for freedom.  Americans are paying more attention and taking the time to learn and relearn our history, the Constitution, and the lessons of freedom.  There is an opportunity and a necessity to provide ourselves with a wide and deep cultural bedrock of freedom, on upon which we can move forward to a freer society.

After all, such a society is what most of us prefer.

D is for "Drive"?

President Obama is fond of using (and abusing) an analogy for Democrat economic policy as opposed to Republican economic policy. In his recent trip to Texas, he repeated the analogy again::

“If you have a car and you want to go forward, what do you do? You put it in 'D,'” Obama said. “When you want to go backwards, what do you do? You put it in 'R.' I'm just saying -- that’s no coincidence. We are not going to give them the keys back."  (Click here for full article.)

That line gets a hearty chuckle from politically-empathetic crowds, but the larger historical record of leftist economic policy tells a different story.

In the introduction to his book, Capitalism and Freedom (click here for Book Reports), Milton Friedman explains how the modern-day "liberal" has come to favor a resurrection of the paternalistic state policies of seventeenth-century mercantilism 

against which proponents of classical liberalism---free market capitalism, that is---fought:

"In the very act of turning the clock back to seventeenth-century mercantilism, he is fond of casting true liberals as reactionary!"

Free market capitalism was a tremendous leap forward out of the economic doldrums of the past.  The more people were free to exchange goods and services, the faster the standard of living rose for untold millions of people.  When societies fostered freedom in their markets, they set the course of their lives and the lives of their posterity forward into greater prosperity.

As Ludwig von Mises noted in chapter one of The Anticapitalistic Mentality (click here for Book Reports):

"Capitalism deproletarianized the 'common man' and elevated him to the rank of 'bourgeois'...Those underlings who in all the preceding ages of history had formed the herds of slaves and serfs, of paupers and beggars, became the buying public, for whose favor the businessmen canvass." 

 Increasing government intervention and influence in our lives and liberties in not setting the car that is our society in "Drive."  With every increase in the central control of our market and therefore economic lives, the government currently controlled by the Ds are heading in Reverse, turning the clock back to the mercantilistic policies that stalled societal adavance and the elevation of millions from hand-to-mouth existences.   Fannie and Freddie control of home mortgages, taking over GM, bank bailouts, and centralizing our health care into the hands of a bureaucratic Leviathan is most certainly putting the car in reverse.

In so far as any of the Rs agree to go along with these backward, regressive economic policies, the president is correct, they are putting the car in reverse.  But the ones putting the car in Reverse are hopping along for a ride with you, Mr. President.

Government and Marriage: Get a Divorce Lawyer

The ongoing controversy over gay marriage illustrates one of the several undesirable effects of government over-involvement in our lives: it sets one segment of society against other segments of society, each attempting to twist the coercive arm of government onto others.

If we take a big step back from the arguments of law, precedent, the 14th Amendment, etc., we could ask ourselves the larger question, If government did not meddle in the institution of marriage, would we be having this social unrest?

No.

And the more government has control over our lives and liberties the more divided, short sighted, and hypocritical we as a people become. This trend sets us to influence government to manipulate others in an effort to secure our own self interests.

On one side of the gay marriage debate are social conservatives looking to government to define and protect marriage in an effort to restrict others in society to the same definition. Really? Conservatives are supposed to be suspicious of "big government" and the encroachment of the state into our lives and liberties.

Are these same social conservatives also comfortable having government define and control how much of their personal property is confiscated and redistributed to others via the progressive tax code? The fruits of our labor is nobody's business. How, then, is asking government to intervene in a very private, voluntary relationship consistent with conservatism?

On the other side of gay marriage are the radical let's-transform-society-in-the-image-of-our-making activists, seeking to use the force of law through judicial activism to force others in society to legally validate a lifestyle that is widely unaccepted. Claiming discrimination as a complaint, they are looking to leverage society to accept homosexuality through government regulation of marriage. This effort goes far beyond a rational argument for toleration and looks to legally force Americans to validate homosexuality by making equal before the law all marriages.

Again, really? The contemporary "liberal" believes (supposedly, at least) in being open-mined and tolerant of others. How is using the court system to force others to accept homosexuality "liberal," then? Are these same activists equally appalled at the discrimination and unequal treatment of the tax code?

The more social conservatives push for government to define and protect the institution of marriage, the more they open up churches to government regulation. Do they really expect government to set an ultimate definition of marriage then have government not eventually have a say in how churches conduct themselves? Does government have a history of growing or receding in these, and, indeed, all affairs?

The more homosexual activists manipulate society through the court system, the more they are empowering the state over their own lives. Is it a guarantee that all court decisions will go the way they wish? Are they really comfortable placing their vision of society in the hands of judges today, thinking it will always be so tomorrow?

We should all want less government in our lives, not more. In a free society government would have no say in marriage. We would be free from the danger of having it and other private associations defined and controlled by small groups in society. And we would be free from the encroachment of the government at least in this one part of our lives, marriage. As individuals we would have less reasons to resent each other. We would have to rely on the free exchange of ideas and the persuasiveness of our arguments to shape society, not petition the government to use coercion to shape society to our respective likings.

There are many reasons to prefer a freer society. A less contentious and litigious society is one of them. As we face a vast expansion of government into other parts of our lives--health care, home mortgages, the auto industry, college tuition---we would do well to think of the social unrest and division government involvement in marriage has caused.

Forget FDR. President Obama is Looking A Lot Like Herbert Hoover

Progressive supporters of President Obama like to fancy a comparison of him to FDR. I think our president deserves a comparison to Herbert Hoover as well.

What, by the way, is the standard public perception of President Herbert Hoover and the Great Depression? Is runs something like this:

President Hoover deserves the blame for the Great Depression because he did
nothing while the country fell deeper into economic misery. He favored laissez-faire economics and refused to use the government to intervene in the economy, leading to higher unemployment and a deepening of the depression. It required the interventionalist policies of President FDR to recover the economy and save capitalism.

None of the Hoover-was-doggedly-laissez-faire lore is true. The general script on Hoover is part of the fable that plagues the history of the Great Depression. Revisiting the historical record sheds truth on the matter and gives us deeper insight into what did actually cause the Depression to be so Great.

In truth Hoover deserves blame for the depression because he intervened too much and set the table fore the hyper interventionalism and meddling of the New Deal.

Hoover was a interventionalist across the board. He was anything but a proponent of "laissez-faire" economics. To that point in history (1929-1932) Hoover set all the records in relation to government intervention in the economy, only to be eclipsed by the dizzying manipulation of the market by his successor, FDR.

Here are some examples, for an excellent book on economic history, How Capitalism Saved America, by Thomas J. DiLorenzo. (When I finish reading the book I will submit it to Book Reports.)

• As Commerce Secretary under President Coolidge, Hoover disliked open competition in the market and favored government-sponsored competition, calling it "cooperative competition." This laid the groundwork for FDR's National Industrial Recovery Act and the National Recovery Association, a noxious system whereby businesses were forbidden from competing below price levels. Policies were set by business cartels supervised by government, and enforcement was provided by the government.

• As president he pushed for and signed the Smoot-Hartley tariff act. This high tariff cut off trade with consumers around the world, set off retaliatory tariffs from other countries, and greatly depressed domestic production of agricultural and manufacturing goods.
  

• Hoover was an enthusiastic proponent of public works. As DiLorenzo points out, by 1931 (FDR was not president until 1933) total government expenditures on public works was as high as any other year in the decade! This is astounding when we consider the millions FDR put on the public payroll with his myriad of works programs. Hoover also encouraged the state governments to increase spending on public works.

• By 1931 Hoover's spending created a $2 billion deficit.
  

• He pushed through the largest tax increase in history, to that point in time. Income, corporate, surcharges, estate, and gift taxes all went up.

• Hoover created the Agricultural Marketing Act, creating another government-created cartel of large corporate interests in the form of the Federal Farm Board. This board colluded production interests that reduced production and drove up prices of agricultural goods. This was the predecessor of FDR's Agricultural Adjustment Act.

• He created the Reconstruction Finance Corporation (RFC). This board used tax payer funds to prop up uncreditworthy with credit, leading to the watering down of free market pressures and forces in lending and finance. This effectively steered capital investment away from productive ventures and job-creating businesses, skewing the market and depressing wealth creation and, therefore, job creation.

Decidedly not laissez-faire, all.

And all these gross interferences in the market occurred during the depression, paving the way for the Great Depression:

• When the market needed more freedom, not less, to create wealth and jobs, Hoover intervened.

• When people needed to save more of their own property in the form of savings, Hoover increased taxes.

• When entrepreneurs and businesses needed more certainty in the market in order to invest and plan for the future, Hoover rocked the boat with interventionalism.

• And when the country could least afford deficit spending, Hoover piled it on.

So, with the the Stimulus Bill piling on to the debt, the health care bureaucratic boondoggle thrown on the people and businesses, tax rates nearly certain to go up in 2011, a finance regulatory bill that exempts the government-run Fannie Mae and Freddie Mac, the taking over of a portion of the auto industry, and the looming talk of a crippling Cap and Trade bill, I think President Obama bears more of resemblance to Herbert Hoover than FDR, the hero of his progressive base .

Follow the Pronouns

“The myth of socialism is far stronger than the reality of capitalism. That is because capitalism is not really an ism at all. It is what people do if you leave them alone.”
~~Arnold Beichman

Speaking recently at a Ford manufacturing plant in Chicago, President Obama made some telling remarks regarding the auto industry and the state of our market economy. To wit:

"The United States does not quit. We always compete...That's what we're doing with the U.S. auto industry."

And later on in the speech: "We are heading in the right direction."



Who is this "we" to whom the president is referring?

Being the government owns the controlling share of GM and has again bailed out Chrysler, the "we" is the government-sponsored monopoly that we call the American auto industry.

Calling it "Government Motors" is no longer a joke.

When large corporations and government collude to control production and the price levels, that is the antithesis of freedom in the marketplace otherwise known as free market capitalism.
In such government-made monopolies, consumer demand--you're choices and preferences in the market and other basic economic considerations--are subordinated to the central planning objectives of the state.

There is no room for competitors in such an economic environment, for the monopoly is established with the coercive power of government. It is a legalized cartel that brooks no pesky little competing businesses seeking the favor of consumers.

For perspective, consider how Mussolini called his government/corporate unholy collaborations "cooperatives" wherein production and planning was controlled by collaborating heads of industry supervised by the government. Call it fascism, corporatism, state-corporatism, socialism, or some variant of central planning authoritarianism if you like. One this is certain, this corporate/government collusion is a rejection of the basic premises of competitive capitalism.

It is interesting this speech was made at a Ford plant, being Ford is the only company that did not take bailout funds. Is the president implying Ford should become part of the corporatist team, to be part of the "we."

"We always compete." Sorry, Mr. President, but it is not competitive to prop up failing companies with tax payer funds, direct production for political and not economic reasons, and prevent would-be competitors from doing a better job in the market.

We the consumers and taxpayers on the short end of this monopolistic stick would prefer real competition in market. Were that to happen, we would have better cars and better government.

Ethics Scandals, Angels, and Good Government

In this video CNN's Jack Cafferty explores the probability that the Rangel and Waters scandals will harm Democrats in the midterm election. He also give a rundown on the recent history ethics scandals in Congress:



It seems silly to remind ourselves that politicians in positions of power are not angels. Few people are surprised when these scandals hit either of the parties. And yet, paradoxically, we've been relatively comfortable seeing the scope and size of government power over our lives grow, not remain constant or decrease. With every growth of government we are giving politicians more opportunities for mischief, abuse of power, and diminishing liberty.

With the steady increase in evidence over the decades that there are no angels to govern us we, have all the more reason to enforce the constitutional limitations placed on their power. And we certainly have every reason to restrain government from assuming powers it is not specifically granted in the Constitution, like forcing individuals to purchase goods provided by the companies of the government's choosing.

As James Madison observed in Federalist 51,

"But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.” (Emphasis added.)

Let's start acknowledging the "necessity of auxiliary precautions," remind politicians they depend on our votes to return to power, and insist on restraining the power of politicians over our lives and liberties.

Good government is a government realistically restrained in light of human nature, history, power, and the ever-precarious state of freedom. Until we see pearly white wings descend upon Capital Hill, we need to restrain, not broaden, government power.

The Volt: What Capitalism Did Not Bring You

Doing his best to sell (pun intended) the auto industry bailout and to prepare the public for the donning of the Volt, President Obama last week visited a General Motors manufacturing plant.

The physical stage of his GM speech, placing the president of the United States with the presidential seal in front an unfinished car off the assembly line, went a long way in setting up the message to America: government and big business are colluding to control the auto market, squash competition, ignore real consumer demand and therefore reduce production, use political instead of business considerations, drive up prices on consumers, and using taxpayer funds to do so.

CNN provides the following portion of the speech:



At the 1:00 mark the president remarks on the number of auto manufacturing jobs lost before he took office, how sales went down, how the industry looked like it "was going over a cliff," how that industry avoided difficult choices, and had not fully adapted to the market.

Such an irresponsible business sounds worthy of failure, of being driven out of the market by competitors seeking the approval of customers and capable of providing more stable jobs for employees. Being competitive capitalism is a profit and loss system, when you're all losses you've proven you cannot efficiently provide consumers with affordable and quality products and services.

But, starting with Bush, what did we do? We propped up GM and Chrysler (again) with a taxpayer bailout.

We have given these business failures even less incentive to get things right and operate efficiently, for now they have the explicit backing of taxpayer dollars. If you do not have to face the market pressures of competitors, why do so? This does, after all, mark the second bailout of Chrysler. What is to preclude a third? Better yet, if government keeps those pesky little competitors out of your way with excessive regulation, all the better.

Worse yet, the federal government is the chief share holder of GM. Besides being blatantly unconstitutional, this transforms GM into a manufacturing wing of the federal government. They now are in the "business" of producing political pet projects for meddling politicians, not making business decisions based on consumer demand. And, as with any government run affair, costs run unnecessarily high as they do not have to operate under the competitive pressures of the market: they have the unending stream of taxpayer funding to fall back on!

Taxpayers pay twice for this collusion of government and business: once in the form of the taxes and borrowing it requires to prop up and run failing businesses, and twice as consumers given a diminished choice of products they did not ask for, offered to them at artificially high prices.

For example, the new Chevy Volt, starting at $41,000 dollars.

Calling this capitalism is like, well, I don't know. Analogies and similes apply to realities that can be logically grasped, and this defies the basic logic of competitive free market capitalism.

This market disruption goes beyond mere socialism. At best it is a lurch backwards into the age of mercantilism that preceded capitalism. At worst it is dabbling in the system of the state corporatism that followed capitalism, tried by 20th century totalitarian governments in Europe.

For capitalism to be capitalism, the market has to be competitive and free. In order to be competitive, competitors cannot be squashed out of the market by excessive government intervention in the form of skewed regulations or, as above, outrageous government bailouts and collusion.

When government exceeds it legitimate role of providing courts to settle disputes, of enforcing contractual obligations, of setting regulations that do not favor one business over another, the market becomes the playground for special interest lobbying and favor-dispensing. Monopolies are created in the market whereby production is lowered by a lack of true competition, therefore prices are artificially made high. This is done by the very government that claims it is the vanguard of consumer protection.

In this circumstance consumers are deprived of their privilege of voting with their dollars, tax payers shoulder the burden, and freedom in the market takes a significant hit.

Volt? From a free market perspective, it deserves the name, Dolt.