The Third Way Leads to One Way

Proponents of the international socialist movement of the early 1900s shared a common vision: "Social Justice."  The ultimate goal was to create a more equitable (as they determined it) distribution of material welfare for all through government ownership of the means of production.  Doing away with the private ownership of the means of production (or the notion of private property in general), it was thought, would allow for all economic activity to be comprehensively planned and directed by government authorities toward the ends defined by "social justice."

As F.A. Hayek points out in The Constitution of Liberty, "The various socialist schools differed mainly in the political methods by which they intended to bring about the reorganization of society."  He goes on to cite the Fabians and the Marxists: one group favored incremental-ism and the other totalitarian authoritarianism to achieve the common ownership of the means of production for the ultimate goal of remaking society in the socialist image of "social justice."

By the mid twentieth-century, however, socialist proponents became disillusioned as their vision collided with the realities of human nature and basic economics.  The impracticality of coordinating economies, top-down, to meet the material needs and wants of entire populations made many realize the private ownership of production was simply more efficient and productive than socialist central planning.  Voluntary coordination, free association and the resulting division of labor in market economies could not be duplicated, much less bettered, by authoritarian central control.

And from the perspective of freedom and the power of the state, the spectacle of totalitarian communism and fascism made many realize the incompatibility of socialism with individual freedom.  It also revealed the brutal and inhumane extent to which the unlimited power of the state required to plan economies can lead.   (As Hayek points out in his classic work The Road To Serfdom, “Most planners who have seriously considered the practical aspects of their task have little doubt that a directed economy must be run on more or less dictatorial lines.”)

Seeing the futility of the nationalization of the production did not, however, move along socialist apologists to abandon the overarching Utopian goals of social justice.  The ultimate goal of remaking society in the nebulous image of "social justice" remained unchanged.

Seeing the efficiency of capitalism with its private property and ownership of production of wealth on one hand and totalitarianism with its gaze fixed on redistributing wealth on the other, many socialists sought out a third alternative somewhere in the middle.

Ludwig von Mises, in Liberalism: The Classical Tradition, labels this third way interventionism:

"In this way, one forms the conceptual image of a regulated market, of a capitalism circumscribed by authoritarian rules, of private property shorn of its allegedly harmful concomitant features by the intervention of the authorities."  

Basically, freedom in the market and private ownership of production (capitalism, that is) suffices to efficiently provide the wealth and prosperity society demands, but government planners stand by and intervene from time to time to indirectly implement the overall vision of socialism.  Intervention takes the form of regulations, price controls, tariffs, punitive taxes, minimum wage laws, wealth transfer programs (like Social Security), and myriad redistributive social legislation.

Mises sees no possible way to maintain a "third way" between freedom and socialism, free markets and central planning:

"There is simply no other choice than this: either to abstain from interfenece in the free play of the market, or to delegate the entire management of production and distribution to the government.  Either capitalism or socialism: there exits no middle way."

Why the either-or, black or white scenario?   Once government sets out to manipulate the market for some goal of "social justice," it will artificially inhibit the otherwise free market and disable it to provide the very goods and/or services the government originally set out to enhance.   Demand is made artificially high and supply diminishes, so prices go way up.  Less people, not more, can afford the very thing government set out to make more accessible.  And once a commodity is no longer provided in the market, government rarely relinquishes control in order to allow the market to again efficiently provide for its demand.  It simply doubles down and makes the market less free. 

A  recent example: "Affordable housing" and government manipulation of the housing market through Fannie Mae and Freddie Mac.  Now, it simply cannot be argued there is a free market in housing.

Video: Mises on Liberty and Economics

For the weekend edition: a lengthy and worthwhile video on Mises and the vital connection between freedom and economics.  This is adds to the subject of the last Chalk Talk nicely:

Remembering The Economic Part of Checks and Balances

It is safe to say most Americans understand there is a limit to the power of government.  There is no consensus, however, on what that limit is or even how that limit is maintained.

There is a limited scope of activities afforded to the federal government in the Constitution itself.  Article 1, Section 8 is the touchstone list “delegated” powers afforded to Congress.  The “necessary and proper” clause of that same section has historically been the legislative escape clause for Congresses looking beyond its short constitutional charter of powers.

The very structure of the Constitution also affords a restraint on just how much the government can “get done.”  James Madison’s prudential observations in Federalist 51 highlights how the separation of powers pits one department of the government against the other in an internal struggle to keep each other from encroaching on the other’s authority.  Making “ambition to counteract ambition,” results in one more restraint on government power and overreach.

And there is the simple yet overlooked reason why there is a limit on government power: we have a written constitution.  If there is little or no restriction on government, why have anything written down?  Furthermore, if Congress may pass any law not strictly prohibited in Article 1, why have a handful of permitted powers listed in the first place?

One of the most overlooked and effective checks on the power of the government is the notion and existence of private property and its voluntary exchange among private individuals—what we call the free market capitalism.  When there is a clear delineation between what is private and what is public, there is a clear limit on what activities in which the government may and may not engage.

Ludwig von Mises, in his classic exposition, Liberalism: The Classical Tradition, remarks:

"There is an inherent tendency in all governmental power to recognize no restraints on it operation and to extend the sphere of its dominion as much as possible...If only private property did not stand in the way!  Private property creates for the individual a sphere in which he is free of the state.  It sets limits to the operation of the authoritarian will.  It allows other fores to arise side by side with and in opposition to political power...It is the soil in which the seeds of freedom are nurtured and in which the automony of the individual and ultimaely all intellectual and material progress are rooted." [Emphasis added.]

The recognition of and respect for private property sets a “No Trespassing” sign (or, for you Lord of The Rings geeks—like myself—a Gandolf-like You Shall Not Pass! declaration) between ourselves and our economy and the authoritarian proclivities of government.  Hence, the vital importance of insisting on economic freedom: If we are free to voluntarily exchange our property among ourselves, we create forces outside of and in opposition to the power of government.  We create one more check on the power of government.

Think of it as an economic checks and balances.  We, the People create and maintain the free market economy through the voluntary exchange of our private property, making arbitrary government actions less likely.

In Capitalism and Freedom, Milton Friedman also stresses the importance of private property and its resulting free market as an economic counter force to the power of government: "History suggests only that capitalism is a necessary condition for political freedom." 

Why?:  In a free market society economic power is widely dispersed among many millions of hands in which government has a limited role prescribed by law.

If government comes to direct and control the economy by laying claim to too much of our private property, it comes to control both political and economic power over our lives.  Economic power is then transferred from millions of hands working through voluntary exchange who hold no coercive power over each other, and concentrated into a few sets of hands in government regulatory agencies who already possess coercive political power.  

“By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power.  It enables economic strength to be a check to political power rather than a reinforcement.” [Emphasis added.]

Thus, the folly of believing we can remain free by being only vigilant about civil rights such as free speech and freedom of religion but neglecting to jealously guard our economic freedom and private property rights.  We cannot afford the confluence of political power and economic power in the same hands.

We need to be mindful of our economic contribution to the “checks and balances” on our government.

Three more things need discussed here: the insidious power of government-sponsored monopolies, the 16th Amendment, and what passes for legitimate government regulation.  Let’s save those for other Chalk Talks.

Social Security Taught by Hayek, Williams, and Madoff

No system of monopolistic compulsory insurance has resisted [the] transformation into something quite different, an instrument for he compulsory redistribution of income.  From F.A. Hayek's The Constitution of Liberty, Chapter 19: "Social Security"





Political cartoonists have had their fun with Bernie Madoff.  In this video, Walter E. Williams uses one such cartoon to set up his thoughts on the Social Security system:


As Dr. Williams points out, Ponzi schemes work, but only for so long.  In the case of Madoff's scheme, old (initial) "investors" eventually absorb too much of the funds from new (current) contributors.  After the deviant administrator absorbs his share of the loot, the funds dry up and the current contributors are left holding the empty bag.

The Social Security system leverages the same scheme.  The only difference between SS and Madoff is he used fraud to implement his Ponzi scheme; the SS Administration utilizes force through the coercive arm of the income-tax confiscating federal government.

Three other differences should be noted.

First, when a private citizen engages in this activity, it is illegal and, if caught, properly punishable under the law.  When the government engages in a Ponzi scheme, such activity is by default exempt from the law that it enforces on its citizens.

Second is the sheer reach and scope of the damage that is done.  When one citizen or a small cabal of manipulators set out to make a few million illegal dollars, the breadth of the damage done is restricted to the number of people they manage to swindle.  In Madoff's case, the amount of dollars brought in through fraud is floated around $50 billion.  When the government modifies countless times over decades a system that was originally sold to the public as an old age "insurance" program and transforms that system into a direct wealth transfer program obliging one generation to the moral obligation of providing for the prior generation without regard to need, the damage done in the form of "unfunded liabilities" racks up into trillions of dollars.  Nearly everyone in the country is affected.

The third difference focuses on the administrator.  In this privately-run Ponzi scheme run on fraud, the mastermind Madoff absorbed his share of the loot that helped create the fiscally unsustainable situation that contributed to the eventual collapse of the system.  In the publicly-run Ponzi scheme we know as Social Security run on force, the administrator is the federal government that, through its endless stream of entitlement expansions and administrative malfeasance, has absorbed the trillions of dollars that is pushing the scheme closer to collapse. 

Hayek points out that old-age pension programs were nothing new by the time FDR pushed Social Security into existence in 1935.  Bismark initiated one in Germany as early as the late 1800s.  And, by 1960 when he wrote The Constitution of Liberty, Hayek could soberly observe that every such system had degenerated into serving the old socialist aim of redistributing wealth in accordance with the nebulous idea "social justice": "The reason why it has come to be so much more widely accepted than the older socialism is that is was first regularly presented as though it were no more than an efficient method of providing for the specially needy."


The great difficulties we are left with are  massive tax increases or massive cuts in benefits, or both.  Long viewed as the "third rail of politics" in D.C., the only changes that have been made to the Social Security system have been changes that aggravate the problem, not address it.  

And like all socialist manipulations of society, the program pits one group of individuals against other groups of individuals.  In this case, the retired generation understandingly expect what they had confiscated out of their income for decades paid back to them, and the working generations who had nothing to do with past Congress' malfeasance understandingly question why they should be left with a burden they did not create.  One side is handed a giant claim-it receipt while the other is handed a giant bill, and neither had anything to do with what the other is holding.   

Add to this entitlement/it-ain't-my-fault mess the fact that Social Security is now deemed a form of retirement wherein many retirees go on to receive much more than they ever "contributed" into the system, and many recipients die well before they ever collect anything close to what they had confiscated out of their property.

Back to Hayek: "The difficulties which social insurance systems are facing everywhere and which have become the cause of recurrent discussion of the 'crisis of social security' are the consequence of the fact that an apparatus designed for the relief of poverty has been turned into an instrument for the redistribution of income, a redistribution supposedly based on some non-existing principle of social justice but in fact is determined by ad hoc decisions."

Reflecting Upon and Choosing the Consitution, Again

After full experience of the insufficiency of the existing federal government, you are invited to deliberate upon a New Constitution for the United States of America….It has been frequently remarked, that it seems to have been reserved to the people of this country to decide, by their conduct and example, the important question, whether societies of men are really capable or not, of establishing good government from reflection and choice, or whether they are forever destine to depend, for heir political constitutions, on accident and force.  [Emphasis Added] From Federalist 1

Hamilton's above remarks were addressed to the people of the state of New York during the period of the ratification debates, after the Constitutional Convention and before the people of each state voted for or against adopting the novel Constitution.

And novel it was.  For the first time in its history a segment of mankind convened, deliberated, debated, and formed a charter of government that set the governing parameters of the central  government.  It was the result of reflection, rationally derived from the minds of men who knew history, human nature, and politics. 

There were prefiguring constitutions such as the Mayflower Compact, the Fundamental Orders of Connecticut, and the founding charters of the original colonial governments.  These documents were original in their own right, but there were elements of "force and accident" that necessitated their creation.  The Articles of Confederation, for example, were hurriedly drawn and implemented in the face of the Revolutionary War.

What set the Constitution apart was its deliberate and planned conception, its scope and ingenuity, and its intent to properly limit the powers of central government to protect the liberties of the people while affording said government the requisite power to maintain stability and avoid the suicidal tendencies of the few examples of popular governments (democracies, that is) history had to afford.

Equally novel was the manner in which the Constitution was to become the supreme law of the land: It was accepted by choice.  Ratification conventions were drawn among the several states with the sole purpose of voting up or voting down the proposed Constitution.  By design of the Constitution itself, such conventions were to be composed of the people themselves; state legislatures were not allowed the authority to vote for or against the Constitution.  Hence, the people of the respective states voted, not the states themselves.  (This is an important distinction as it further solidified the popular character and beginnings of the Constitution, and supported Madison's contention that the new government was a federal one, neither wholly national nor merely another compact of states.  It was partly national, partly a government of respective states.  See Federalist 39)

The Constitution was also a boldly liberal document, liberal in the classical sense and in the broadly novel approach it took to difficult issues.  The words, "slavery," or "slaves" do not appear anywhere, yet it deals directly with the issue by severely limiting the voting power of the slave holding districts by reducing their representation in the House by 3/5.  This, contrary to contemporary misgivings, was a great step forward as it diminished the number of pro-slavery votes in legislation.

And who was barred from voting for representatives in the House?  Put another way, who was permitted, in the Constitution, to vote for members of the House?  If you said, "White property holding males" go to the back of the class: No one was denied!  The qualifications were left to the state legislature to decide. This left the possibility completely open to wider suffrage.  This is a striking historical step forward when considering the broader historical and world context (it was 1789) and the state of equal rights, minority rights, and free society.

Looking at our constitutional history, it is good to remember its unique origin, implementation, and unique features.  What is equally important is to take a step back and consider how far we have departed from the constitutional government under which we are supposed to live freely.  We need to ask ourselves, is it time we once again "reflect" upon our situation and bring about a constitutional change through"choice"?

The grassroots stirrings of the past year and a half indicate there is a lot of attention placed on the state of our government, economy, debt, and freedoms.  Many more people are turning an eye to our situation and to our future.  Happily, there is a lot of reflecting taking place as numerous educational groups are once again reading our history and studying the Constitution (Yay!  Imagine that.)  The connection of individual liberty to constitutionally limited government is a concept that is spreading, again.  A significant number of Americans have made a good choice, and this is a very good thing.

Who, then, is left to reflect and choose, once again, the Constitution and embrace and respect its authority as the charter by which government is to conduct itself?

That would be the ensconsed powers-that-be in both political parties.  They can be made to "reflect" upon the virtue of following the Constitution, that reflection being the consideration of their likelihood to lose their offices come election time.  Here is the choice to be reflected: "If I disregard limited constitutional government, I don't get reelected."

And election time includes the primaries.

The more upward pressure from the grassroots level, the more likely politicians will again choose the Constitution.  If we're frank with ourselves, we'll acknowledge that history teaches the Constitution is incapable of enforcing itself and the politicians that swear to uphold and protect it will discard and destroy it when we let them off of their electoral leash.

As a culture we are learning and relearning our Constitution.  Now we are turning the hard work of teaching it to our politicians.  They've become too much like poor old Barney Fife:

Video: Ron Paul on Principles and Compromise

All compromise is based on give and take, but there  can be no give and take on fundamentals. Any compromise on mere  fundamentals is a surrender. For it is all give and no take.  Gandhi  

I've wanted for some time to post something on principle and compromise.  This was originally an In Real Time post, and probably should stay there, but its content is worthy of a Chalk Talk.  Why is it that in every other aspect of life "compromise" is a bad thing?  If you compromise your health, your ill.  If you compromise your integrity, you're an ethical cur.  If you compromise your marriage vows, you're a despicable reprobate.  But, oddly, if one compromises his or her principles inside the halls of Congress or in the Oval Office, they are applauded for exhibiting moderation, practicality, and a desire for "get things done" for the public.  What gives? 

In this CNN interview with Anderson Cooper, Ron Paul brings out the vital lessons to be learned about this primary season: Real change and reform for freedom is effected from the upward pressure of the grassroots. "The grassroots knows that government fails."  (Do the party establishments know this?)



Cooper asks the poignant question that's on everyone's mind: Would it have been better to get a moderate, Democrat-Lite (my words, not his) like Castle on the ticket, and "is there room" for moderates like Castle in the GOP.  (As if constitutional conservatives actually set the agenda inside the RNC.)

Paul uses the question to get to the heart of the issue.  He also gives an excellent response to Cooper's (unsurprising) assertion @3:45 that "there are those who say..." we have to "get things done" in Washington and brings up the reflexively sacrosanct need to compromise. (Compromise with whom and on what, by the way?  Those specifics are rarely attached with the question.  Paul zeroes in and clarifies the issue.)

Finally!  A politician who knows and articulates the difference between compromise and coalitions, and where principle stands with both.  If you stand for liberty and anti-liberty policies bends to your position, that's a good compromise.  If the anti-liberty policy makers set the agenda and you simply soften the degree to which they further restrict freedom and vote along with them, that's really not a good thing.  Have them compromise with us!:

"Always compromise with people in your goals which is to me perfecting liberty, increasing individual liberty, and the free market place.  When you compromise moving in that direction and working with coalitions, that quite a bit of difference." [Emphasis added.]

Yes, quite a bit!

The center of politics in Washington has for decades been the redistributive welfare state from which most legislation and policy emanates out into our lives.  The public discontent results from this arrangement--crushing deficits and erosion of liberties--and has become intense enough that it is making an impact on the primary elections of one of the political parties that has had a hand in this process.

Whether that hand was passive in compromising principles or active in initiating new levels of federal spending and increasing the size of government  (prescription D entitlement, a wasteful education bill that nationalizes education standards, and soaring deficit spending during the Republican Congress and presidency of Bush II  are some examples that come to mind), the only viable choice for reforming government has become obvious: from the ground up.   We've seen where party establishment leadership has taken us, and we don't care for it.

No one can seriously contend that all our fiscal and political woes began after the inauguration of President Obama.  He and his Democrat majorities in Congress have greatly accelerated matters, for sure, but the table was set for him before he ever walked down Pennsylvania Avenue.

This sorry scenario is the end result of decades of "compromise" and "getting things done" in Washington.  The time has come to make the "things done" in Washington friendly to freedom, to reorient the almighty center of politics around liberty and that whole, what's it called?, Constitution thing that limits the power of government.

That truly would be a revolution, one worth having the other side compromise on.

Revisiting Hoover, Again

                                                           

                                                           

This weekend I read good article by Johan Goldberg.  It addresses the not uncommon comparison of President Obama to FDR and touches on all the concomitant historical fables (oximoron intended) that surround Herbert Hoover and the Great Depression.

Reading the article prompted me to re-post some scribblings about Hoover, FDR, and the anti laissez-faire Hoover policies that laid the foundation for hyper interventionist policies of the New Deal.

Free market apologists should agree with the big government advocates who reflexively proclaim that Hoover was a terrible president.  He was indeed a terrible president because his policies were a prefiguring of the New Deal that was to come, not because he was a "hand's-off" champion of free markets.  That framing of Hoover is a myth.

History teaches that misguided and excessive government intervention caused and prolonged the Great Depression, not "excesses" of capitalism.  It started with the Fed's misappropriation of the money supply before and after the crash of 1929, continued with Hoover's obsessive grasping at market forces, then went into overdrive with the New Deal for eight years until America's entry into World War II.

                                                                      Two excellent sources on this history are Powell's FDR'S Folly and DiLorenzo's How Capitalism Saved America.  DiLorenzo's chapter 9, Did Capitalism Cause the Great Depression? begins with a quote from FDR's chief economic adviser, Rex Tugwell:

"The ideas embodied in the New Deal legislation were a compilation of those which had come to maturity under Hoover's aegis...We all of us owed much to Hoover."

To my earlier post, "Forget FDR. 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 interventionism 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.

    •    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.

Here is a video coverning the same:
 

Video: In Memory

Video: Hope in What?

I found this interview very interesting.  What is striking is the first cartoon, a map of America filled in with hundreds of the word, "Hope."

In what, exactly, did so many Americans place their hope?  Was it Obama himself?  Was it a set of ideas and principles he articulated in the campaign?

Few will forget the tremendous lack of anything Obama offered in the way of ideas, principles, or even a voting record in the US and Illinois senate.  He simply threw out there a vacuous notion of "Hope" and "Change," and the public voraciously ate it up.  We placed all our hope in one charming, articulate, well-groomed person who could swoon masses with speeches about nothing, who offered few hints as to the policies he would pursue, and about whom we knew very little.

We placed our hope, not in ourselves as a free people, but in a finely-marketed set of non-ideas articulately refracted back upon us from two teleprompters.  We bought it, hook, line, and sinker.  

Contrariwise, it is fascinating to retrace the grassroots explosion of the Ron Paul Republican primary campaign of 2008.  What was the attraction?  Why all the buzz?  How did Paul's campaign raise $4 million dollars in one day, uncoordinated by the campaign itself?

Is Paul a smoothly packaged, charming speaker?  Hardly.  I've seen him speak twice.  He rambles around at times, has an irregular voice, lacks the rhythm and cadence needed to effectively drive home a point, and seems greatly out of place behind the microphone he often grasps out of nervousness.   By his own admission he has a difficult time in debates because of the time restraints.  He does has an avuncular aspect to him, but sweet older uncles are not known to draw the raucous admiration of thronging crowds.

So why all the enthusiastic followers, a good portion of which are under the age of thirty?  What's the attraction?

People gravitate to the message, not the messenger.  Ron Paul articulates a consistent and clear message of liberty and constitutional government. His book, The Revolution: A Manifesto, could not be more to the point and principled.  Americans are hard-wired for such a messaged---it is part of who we are.  Being we have been starved, for so long, not only of politicians who mean what they say and say what they mean, but politicians that say a lot about freedom and how far we have drifted from living within the constitutional restraints required to preserve that freedom.

And because Ron Paul is the messenger and not the message, it does not matter if he will run for president in 2012. The freedom movement is about freedom, not about blindly following some charismatic speaker into the misty future of his making.  Dr. Paul, I think, would say so much.

We seem poised to again put our hope in freedom, constitutionally-restrained government, and fiscal sanity.

Maybe soon cartoonists will fill up an outline of America with "Freedom."

Socialism, The Welfare State, and "Social Justice"

"[M]any of the old socialists have discovered that we have already drifted so far in the direcetion of a redistributive state that it now appears much easier to push further in that direction than to press for the somewhat discredited socialization of the means of production.  They seem to have recognized that by increasing governmental control of what nominally remains private industry, they can more easily achieve that redistribution of incomes that had been the real aim of the more spectacular policy of expropriation." F.A. Hayek, The Constitution of Liberty (1960)

Since the 2008 election the words "socialism" and "socialist" have been tossed around somewhat regularly.  The more ardent opponents of President Obama and the Democrat Congress contend that a socialist agenda is being heaved upon us.  Supporters and apologists of the president agenda respond there is no such agenda to be founds.

I think F.A. Hayek would say both parties are wrong, and both are correct.

In "The Decline of Socialism and The Rise of The Welfare State" (chapter 17 of of The Constitution of Liberty and the origin of the above quote), Hayek strikes out an important difference between the original aim of socialism and the means by which socialists sought to secure that goal.

"The common aim of all socialist movements was the nationalization of the 'means of production, distribution, and exchange,' so that all economic activity might be directed according to a comprehensive plan toward some ideal of social justice." [Emphasis added.]

One will not hear many public advocates for the outright state ownership of industry, and even the more noted progressive apologists dismiss such calls.   Cries for "social justice," however, can be heard not infrequently, both in churches and in public policy circles:


Like other illusive terms, "social justice" can mean a host of things.  Listening closely to the Left, however, betrays that "social justice" is the newest catchphrase for the old aim of socialism: the arbitrary redistribution of wealth in pursuit of a progressive vision of a more just society.

Back to Hayek for a moment.

As Hayek goes on to explain, the Soviet totalitarian style of the outright state ownership of production and arbitrary distribution of welfare disillusioned and even alarmed Western socialist intellectuals.  The socialist George Orwell, for example, went to great literary lengths to awaken society to the dangers of unlimited state authority in his classic work, 1984, arming opponents of big government with the powerful image of Big Brother watching and directing the every move of citizens.

The freedom-crushing, authoritarian means of pursuing some notion of "social justice" was discredited, but the end of redistribution of wealth and creating society in the image of some new progressive order did not go away with it.   Enter "social justice." Rather, the ongoing, peaceful increase in government control of marginally free market enterprise seemed the best new means to the old ends of socialism.

In 1960, when Hayek made these observations, the old socialist ends seemed achievable within the web of FDR-style centralized bureaucratic control of the economy that did not disappear after the Great Depression was ushered into the history books.

Ever since then, we've witnessed an ongoing quasi-central planning of the economy through government regulation of the market.  After all, why go through the ugly mess of taking over industries and entire markets when you're in a position to dictate the direction and, in many cases, the outcome of market activity through the regulatory apparatus of government?

With the GM bailout making the government its majority share holder, the current administration has come close to the old socialist means of taking over the production and direction of a significant part of our economy.  But remember it was Bush II that initiated the bailout before he left office.

What the current administration is certainly poised to do is achieve the old socialist aim of redistributing wealth in service of progressive visions of social justice through simply increasing the regulation of our economy and lives.  We cannot blame Obama for the bureaucratic network that was in place before he ever took office.  Republican and Democrat presidents and congresses of the past seventy years are to blame for that.

So, yes and no.  The current party in power is pursuing socialist goals.  But they are not employing the old socialist methods of doing so.   Proposing the state ownership of all the economy would be too hard a sale to the American public.

What the American public would find equally unattractive is the end result of incrementally wedding our economic futures to the size, scope, and discretion of a government that has a hand in most all of our lives.  With government control of the housing market through Fannie and Freddie and health care  control through the maze of new Obamacare regulations, we are on our way to some wider and deeper progressive vision of social justice.  Cap and Trade would push us further down that path.

We need to put politicians in a place to make that socialist sales pitch openly.  Then we need to keep on shopping.

Video: I.O.U.S.A.

You may recall the Chairman of The Joint Chiefs of Staff, America's highest ranking military official, remarking that the national debt is the biggest threat our national security:


There are obvious reasons why he would say this: a staggering debt puts on a road to national insolvency, cripples our ability to finance our own defense, puts us in a place where interest payments consume more than the defense budget, etc.

Other reasons include who actually holds our debt.  The Chinese buy up our debt and continue to float us loans; this in effect means we're mortgaging our future to China, as well as other countries.  Can we seriously expect this to not adversely affect our foreign affairs?

Worst of all, the debt and unfunded liabilities put us on a path to certain serfdom, to borrow from Hayek, in that we will implode upon ourselves.  We will one day have no one to buy up our debt to fund the ever-growing entitlement rolls.  At that point we will either raise income taxes to a crushing level wherein we become Sweden, Jr. and nearly completely wreck our creative market capabilities, or we will face a banana republic scenario where the tax payers put up a tax revolt in the face of massive redistribution or the the tax consumers revolt in demand of the entitlements the demagogue pass-the-buck politicians have promised over the decades.

A well done documentary on the debt is I.O.U.S.A. One Nation. Under Stress. In Debt.  (There is a 30 minute version on Youtube.  I attempted to embed and upload the video here, but the embed has been disabled.  You can link to it here.)

The documentary features David Walker, former Comptroller of the U.S., Government Accountability Office under Reagan, Bush 41, and Clinton and currently president and CEO of the Peterson Foundation.

The video was completed in 2007 and focuses much time on the acceleration of the debt under Bush 43.  It also relates the debt-to-GDP ratio of past administrations and times.  How chilling to think what has been piled on since 2007.

I recommend this documentary to everyone.  We cannot stay on this path of insolvency.  The U.S. cannot survive if it does, and individual freedom certainly will take a back seat to the dire fiscal circumstances that debt will bring upon us.

Now

"The argument for democracy presupposes that any minority opinion may become a majority one."  F.A. Hayek, The Constitution of Liberty

A bird's eye view of the 2008 elections beheld a tremendous political shift in American political and social life.  Democrats added to their congressional majorities won in 2006 and we elected a very progressive, leftist president.  The poll results revealed, it seemed, that a majority of Americans wanted to live out the conclusion of Newsweek magazine, that we are all socialists now.

That was nineteen months ago.  Now things look considerably different.

To interpret 2008 as a watershed election on par with 1800, 1860, and 1936 wherein the center of politics shifted enough to dominate all future legislative policy, one has to make the convincing argument that a majority of Americans have embraced the idea of living under a European style cradle-to-grave nanny state.

Now, we continue to witness the sustained energy and vocalized dissent of Americans through movements like the Tea Party where there is a shared interest in limited government, freedom, and a return to the Constitution.  We see the popularity of Glenn Beck's 5 o'clock show that offers more history and book reviews than news.  We watch the skyrocketing sales of classic works on freedom like The Road to Serfdom (Amazon's top-selling book in June), written in 1944.  And consider that,d due to overwhelming interest, the Austrian economics think tank Foundation For Economic Education had to turn away applicants from their summer seminars.

These social indicators paint a different political landscape that what Newsweek was so giddy to report.  And they tell us two things: America is not primed to become France, Jr., and that the 2006 and 2008 elections were not the seismic shift in politics hoped for by those wanting us to become France, Jr.

Rather, the public seemed primed to vote for Candidate Not-Bush, and give the Not-Republican Party an opportunity at power.  Democrats never gave the public substantive reasons to take back Congress other than reminding us how long Republicans were in the majority.  Presidential candidate Senator Obama campaigned on "hope" and "change," avoiding even marginally substantive talk on concrete issues that would have indicated his desire to "fundamentally transform" America.  He waited to tip his hand to that little ambition days before before the election.

Hope, change, and "he's not the other guy" are not the grounds upon which realignment elections are built.  And they certainly are not principles upon which the public places currency, much less confidence, embraces unequivocally, and holds up as reasons to socialize the country.

Now that we've had a taste of what America could become, if the majority of Americans embraced what this administration and Congress is placing upon them, the public's reaction gives us confidence no such majority exists.  The voice of the minority in the technical sense---those of us not represented by the party in power---is the voice of a larger, deeper, and wider political sentiment in the country.  That voice, then, is really not one of a minority but one of a true majority, preferring freedom, that was waiting to be woken up. 

And it shows no signs of falling back asleep.

What happens this fall and in the next two years will depend on this voice of dissent, and how much effect it has on both political parties.  We've seen we cannot wait for top-down reform (real change, that is) so we have to rely on ground-up pressure on the powers-that-be.   A policy of freedom is what the majority of Americans truly want, and political parties can act oblivious for only so long.

That's how it is, for now.