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.