October 25, 2014

Even libertarians wrong on Monsanto Protection Act

TAMPA, April 3, 2013 ― While the high priests in black robes were hearing arguments on gay marriage, President Obama quietly signed the continuing resolutions act that keeps the federal government operating in the absence of a budget. Buried inside the bill was language that has become notoriously known as “the Monsanto Protection Act.” The blogosphere exploded with cries of conspiracy, crony capitalism and corruption.

Liberals oppose the provision for the usual reasons: It lets a big corporation “run wild” without appropriate government oversight, free to (gasp!) make bigger profits on food. More thoughtful liberal arguments have suggested it may threaten the separation of powers by allowing the executive branch to override a decision by the judicial.

The lunatic fringe believes that Monsanto will control the world’s food supply through intellectual property laws and enslave us all, like the evil corporation did with oxygen in Total Recall. Of course, let’s not forget that old saying. “Just because I’m paranoid, it doesn’t mean they’re not out to get me.”

The liberal reaction to this bill and Monsanto’s activities in general is not surprising. It’s the libertarian reaction that’s surprising and disappointing. Even the Ron Paul crowd sounds like New Deal Democrats when it comes to this corporate farming giant.

They say that regardless of how much he supports the free market, everyone has that one issue that he is hopelessly socialist on. For some, it’s roads and so-called “infrastructure.” For others, it’s intellectual property. For Thomas Jefferson, it was education. Apparently, for libertarians it’s farming.

Now, if libertarians want to argue that corporations shouldn’t exist at all, that the privilege of limited liability violates individual rights and leads to market distortions, that regulating the markets only insulates large corporations from competition, that’s one thing. I’ve been there, written that.

Read the rest of the article at Communities@ Washington Times…

Michigan unions say no right to work

TAMPA, December 10, 2012 – Lansing, Michigan is bracing for an onslaught of protestors following Republican Governor Rick Snyder’s indication that he would sign “Right to Work” legislation currently making its way through the state legislature. President Obama and Harry Reid have both joined Michigan Democrats in denouncing the bill.

As usual, both liberals and conservatives are already demonstrating their skewed perception of reality in weighing in on this debate. President Obama told workers at an engine plant outside Detroit that “what we shouldn’t be doing is trying to take away your rights to bargain for better wages,” as if the law would do any such thing.

However, Harry Reid surpassed all in obtuseness when he called the legislation a “blatant attempt by Michigan Republicans to assault the collective bargaining process and undermine the standard of living it has helped foster.”

Perhaps the senator should ask the residents of Detroit, an entire city laid waste by New Deal union legislation, how they are enjoying the standard of living it has produced.

Libertarians haven’t been able to say this in quite a while, but the conservatives are mostly right on this one, although perhaps for the wrong reasons.

The only troubling sentiment coming from grassroots conservatives is the animosity towards labor unions themselves. Many seem to believe that the mere existence of labor unions causes economic distortions. Nothing could be further from the truth. Labor unions themselves are not the problem.

Like virtually all human misery, labor market distortions are caused by the government. Specifically in this case, they are rooted in the National Labor Relations Act of 1935 (a.k.a. the Wagner Act).

Read the rest of the article…

 

Libertarians are not corporate apologists

TAMPA, October 22, 2012 – In the wake of Ron Paul’s campaign and with Gary Johnson rising in the polls, libertarianism may just get a hearing for the first time in decades.

Already, the usual fallacies have resurfaced. If you don’t want the government to run education, you must be against education. If you don’t want the government to run healthcare, you must not want people to get healthcare.

This misunderstanding is often summed up with comments like, “I’m not sure I’m comfortable with an ‘every man for himself’ society.” This springs from the absurd assumption that human beings never confer benefits upon one another except when forced to do so at gunpoint.

One corollary of the “every man for himself” theory is that a libertarian society would “let corporations run wild,” resulting in a small, wealthy elite controlling all of the resources and exercising oligarchical rule over the rest of society. (So do we live in a libertarian society now?)

Most people would probably be surprised at the libertarian stand on corporations. In a libertarian society, they wouldn’t exist. Corporations are creatures of the state. They are created by the government and endowed with privileges that individuals do not have. This contradicts a fundamental premise of libertarianism, that all people are created equal and have equal rights.

Continue at Communities@ Washington Times…

How the Fed Steals for the 1% (Tom Mullen on the Huffington Post)

It is ironic that Occupy Wall Street is reportedly very low on cash. This is something that Wall Street itself never has to worry about. They have ready access at all times to as much cash as they need. The Occupiers mistakenly blame capitalism, but it is not capitalism that is behind this inequity. It is the completely anti-capitalist Federal Reserve System.

The Fed purports to stimulate economic growth by expanding the volume of money and credit. This forces down interest rates and makes more money available to start new businesses or expand existing ones. However, while the currency units are created out of thin air, the purchasing power is not. The purchasing power has to come from somewhere.

As I’ve explained before, the expansion of money and credit really redistributes wealth from the holders of existing currency units to whoever receives the new money. When an individual “redistributes wealth” without the consent of its current owner, most people call it “stealing.” Now, the Occupy movement may not have a problem with that if it results in less disparity between rich and poor. However, that’s not what the Federal Reserve System is all about. The Fed steals for the 1%.

Read the rest of the article at The Huffington Post…

Government Cannot Be Run Like a Business

Despite his big-government record as a governor, Mitt Romney has run for president as a conservative who would allow the free market to work. To bolster his credibility, he points to his success as CEO of Bain Capital. Romney led that company to become one of the largest and most successful private equity investment firms in the nation.

Many of his supporters have been able to look past the fact that he consistently raised taxes and pioneered Obamacare in Massachusetts because of this private sector success. They echo Romney’s argument that “the government should be run like a business” and believe that only a proven, successful businessman can do the job.

There are two problems here. The first is that history has already shown that successful businessmen are terrible for the free market whenever they get anywhere near government power. The second is that government cannot ever be run like a business. Its very nature makes that utterly impossible.

Regarding the first problem, one need only study the 19th century. If you don’t like the progressive movement, you can thank the 19th century Republican Party for creating the conditions that led to its birth.

The entire period is a record of big business getting together with government to intervene into the free market. Always under the pretense of protecting consumers, the true purpose of these interventions was limiting or eliminating competition for connected companies.

For example, Republicans wrote and passed the Sherman Anti—Trust Act. Standard Oil’s competitors were unable to deliver similar quality oil at the same price, so they went to the government for help. They successfully broke up a company that at the time the Act was passed had over 300 competitors and had lowered its prices for decades. Why? So that they could survive selling their oil at higher prices.

John D. Rockefeller, founder and chairman of Standard Oil, learned from this experience. Contrary to popular myth, Rockefeller was not a robber baron in the oil business. Like Romney, he had achieved his success honestly in the market through reinvestment, voluntary contracts, and his commitment that ““we are refining oil for the poor man and he must have it cheap and good.”[1]

However, when he got into banking, his strategy was different. Having seen the advantages of having government as a partner, Rockefeller made sure that he was well-represented at the secret meetings held on Jekyll Island to create the Federal Reserve System.

Pitched as a consumer protection against bank instability, it set up a government cartel that controls the money supply, interest rates, and most banking activity in general. Free market economists cite the Federal Reserve System as the chief cause of economic booms and busts, including those that led to the Great Depression and the 2008 housing crisis.

Railroads provide another example. 19th century government-subsidized railroads were plagued by fraud, waste, and recurring bankruptcies, while James J. Hill’s non-subsidized Great Northern Railroad operated profitably. Unable to compete, his subsidized competitors persuaded the government to pass the Interstate Commerce Act of 1887 and the Hepburn Act of 1906. As Thomas Dilorenzo observes, “What these two federal laws did was to outlaw Hill’s price cutting by forcing railroads to charge everyone the same high rates. This was all done in the name of consumer protection, giving it an Orwellian aura.”[2]

Romney’s economic policy as laid out on his issues page continues in the interventionist tradition. According to Romney, “History shows that the United States has moved forward in astonishing ways thanks to national investment in basic research and advanced technology.” He must read the same history books as Barack Obama. True proponents of free markets argue that entrepreneurs have moved the United States forward despite government intervention, not because of it.

Romney makes the distinction of “investing” in basic research rather than “politically favored approaches” to energy solutions. However, basic research is just another investment that should be made by private capital in the hope 0f profits, not by government for “the common good.” The latter is just more of Barack Obama’s collectivism repackaged. It will yield similar results: more bridges to nowhere, bankruptcies, and waste.

Despite the popular conservative misconception, government cannot be run like a business. Government simply does not exist under the same conditions as private firms. It does not receive its money voluntarily from its “customers.” The ability of customers to choose not to buy is the driving force behind all market innovation and efficiency. Private companies are not owned and run by more noble creatures. They are simply under conditions that force them to innovate and control costs in order to survive.

Contrary to the arguments made by Romney, Santorum, and Gingrich, there is only one role for government in a free market economy: to protect private property rights and enforce contracts. Regardless of good intentions, anything else the government does destroys the market. Only Ron Paul understands this. If you truly believe in free markets, he is your choice for president.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.


[1] Folsom, Burton, Jr. John D. Rockefeller and His Enemies from The Freeman http://www.fee.org/pdf/the-freeman/0805FreemanFolsom.pdf.

[2] Dilorenzo, Thomas How Capitalism Saved America Three Rivers Press New York 2004 pg. 120

Earth to Rick Santorum: Libertarians Founded the United States

Andrew Napolitano recently showed a clip in which Rick Santorum explained his views on libertarianism. His comments are also instructive in understanding his animosity (politically) towards Ron Paul. Santorum said:

“One of the criticisms I make is to what I refer to as more of a Libertarianish right. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. That is not how traditional conservatives view the world. There is no such society that I am aware of, where we’ve had radical individualism and that it succeeds as a culture.”

As David Boaz pointed out in the interview with Napolitano, Santorum seems to oppose a basic American principle- the right to the pursuit of happiness. I agree with him on this, but there is something even more fundamental here than that. It has to do with the conservative philosophy itself. One of the statements that Santorum makes is true. “That is not how traditional conservatives view the world.”

There is a great disconnect between average Americans who refer to themselves as “conservatives” and the small group of politicians and politically-connected businessman who call themselves likewise. The members of the former group believe in the founding principles of the United States, including the inalienable rights to life, liberty, and the pursuit of happiness. They believe that these rights are endowed by their Creator. In other words, they preexist the government. They are not created by the government. It is the government’s one and only job to protect those rights and when the government fails to protect them and instead violates them, it is the duty of the people to alter or abolish the government.

These inalienable rights are also referred to as “natural rights,” meaning that man possesses them even in the state of nature (the state without government). For Jefferson, whose philosophy was inspired by Locke, the reason that men formed governments was to protect these rights better than they could be protected otherwise.

Locke viewed man as capable of both good and evil. For Locke, man’s natural state was a state of reason, which meant that he respected the rights of other men and observed the natural law of non-aggression. “The state of nature has a law of nature to govern it, which obliges every one: and reason, which is that law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions.”

For Locke and his philosophical heir Jefferson, this natural law of non-aggression was the basis of government power. By prohibiting aggression by one person or group against another, the government would preserve the natural rights to life, liberty, and property. Importantly, repelling aggression was also the limit of government power, for when the government exercised power for any other reason it was committing aggression itself and invading the rights it was meant to protect.

That this was Jefferson’s guiding political principle is clear from his many statements to that effect. In his first inaugural, he argued for,

“…a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.”

In a letter to Francis Walker Gilmer in 1816, he wrote, “Our legislators are not sufficiently apprised of the rightful limits of their powers; that their true office is to declare and enforce only our natural rights and duties, and to take none of them from us. No man has a natural right to commit aggression on the equal rights of another; and this is all from which the laws ought to restrain him.”

Even on religious freedom, Jefferson based his position on the non-aggression principle. ““The legitimate powers of government extend to such acts only as are injurious to others. But it does me no injury for my neighbor to say there are twenty gods, or no god. It neither picks my pocket nor breaks my leg.”

The non-aggression principle defines liberty itself as Jefferson understood it. For him, as well as for the likeminded libertarians that led the secession from Great Britain, the word “liberty” as used in the Declaration of Independence had a specific definition. It meant the right to do what one pleases as long as one does not invade the life, liberty, or property of another human being. In other words, each individual was beyond the reach of government power so long as he committed no aggression against anyone else.

These are not conservative ideas. They are libertarian ideas. While Jefferson, Samuel Adams, and the others who espoused this theory may not have called themselves by that name, the basic tenets of their philosophy were the same. Today, the non-aggression axiom remains the fundamental basis for libertarian theory. Ron Paul bases his positions on it, as he said (about the 3:30 mark) when running for president on the Libertarian Party ticket in 1988.

Just as this non-aggression principle serves as the foundation and limit of government power between individuals within society, it is the foundation and limit of government power with respect to other nations. As all nations exist in a state of nature with each other, the natural law of non-aggression is the only one that governs them. As I’ve stated before, the non-aggression principle is the basis for the Declaration of War Power. The purpose of that power is for Congress to debate whether or not the nation in question has actually committed aggression against the United States. If it has, then a state of war exists and military action is justified. If it hasn’t, there is no state of war, no declaration, and no military action is justified. The use of military force in the absence of a state of war (previous aggression by another nation) violates the natural law.

The conservative philosophy rejects all of these ideas. There were conservatives in the 18th century just as there are today and their philosophy hasn’t fundamentally changed, either. The writer that most modern conservatives trace their philosophical ideas to was Edmund Burke. He has this to say about inalienable rights.

“Government is not made in virtue of natural rights, which may and do exist in total independence of it, and exist in much greater clearness and in a much greater degree of abstract perfection; but their abstract perfection is their practical defect. By having a right to everything they want everything. Government is a contrivance of human wisdom to provide for human wants. Men have a right that these wants should be provided for by this wisdom. Among these wants is to be reckoned the want, out of civil society, of a sufficient restraint upon their passions. Society requires not only that the passions of individuals should be subjected, but that even in the mass and body, as well as in the individuals, the inclinations of men should frequently be thwarted, their will controlled, and their passions brought into subjection. This can only be done by a power out of themselves, and not, in the exercise of its function, subject to that will and to those passions which it is its office to bridle and subdue. In this sense the restraints on men, as well as their liberties, are to be reckoned among their rights. But as the liberties and the restrictions vary with times and circumstances and admit to infinite modifications, they cannot be settled upon any abstract rule; and nothing is so foolish as to discuss them upon that principle.”

While modern conservatives like Russell Kirk have pointed to Burke as their philosophical inspiration, one can clearly see that Burke is here merely restating ideas from the true father of modern conservatism, Thomas Hobbes. Hobbes asserted that in the state of nature man had “a right to everything,” even a right to one another’s bodies. Hobbes asserted, as Burke implies here, that man’s passions would always overcome his reason and because of this the state of nature was a state of war of “everyone against everyone.” For Hobbes, as for true conservatives today, man has to give up his natural rights upon entering society and accept those privileges to liberty and property that the government grants him.

For Hobbes, not only did man give up his natural rights upon entering society, but he also had to grant the “sovereign” absolute and undivided power. This was necessary in order to completely dominate man’s natural impulses, which would always lead him to harm his neighbor if they were not checked. This power must literally keep each individual “in awe,” to make him fearful of committing any unlawful act. To secure this absolute power, the sovereign needed control over the economy, which he consolidated through a privileged, wealthy elite. He also needed control over education and even the religious beliefs of the people. No individual could ever be allowed to follow the dictates of his own will, as it would inevitably lead him to harm his neighbor or the commonwealth in general.

On foreign policy, Hobbes also viewed all nations as existing in a state of nature. However, since he viewed the state of nature as equivalent to the state of war, he viewed all nations not under control of the sovereign as de facto enemies. In reading Leviathan, one can almost hear George W. Bush’s famous remark, “You are either with us or with the terrorists.” This is why conservatives support the deployment of troops all over the world. Like Hobbes, they believe that we are in constant danger from any nation that we are not completely dominating with the threat of force.

The reason that conservatism seeks to “conserve” the status quo is because its adherents do not believe that natural rights are inalienable. Upon entering society, man has to give up all of his natural rights, so the only rights that man has in society are those he has been given by government in the past. Thus, if you get rid of the past, you get rid of the rights. While the status quo might not be optimal, the conservative believes that to get rid of the status quo means returning to the awful state of nature, and necessitates reconstructing man’s rights – via government – all over again. Conservatives are always fearful that rights can be lost and never regained – as opposed to libertarians who believe that rights are inalienable.

The conservative tradition in America does not trace back to Thomas Jefferson or the Declaration of Independence. Its tenets are completely incompatible with the basic libertarian philosophy that informed Jefferson and that document. The conservative tradition in America traces back to Alexander Hamilton and the Federalists, who were the conservatives of their day. Hamilton sought to preserve the status quo, which was a central government with absolute power, along with its mercantilist economic system. The only change he sought was that the system be run by Americans rather than the British.

Hamilton was a Hobbesian on every issue, which is why he clashed so stridently with Jefferson. Hamilton also believed that the power of the federal government had to be absolute. Otherwise, the separate states would be in the state of nature with each other and inevitably at war. He often spoke of the “want of power in Congress” leading to the states “being at each other’s throats.” Economically, he wanted a central bank, high protectionist tariffs to enrich domestic manufacturer’s at taxpayer expense, and “internal improvements,” which meant the government using taxpayer money to build what we would today call “infrastructure.” While all of these policies were anti-free market, they served the agenda of securing the loyalty of a wealthy elite to the government. Hamilton went so far as to call the national debt “a national blessing” for the same reason. On foreign policy, Hamilton was an unqualified militarist who sought to lead an army in conquering an American empire, starting with the Western Hemisphere possessions of Spain.

He felt justified in all of these invasions of individual rights and violations of non-aggresion because he believed that what he called “national greatness” (today conservatives call it “American Exceptionalism”) trumped the rights of individuals. For Hamilton, as for conservatives throughout human history, the individual lived to serve the commonwealth, as opposed to the libertarian belief that the commonwealth only existed to serve the individual.

This conservative tradition can be traced throughout American history from the Federalists to the Whigs to the Republican Pary. The Republican Party was born as the party of big government, centralized power, and a mercantilist economy. Ironically, all that history remembers of the Republican Party at its birth in the 1850′s is its opposition to slavery – its one libertarian position – while ignoring its Hobbesian conservatism on all other matters. However, with slavery abolished, the Republican Party retained the rest of its philosophy through the next century and right up to the present day. One can hear it rehashed in any 2012 Republican presidential primary debate.

Today, conservative American voters wonder why the Republican politicians that they elect never seem to make the government smaller or less intrusive. They refer to elected Republicans who consistently grow the size and power of the government as “RINOS” (Republicans In Name Only). They believe these politicians are not “true conservatives,” because while they may belong to the Republican Party, they do not adhere to the principles of an underlying conservative philosophy that they imagine to exist. They are wrong. Newt Gingrich, Rick Santorum, George Bush, and the rest of the establishment Republicans are the true conservatives. The American voters identifying themselves as conservatives are really libertarians  – they just don’t know it yet.

Go to any Tea Party rally. This is where you will supposedly find “radical conservatives,” but you won’t find them carrying any signs quoting Alexander Hamilton. You won’t find speakers extolling the virtues of government spending on infrastructure. Instead, you see signs quoting Thomas Jefferson and speakers mocking the many “bridges to nowhere” that have resulted from attempting to put Hamilton’s conservative ideas into practice.

The one inconsistency is the Tea Party’s support of the U.S. government’s military empire. This false note in the otherwise libertarian movement is the result of cultural confusion. These conservatives don’t yet realize that they aren’t really conservatives. They are libertarians, and the warfare state is inconsistent with the rest of their philosophy. They support it because they have been told all of their lives that it is the conservative position, which it is. However, limited government, inalienable rights, free markets, and individual liberty are not.

Contrary to Rick Santorum’s assertion that no society based upon radical individualism has ever succeeded, the libertarian, radically individualist principles upon which the United States was founded were precisely why it succeeded so spectacularly. It was libertarianism that made America different from any society before or since – what made it the “shining city on the hill” as Santorum calls it. It was the collectivist conservative philosophy that helped bring it down – with a lot of help from a third philosophical movement called Progressivism. Neither more conservatism nor more progressivism – nor any combination of the two – can solve the problems that America faces today. If Americans want to see liberty and prosperity restored in the United States, then restoring libertarianism is their only hope.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Free Chapters – A Return to Common Sense: Reawakening Liberty in the Inhabitants of America

Kindle edition now available here!

Paperback here!

Hello friends,

Americans are waking up to the reality that our once free republic is in serious trouble. They are searching for answers to what seem like unsolvable problems: economic depression, unending war, political corruption, and vanishing liberties. What if there were just one answer – freedom? The American republic was founded upon that principle, yet few suggest it is the solution to any of our problems,  much less all of them. But if freedom is the answer, we first must know what it is. Sadly, most Americans do not. That is why I wrote this book.

I hope you enjoy the Introduction and Chapter One: What is Freedom?, which I am making available for free below. The subsequent chapters discuss how freedom can solve the many challenges we face.

To read the rest of this book, you can get the Kindle Edition here.

I look forward to fighting with you to restore our liberty.  – Tom Mullen

Reviews

“Thomas Mullen is a knowledgeable and passionate libertarian and A Return to Common Sense is a valuable addition to the libertarian literature. Those new to the freedom movement will benefit from Tom’s introduction to both the practical and moral arguments for freedom. Long-time activists will benefit from Tom’s explanation of why strict adherence to principle is vital to the future success of the liberty movement.”

- Representative Ron Paul (TX-14)

Congressman and author of The Revolution: A Manifesto and End the Fed.

“A well written primer on economics, liberty, and government that even avid Austrians will enjoy. If you have been blinded by government and Wall Street propaganda, A Return to Common Sense will help open your eyes. I not only recommend that you add this book to your freedom library, but that you buy a few copies for your friends.”

- Peter Schiff, President of Euro Pacific Capital, Inc and author of Crash Proof: How to Profit from the Coming Economic Collapse.

Tom Mullen has written a thorough and useful book. Those for whom a discussion of liberty is a new experience will discover in A Return to Common Sense a clear, easy to understand guide to the nature of freedom, and why it is essential to our fondest hopes for a civil society of opportunity, peace, and prosperity. For those who already share these values, it’s a welcome resource for perfecting our own knowledge and advancing our cause.

- Charles Goyette, author of THE DOLLAR MELTDOWN: Surviving the Impending Currency Crisis with Gold, Oil, and Other Unconventional Investments and RED AND BLUE AND BROKE ALL OVER: Restoring America’s Free Economy

 

Free Chapters

Introduction:

The American Crisis

THESE are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman.”

 – Thomas Paine (1776)1

America finds itself in a time of crisis.  For several generations we have expressed dissatisfaction with government, whether with the Viet Nam war, the energy and economic crises of the 1970’s, the scandals of the 1980’s and 1990’s, or the present wars in the Middle East.  While a little dissatisfaction with the status quo is healthy, it has gone far beyond that now.  For anyone remotely in touch with the state of our republic, there is a growing sense of dread that whatever is wrong is getting much worse much faster.  They realize that what was once a desire for change has now become a dire need for change.  Yet, in as much as the voting public clamors for it, does anyone think for a moment that the majority of people in America actually know what changes are necessary, or even what changes they want?

The United States emerged from the 19th century during the most innovative period in the history of mankind.  The industrial revolution had wrought miracles that could barely have been imagined 100 years before.  After thousands of years of traveling on foot or on the backs of beasts of burden, automobiles carried Americans wherever they wished to go.  Steamships freed travel by sea from the vagaries of the four winds, and the telegraph and telephone made communication with distant locations instantaneous, when just a few decades earlier weeks or even months might be required for a single letter to arrive.  Electric light replaced gas lamps, and man’s most ancient dream was realized by Wilbur and Orville Wright.

With the explosion of technology came an explosion of wealth and prosperity.  Mass production and other improvements made manufactured goods cheaper, increasing their availability beyond the affluent to the common man.  Indeed, as significant as the fortunes that were made by famous captains of industry was rising living standards of the growing middle class and even of the poor.  For the first time in history, the common people were the prime market for the output of society’s production.  After thousands of years, children no longer had to toil with their parents just to ensure that the family had enough to eat.  The average American lived comfortably on the income produced by one member of the family and that family’s standard of living was constantly improving.  No challenge seemed too formidable for a people that had harnessed the power of lightning, conquered the air and seemingly made a servant of Mother Nature herself.  Finally, the end of poverty and want were in sight.

At the dawn of the 21st century, no such optimism prevailed.  The technology-fueled prosperity of the 1990’s had hit a serious stumbling block with the crash of the NASDAQ index. A recession was just getting underway when America welcomed a new president.  In the midst of economic doldrums, socio-political disaster occurred.  Commercial airplanes exploded into the World Trade Center as a nation and world looked on in horror.  The buildings fell down and the War on Terror began.

Over a decade later, the United States finds itself quagmired in that war beyond anyone’s expectations.  Despite the fact that the Democrats won the White House and the House has changed hands twice since 9/11, there is still no end in sight to the wars in the Middle East.  President Obama began his campaign as an anti-war candidate, but has made it clear that he will continue the U.S. government’s policy of military intervention in the Middle East.  As the budget deficits and loss of lives mount, Americans are left to wonder if we will be at war forever.

At home, we find ourselves in economic crisis.  The stock market has experienced another historic crash, and for the second time in the past century we are told that we face a Great Depression.  While 50 years ago, the average American family was comfortably supported by one income, both parents in that family typically work today, and a second job for at least one parent is not uncommon.  While doctor bills were once only a concern for those with unusual medical needs, the typical American family is more and more being forced to choose between healthcare and other basic necessities.  While past generations saved for a comfortable retirement, the average American today is deep in debt.

How could a century that started with such promise end with so much doubt?  Where did we go wrong?  Since her historic founding, America has been known as the “land of the free.”  Yet, the answers proposed for each of our problems involves Americans giving up some of that freedom.  However, if freedom is what made America great, why would less freedom make things better now?

We are told “the world changed on September 11, 2001.”  Is this true?  Is the world fundamentally different than it was?  Do evil people really hate us enough because of our freedom and prosperity to commit heinous acts of murder against us?  Or are there other reasons?  Do we really have to surrender some of our freedom in exchange for security against this new threat?  What if the threat continues to increase?

Similarly, we are told our economic crisis was caused by too much laissez faire capitalism and too little regulation.  Can too much economic freedom really harm us?  Will the massive new government programs and “reregulation” promised by our new President solve our problems?  What if they don’t?  Will even less freedom be the answer then?

This book will set out to answer those questions.  In order to do so, we must take a sober look in the mirror.  In order to know what has put America in decline, it is necessary first to understand what made her great.  At a time when most people are confused and searching for answers, we must shine the light of clarity on every aspect of our society.  At times, that light may reveal truths we are not ready to face, including the part each of us has played in bringing about our nation’s decline.

We must question institutions we have long ago come to think of as unquestionable.  The past 100 years in America has been a time of significant change.  Of course, the 20th century was a time of astounding technological advancement.  However, we have also made ideological changes that have made America into a much different kind of society than the one our founders built.  Were those changes improvements, or have we moved away from the principles that made us great?  Are we still the “land of the free?”  Are we still the “land of opportunity?  Do we really know what those cherished words mean?

During the past few decades of apparent prosperity, very few of us wished to be bothered with the endless partisan bickering of our politicians, despite our frequent expressions of dissatisfaction with them.  While we may not have agreed with much about the direction in which our leadership was taking our country, we did not connect what was happening in Washington, D.C. with our own lives or the lives of our families.  We have been in a kind of slumber, believing that a free and open society of opportunity and prosperity is guaranteed in America, regardless of the decisions of politicians that determine what kind of society we are.

One thing is certain.  We are out of time.  In past decades, we have talked about issues we feared may present significant problems for the America of the future.  That future is here.  It is no longer enough to wistfully talk about the America we will leave to our children.  Everything we hold dear about America is in jeopardy, and the time has come to act.

 

Chapter 1

What is Freedom?

And what is this liberty, whose very name makes the heart beat faster and shakes the world?”

 – Frederic Bastiat1 (1850)

If there is one thing uniquely associated with America, it is freedom.  From the moment Cornwallis surrendered to Washington at Yorktown, America has been a symbol of liberty to the entire world.  Since the end of World War II, when the United States assumed a worldwide leadership role, it has been the leader of the “free world.”  At sporting events, standing crowds begin their ovation when the vocalist singing the national anthem gets to the words, “O’er the land of the free.”  Even in everyday conversations, scarcely a day goes by that one does not hear someone say, “Do what you like, it’s a free country.”

Although we all agree that America is the “land of the free,” there are questions about freedom that might be more difficult to answer.  What is freedom?  How is it defined?  What makes America the land of the free?  How would we know if we were to lose our freedom?  What is it that our soldiers die for and our politicians swear to defend?

We have been told a lot of things about what freedom is not.  From the end of World War II until 1991, most Americans understood that freedom was not communism.  For almost three generations, Americans lived in the “free world” during its cold war with the communist Eastern Bloc.  Without further thought or instruction, many children of the 20th century think of freedom merely as the antithesis of communism.  In some ways, this is not completely untrue, although it hardly provides a complete answer to our question.

Certainly, the mere absence of communism doesn’t necessarily guarantee freedom.  The 18th century British monarchy wasn’t communist, but the American colonists nevertheless considered it tyrannical enough to rebel against.  Likewise, the Royal House of Saud may be an ally of the U.S. government, but most Americans would not regard Saudi Arabia as a “free country.”

In addition to monarchies, there are plenty of dictatorships around the world that don’t enforce a communist system but are nevertheless oppressive.  While they also may be allies of the U.S. government, they certainly aren’t free countries, either.  So, a society is not free merely because it is not communist.

On the other hand, monarchy doesn’t seem to necessarily preclude freedom, either. Great Britain has been a relatively free country throughout much of its history, even when the monarchy was much more than a figurehead.  The American Revolution notwithstanding, Great Britain was at that time one of the freest societies in the world.  Therefore, rather than conclude that no freedom is possible under a monarchy, one might instead conclude that monarchies neither guarantee nor necessarily exclude freedom. Freedom or tyranny seems possible under almost any system of government.

Perhaps we can define freedom more easily by looking at its antithesis.  Merriam-Webster Dictionary lists slavery among antonyms for freedom.  Surely, we have found a start here.  Most people would agree that slavery is the complete absence of freedom.  Who can we imagine that is less free than the slave?  This is helpful in beginning to try to frame an answer, but freedom cannot be merely the absence of slavery.  Surely our founding fathers bled to give us a higher standard than this!

If we are told anything about what freedom is, it is that freedom is democracy.  If you ask most Americans, this is the answer you will get.  This is reinforced ad nauseum by politicians, media, and teachers in our public schools.  When Iraq held its first elections after the overthrow of Saddam Hussein, politicians and journalists universally celebrated the Iraqis’ “first taste of freedom.”

Certainly, democracy is a vast improvement over the autocratic rule of a dictator. But does democracy automatically mean freedom?  If democracy is rule by the majority, what about the minority?  What if 51 % of the people voted to oppress the other 49%?  Would that society truly be free?

Most Americans would be quite surprised to learn what our founding fathers thought about democracy.  Any objective analysis would conclude that their feelings lay somewhere between suspicion and contempt.

James Madison said, “Democracy is the most vile form of government … democracies have ever been spectacles of turbulence and contention: have ever been found incompatible with personal security or the rights of property: and have in general been as short in their lives as they have been violent in their deaths,”2

In a letter to James Monroe, he also said,

“There is no maxim, in my opinion, which is more liable to be misapplied, and which, therefore, more needs elucidation, than the current one, that the interest of the majority is the political standard of right and wrong.”3

While often extolling the virtue of majority rule, Thomas Jefferson nevertheless wrote,

“…that the majority, oppressing an individual, is guilty of a crime, abuses its strength, and by acting on the law of the strongest breaks up the foundations of society.”4

Can this be true?  The founding fathers were ambivalent about democracy?  For many people, this is tantamount to sacrilege.  More shocking still is what the Declaration of Independence and the U.S. Constitution say about democracy: nothing.  Nowhere in our founding documents will you find the word “democracy” or the assertion, implicit or explicit, that our government is a democracy.  How can this be?

Despite what we are taught virtually from birth, the United States of America has never been a democracy.  As only contrarians point out these days, it is a constitutional republic.  We choose our leaders using the democratic process of majority vote, but that is the extent to which the United States involves itself with democracy.

Like monarchy, democracy neither guarantees nor necessarily prohibits freedom.  Our founders actually feared that democracy poses a danger to freedom.  Apart from the pure heresy of the idea, it leaves us with a problem.  We are no closer to defining freedom.  If even democracy is not freedom, perhaps freedom doesn’t really exist!  If we are not to find freedom in democracy, where else can we look?

We certainly won’t learn what freedom is from our politicians.  While terrorism, healthcare, unemployment, gay marriage, and a host of other “major issues” dominate public debate, freedom is just too quaint, too academic, or too forgotten to get any airplay.  Yet, as we shall see as we explore the different subjects of this book, freedom is the fundamental issue.  In fact, despite what we perceive as a myriad of different problems facing the United States of America today, freedom is actually the only issue.  That may be hard to accept, given the decades of shoddy history, obfuscation, and plain old bad ideas we’ve been bombarded with.  Nevertheless, our greatest challenges and their solutions revolve around freedom.  If freedom is really that important, we’d better be absolutely sure we know what it is.

In order to answer the question posed by Bastiat at the beginning of this chapter, we will have to go back to the beginning.  Our founding fathers faced no such quandary about the definition of freedom. They knew exactly what it was.  They were children of the Enlightenment, and derived their ideas about freedom directly from its philosophers, especially John Locke.  While these philosophers were powerful thinkers and their ideas were (no pun intended) revolutionary at the time, the principles of liberty are relatively simple.  They are, as the namesake of this book concluded, common sense.  It was an understanding of these revolutionary ideas by average American colonists that inspired the revolution that gave birth to a nation.

The idea that opens the door to the true meaning of freedom is individual rights.  Despite the emphasis today on the “general welfare” and the “common good,” the American tradition of liberty has nothing to do with either.  Instead, the founders believed each individual was born with natural, inalienable rights.  The Declaration of Independence states,

“We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,” 5

This passage is quoted widely in popular culture.  Invariably, the words emphasized are “that all men are created equal.”  Certainly, these are fine words and worthy of veneration.  However, the rest of this passage is equally important.  Every human being, because of his equality with all other human beings, has rights no earthly power can take away.  These rights are “unalienable,” so that governments, even democratically elected governments, have no power to revoke them.  To the founding fathers this was self-evident.  It was true based purely upon man’s existence itself.

This idea is drawn directly from the philosophy of John Locke, who wrote,

“A state also of equality, wherein all the power and jurisdiction is reciprocal, no one having more than another; there being nothing more evident, than that creatures of the same species and rank, promiscuously born to all the same advantages of nature, and the use of the same faculties, should also be equal one amongst another without subordination or subjection,”6

While these rights are endowed by a Creator, the founders did not specify who the Creator was.  Too often, those arguing for the ideals of our republic make the fatal mistake of basing the natural rights upon belief not only in God, but specifically upon the Christian God.  While the founders were by no means opposed to Christianity, belief in it or even in God is not a prerequisite for the existence of the natural rights.  The beauty of this idea is that it transcends religion and thus welcomes members of all religions, and those with no religious beliefs at all.  Therefore, the first building block of freedom, individual, inalienable rights, can be claimed by Christians, Muslims, Jews, Buddhists, Hindus, atheists, by every person on earth.

So what are these inalienable rights, which cannot be taken away?  The Declaration goes on to say, “That among these are Life, Liberty, and the Pursuit of Happiness.”7

At first glance, this statement might be a bit deceiving, maybe even a little disappointing.  Life, Liberty, and the Pursuit of Happiness?  Is that all?  Surely we have more rights than these!  Of course, the Declaration says “among these,” so it does not limit the natural rights to these three.  But these three are important.  It is worthwhile to determine the meaning of each.

The right to life is pretty easy to understand.  Most civilized societies have laws against murder.  Each individual has a right not to be killed by another human being, except in self-defense.  So far, so good.  What about the other two?  We are in the midst of trying to define liberty, or freedom, so let us put that aside for the moment.  The third right listed is “the pursuit of happiness.”  What does that mean?  Does it mean nothing?  Or does it mean everything?  What if it makes me happy to steal cars or blow up buildings?  Surely, I don’t have a right to pursue happiness like that!

No. There is a natural limit on liberty and the pursuit of happiness. Again, we can find the answer in Locke,

“To understand political power right, and derive it from its original, we must consider, what state all men are naturally in, and that is, a state of perfect freedom to order their actions, and dispose of their possessions and persons, as they think fit, within the bounds of the law of nature, without asking leave, or depending upon the will of any other man.” 8

While people are free to do what they want, they must do so “within the bounds of the law of nature.”  What is the law of nature?  Locke goes on to tell us,

“The state of nature has a law of nature to govern it, which obliges every one: and Reason, which is that law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions…” 9

Finally, we have some indication of what freedom is, rather than what it is not.  Liberty is not the unlimited ability to do whatever you want, nor is it confined to the arbitrary limits placed upon people by governments.  Contrary to the spurious argument that unfettered liberty would result in chaos, we see that the law of nature, Reason, very clearly and unambiguously prohibits some actions, even for people in a state of absolute liberty.  They are:

1.   Initiating the use of force or violence

2.   Infringing upon another person’s liberty

3.   Harming them in their possessions.

This last limit upon the actions of free individuals is important.  Locke spends an entire chapter of his Second Treatise talking about it.  It is related to property, which is arguably the most important right, while at the same time the least understood.  Property is important enough that we will spend the next chapter examining the subject.  To do this we will have to come to a clear definition of property, including how it is acquired, how it is exchanged, and what right the owner has to it.

More importantly, we have arrived at a definition of liberty.  It is the right of any person to do as they please, as long as they do not violate the equal rights of anyone else.  The latter half of this definition is generally referred to as the “non-aggression principle.”  Political activists associate this principle with libertarians, while intellectuals associate it with Ayn Rand’s philosophy of Objectivism.  Certainly both movements recognize and venerate it, but it is important to realize that neither is its source.  In fact, the non-aggression principle has been articulated with very little variation by all writers in the liberal tradition, including Locke, Jefferson, Paine, Bastiat, Mill, and later Rand and other 20th century writers and thinkers.

By applying this principle, the most complicated societal issues become astoundingly simple.  The ambiguous becomes unambiguous.  The answers become clear.  Virtually every problem facing America today can be solved by applying the principle of freedom.

There are a few points we should review for emphasis.  First, the rights mentioned in the Declaration of Independence and drawn out of Locke’s philosophy are inalienable.  They cannot be taken away by any power on earth, including a majority vote.  The reason the founders were suspicious of democracy was because of their fear that the majority would oppress the individual by voting away the individual’s rights, especially property rights.  This was the reason for the separation of powers and the limits on government authority.  Even a majority vote can be a threat to freedom.

The difference between a right and a privilege is a vital concept to understand.  A right is something you are born with, that you possess merely because you exist.  A privilege is something that is granted by another person, group, or a government.  Our country was founded upon the principle that all people have inalienable rights that cannot be taken away, not privileges granted by their government.  As John Adams so eloquently put it,

“I say RIGHTS, for such they have, undoubtedly, antecedent to all earthly government, — Rights, that cannot be repealed or restrained by human laws — Rights, derived from the great Legislator of the universe.”10

There is no need to be “thankful for the rights we have in America.”  All people have those rights and gratitude is neither necessary nor appropriate.  Rather, people are justified in demanding their rights, and any violation of them should be recognized as an act of aggression.

Second, in any conflict between individual liberty and the will of the majority, individual liberty prevails without compromise.  The majority has no right to violate the rights of the individual.   This is to some extent merely making the first point in reverse, but it is important enough to say in more than one way.  Society doesn’t have rights; individuals do.  Society is nothing more than a collection of individuals, so protecting each individual in society protects society.

Despite these seemingly undeniable truths, individual liberty is today under constant attack because of its perceived conflict with the common good or “the needs of society.”  While living together and agreeing not to initiate aggression against each other seems astoundingly simple, our politicians would have us believe there is something incredibly complicated about it.  They create a world in which civil society is a maze of moral dilemmas that only their astute guidance can lead us safely through.  Once liberty is properly understood and applied, all of these supposed dilemmas disappear.

End Notes

Introduction: The American Crisis

1 Paine, Thomas The American Crisis “The Crisis No. 1” December 19, 1776 from Paine Collected Writings edited by Eric Foner Literary Classics of the United States, Inc. New York, NY 1955 pg. 91

Chapter 1: What is Freedom?

1 Bastiat, Frederic The Law 1850 from The Bastiat Collection 2 Volumes Vol. 1 Ludwig Von Mises Institute Auburn, AL 2007 pg. 79

2 Madison,James Federalist #10    http://www.foundingfathers.info/federalistpapers/fedi.htm http://www.foundingfathers.info/federalistpapers/fed10.htm

3 Madison, James Letter to James Monroe October 5th, 1786 James Madison Center, The http://www.jmu.edu/madison/center/home.htm Phillip Bigler, Director, James Madison University Harrisonburg, VA http://www.jmu.edu/madison/center/main_pages/madison_archives/quotes/supremacy.htm

4 Jefferson, Thomas To Dupont de Nemours from Jefferson Writings edited by Merrill D. Peterson New York, NY: Literary Classics of the United States, 1984 pg. 1387

5 Declaration of Independence, United States 1776 National Archives and Records (website) http://www.archives.gov/exhibits/charters/declaration_transcript.html

6 John Locke Second Treatise on Civil Government from Two Treatises of Government C. and J. Rivington, 1824 (Harvard University Library Copy) pg. 132

7 Declaration of Independence, United States 1776 National Archives…

8 Locke Second Treatise pgs. 131-32

9 Locke Second Treatise pg. 133

10 Adams, John A Dissertation on the Canon and Feudal Law 1765 Ashland Center for Public Affairs (website) Ashland University  http://www.ashbrook.org/library/18/adams/canonlaw.html

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What is Greed?

Whether you are liberal, conservative, libertarian, or none of the above, it is hard not to feel some sympathy for the “Occupiers.” Even if do not agree with them on every issue, there is something very American about a grassroots movement to “fight the man” and protest the existing order. After all, that is how the united States of America were born. As with the Tea Party, it is refreshing to see a group of Americans objecting to something about the sad state of our republic, rather than indifferently accepting each new depridation like sheep awaiting the slaughter.

It is in this spirit that I take issue with one of the central themes of the OWS movement: the fight against “greed.” Here is one area where I believe that the Occupiers are chasing a phantom. Greed is the government’s favorite hobgoblin. Any politician with a bad record, skeleton’s in his closet, or some other threat to his phoney baloney job can invoke this loosely defined vice and count on some level of support in his time of need (for votes). But what is greed and how can one fight it?

That is two questions and one cannot answer the second before resolving the first. I believe that if you asked any 10 people at random for their definition of greed, you would get 10 different answers. The first answer is usually “a desire to have more than one needs.” However, this doesn’t hold up very well. It is obvious that all people desire more than they need. Without accumulating more wealth than what is minimally needed for survival, no human being can read or write a book, create a work of art, or perform an act of charity. In fact, none of what we commonly call “culture” would be possible if human beings did not accumulate the excess wealth that affords them the leisure time to create art, literature, charitable organizations, or the other blessings of society.

To this objection, proponents of the “more than one needs” definition will immediately clarify. “No, I meant desiring far more than one needs.” This clarification is just as problematic. How much is too much? Who sets the limit? At what point has one changed from being a hard worker to being “greedy?” Does that limit change from person to person? Is there a greed-o-meter out there that can set a dollar amount?

If one accepts this definition of greed, the solution to the problem is even murkier than the definition itself. Exactly what is to be done about the fact that “the 1% cares only about profits and not about the  rest of society?” Should businesses take specific actions to cut their profits? What are those actions? The great majority of all new businesses fail within their first year, even when their sole motivation is profit. How is an entrepreneur to know for sure that his business will succeed at all, much less make “excessive” profits? What action can he take to counteract this? Should he cease to innovate, improve efficiencies, lower costs for consumers, improve the quality and features  of his products, or employ people? These are the things that entrepreneurs do to make profits. Specifically which one is “bad” for the 99%?

To be fair, many of the comments on the OWS Demands page are more specific. As I’ve said before, they are definitely in the ball park when they finger the financial sector. However, comments like this one indicate that they haven’t yet found their seats:

“The moneyed elite of our society has changed from being apart of the team that built an economy that raised the lives of all men with ample profits for themselves to a Gambler, who only wants to keep score through the accumulation of money, ever screaming for more profits for themselves at the expense of the people they pretend to serve.”

This is a popular theme and not just among OWS supporters. The accusation that economic players in the financial sector took excessive risks that harmed people other than themselves is almost universally accepted, even by conservatives. Remember George W. Bush’s famous pronouncement, “Wall Street got drunk.”

However, the statement that the “gamblers” make “profits for themselves at the expense of the people they pretend to serve” just doesn’t compute. Wall Street did take excessive risks during the boom that predeceded the bust. They did indeed take those risks in the hope of making greater profits. However, those profits would not have been made at the expense of the people they serve. The people they serve would have made those profits, too, on their own money. They voluntarily gave their money to the financial sector in the hopes that the “gamblers” would win them a return on their investment. Had all gone well, the 99% would have realized a huge return. It is fashionable to claim that financiers make money for producing nothing, but this isn’t true. They make money from their ability to make sound investments and the willingness of other people to pay them to do if for them.

So what can be done about this problem? How do politicians or their constituents, who know nothing about investing (which is the whole reason that they give their money to financiers in the first place), make rules for how much risk investors are allowed to take? Do those rules apply to their own investments? Without some risk, there are no new businesses, no new jobs, no economic growth. How much risk is too much and who decides? The investors themselves or people who know nothing about investing? If investors are not allowed to take whatever risks they deem prudent and the result is that the economy in America dies, will the 99% take responsibility for that? We know that the politicians won’t.

All of these seemingly insoluble dilemmas spring from the initial premise about greed. As long as greed is defined in terms of how much wealth one desires to accumulate, the conclusions that one draws from that premise will always be absurd. The amount of wealth one accumulates or desires to accumulate is immaterial. Instead, it is the means by which one wishes to acquire it that is vital.

If you change your definition of greed from “desiring more than one needs” to “desiring more than one has earned,” then all of the contradictions and ambiguities disappear. Of course, we are immediately begging the question of how to define “earned,” but that is a simple matter. One has earned wealth if one has acquired it without initiating the use of force against anyone else. Under this definition, money given to someone as a charitable contribution qualifies as earned just as profits made from selling products do. In this scenario, the amount of wealth one is able to accumulate has a natural limit – the amount that others are willing to pay for one’s goods or services. This eliminates those troublesome questions about how much is too much in terms of profit.

To be greedy, then, is not the desire to accumulate more wealth than one needs, but the desire to accumulate more than others are willing to pay you for your services. For in order to do that, you must forcibly take the money that they would not willingly give. There is only one institution in all of society that can facilitate this legally: government.

Thus, if Person A accumulates $1 million by selling 100,000 units of his product at $10 per unit, he is not being greedy. He has made an equitable exchange with his fellow human beings: $1 million in products for $1 million in money. In this scenario, he and the 99% are square. Each has benefitted equally from the exchange. We know that he has earned his $1 million because the consumers set the price of his products with their voluntary decision to buy.

Now consider Person B, who wishes to accumulate that same $1 million through government employment, subsidies or privileges. No one voluntarily buys his product. The fact that the government has to either subsidize Person B or protect him from competition means that he is trying to sell something that people would not otherwise buy at his asking price. At best, Person B has sold something at a higher price than people are willing to pay. At worst he has sold something that his fellow humans don’t want at all, but are forced to purchase by the government.

Either way, Person B is greedy – he wishes to accumulate wealth beyond what people are willing to pay him voluntarily. In other words, he is willing to commit armed theft against his neighbors. As you can see, Person B may be far more greedy in his desire for even $50,000 than Person A is in his desire for $100 million, if Person B plans to obtain it by force and Person A means to obtain it through voluntary exchange.

OWS is right to want to stamp out greed, but they aren’t defining it correctly. Since Woodrow Wilson, progressives have been making the same fundamental error in failing to distinguish between legitimately acquired wealth and wealth acquired through government force. It is the latter that OWS should look to stamp out, rather than indiscriminately condemning anyone who becomes wealthy. The most effective way to fight greed by its true definition is to take the Occupation to Washington, D.C., where the power that the greedy utilize resides.

Imagine a world in which every individual has an equal chance to be a millionaire, but only if he offers his fellow individuals $1 million in benefits, with the 99% deciding for themselves how much they are willing to pay. That is a world without greed. That is what we used to call “freedom.”

OWS and the Tea Party: In the Ball Park But Haven’t Found Their Seats

As the 2012 elections approach, there is now a left wing protest movement to mirror the right wing Tea Party. Occupy Wall Street (OWS) and its many offshoots claims to represent “the 99%” of Americans who are not among the richest 1%. Like the Tea Party, OWS sees economic catastrophe ahead if America’s economic system is not fundamentally changed. However, unlike the Tea Party, which places the blame for America’s economic woes on the doorstep of politicians, OWS points the finger squarely at Wall Street – and anyone else that makes enough money to qualify for a “1%” membership card.

It is actually refreshing to see Americans from both sides of the political spectrum interested enough to actually object to something. Whether marching around and carrying signs actually accomplishes anything is debatable. However, the Tea Party has already shown that political careers can be made or ended when enough people get both fed up and organized. While OWS is not as politically organized as the Tea Party was at this point in 2009, it has already made it over the toughest hurdle – getting a critical mass of people off the couch and out into the streets. As labor unions and other left wing special interests get more involved, it is likely that a bona fide political movement will emerge from the present confusion. Like the Tea Party, OWS might even change a few seats on their side of the aisle. But what then?

If the results of the Tea Party Congress are any indication, the answer to that question is “nothing.” Yes, the new Congress made some symbolic statements, like requiring the members to read the Constitution aloud during the opening session. However, when it came to actually advancing their supposed agenda in a substantive way – cutting the size of the federal government and reigning in deficits – not much happened. A proposal emerged to cut $100 billion out of the $1.6 trillion deficit, which would have been meaningless even if it passed. Beyond that, it’s been business as usual inside  the Capitol, with Congressmen from both sides of the aisle continuing to spend money that the federal government doesn’t have and kicking the can a  little further down the road.

Left wing Americans should already know that the electoral process is unlikely to produce substantive change. As the third year of Obama’s presidency draws to a close, there is almost nothing of substance that either his supporters or his critics can point to that differentiates his presidency from that of George W. Bush. Both championed and got passed an expansion of government involvement in the health care system that costs taxpayers about $100 billion per year directly and likely causes distoritions in the health care market that are far more costly than that. Both started a few new wars in the Middle East. Both expanded the federal government’s power to spy on its own citizens. Both passed “sweeping regulatory reforms” that further crippled America’s already weak economy. Both expanded executive power unconstitutionally. Both set new precedents in attacking the Bill of Rights.

However, the similarity between the two that should resonate most  with OWS supporters is this one: both filled their cabinets with Wall Street and corporate insiders and never made a move that those special interests didn’t like. Sure, Obama made some populist, anti-business statements early in his presidency, but when it came to “Change” in the healthcare system, his program turned out to be a half trillion pear year handout to the health insurance industry. That wasn’t exactly what the true believers had in mind, but it was business as usual for corporate-owned Washington.

In short, two hugely trumpeted “revolutions” in American politics – a leftwing  one in 2008 and a right-wing one in 2010 – have failed to move the needle one degree in Washinton, D.C. A lot of articles were written and a lot of television talk shows were provided with material about both, but absolutely nothing has changed. Sooner or later, one has to answer the question: Why not?

The answer is that even the genuine grassroots members from both the left and the right don’t understand what is ailing America. They know something is wrong, but decades of government propaganda bolstered by shoddy education have left most Americans unequipped to figureout what it is. In fact, both the Tea Party and OWS share the same fundamental misconceptions about The Problem.

Both the Tea Party and OWS believe that Republican presidents, especially Ronald Reagan, had somehow created a laissez faire capitalist economy during their presidencies. The Tea Partiers believe that America must get back to Reaganomics, while OWS believes it was the root cause of today’s problems. Both of them are wrong. Neither Ronald Reagan nor George W. Bush signed one bill that substantively made the American economy more laissez faire. In fact, Bush actually signed Sarbanes-Oxley, which he himself called “the most sweeping regulatory reform since the New Deal.” Even what the media called “deregulation” during the Reagan years was mostly regulatory tweaks that were passed under Carter. Tom Woods covers this in detail in Rollback, so I won’t attempt to reconstruct the whole argument here. In short, “deregulation” never happened. It was just one huge, Jedi mind trick, similar to “hope and change.”

That brings us to misconception number two: regulation itself. Both movements misunderstand the relationship between our present corporate economy and government regulation. The Tea Party believes that getting rid of regulations as Reagan supposedly did would “get the government out of the way” of America’s corporations, resulting in huge gains in productivity and employment. OWS believes that more regulations will reign in “corporate greed” and protect the little guy from those same rapacious corporations. Again, both of them are wrong.

A truly unregulated free market would not result in a few, large corporations controlling every economic sector. Nor would it result in most of society’s wealth being concentrated within a small percentage of the population. While no one alive has ever lived under such a system in terms of the entire economy, we have seen it in a particular sector within the last two decades. As Bill Bonner pointed out, the high tech industry existed for a time as an unregulated free market. Did this result in entrenched corporations getting bigger and concentrating even more wealth in the hands of a few? Absolutely not. As Bonner reminds us, “They created an entirely new industry…with new companies nobody had ever heard of. And then, they destroyed some of the biggest businesses in America.”

Government regulation creates barriers to entry for new firms and dampens innovation. In other words, it insulates entrenched corporations from competition, causing the very consolidation and concentration of wealth that OWS objects to. That’s why established corporations never object to new regulations. Why should they? They end up writing the regulations themselves with one thing in mind – protect their position from the competition that would occur in a free market. That’s what makes left wing support for increased government regulation so tragically ironic. It’s like they are rushing to the scene of a fire with a sistern full of gasoline.

The Tea Party purports to favor less government regulation, but they have no idea what the results would be. They, too, do not understand the difference between our present corporatist system and a free market. Were the economy truly deregulated, most of the corporate giants that they hold up as symbolic of the free market would be gone. Only those that could deliver better products at lower prices in the face of unrelenting competition would survive – and only for as long as they could continue to do so. Upward mobility would return. Large fortunes would again be made by “college drop-outs, computer nerds, products of teenage mothers and broken marriages” (Bonner again), just as the misnamed “robber barons” largely came from the ranks of the poor. Conservatives didn’t like that in the 19th century – and they might not like it now, either. But that’s what the free market does. It rewards innovation, productivity, and achievement, regardless of the social pedigree of the innovator.

Neither OWS nor the Tea Party recognizes how economically destructive the gargantuan U.S. military establishment is. There were some left wing protests against the Iraq War during the Bush years, but that is a non-issue for OWS. Now that there is a Democrat running the empire, the left seems to have made its peace with war. The left never objected to the continuation of the decades-long occupations of Europe, Japan, Korea, or the 130 or so other countries that the U.S. government currently has troops in. In purely economic terms, those programs dwarf the active wars.

Of course, support for this trillion-dollar-a-year abomination is a key plank of the Tea Party movement, which is against taking money from one American and using it to buy healthcare for another American, but has no problem taking money from one American and using to (supposedly) buy “freedom” for people in other countries. Not only is this direct transfer of wealth draining America of scarce resources, but it has completely skewed what’s left of American manufacturing towards producing products that don’t increase wealth. Wealth is only increased when products are produced that people voluntarily buy. No one voluntarily buys weapons or the services of military personnel. And those resources in turn don’t produce anything at all.

Both the left and the right view imperialism as somehow part and parcel of laissez faire capitalism. Nothing could be further from the truth. The foundation of capitalism is voluntary exchange. There is nothing that a military force can do under the guise of “protecting America’s vital interests” or “opening up markets for American companies” that has anything to do with capitalism or voluntary exchange. Even if an army really did influence people in other countries to trade with American companies, that would not be capitalism any more than Fannie Mae or Freddie Mac influencing people to take out loans was capitalism. When it’s not voluntary, it’s not a free market. Whatever its true purpose is (and there are a lot of theories about that), the U.S. government’s massive military establishment is just another large, bankrupt government program.

However, the most harmful misconception that OWS and the Tea Party share is not really a misconception at all. It is the failure to recognize the most destructive element in the American economy – the Federal Reserve. The failure of either movement to make the Federal Reserve a priority or even acknowledge its existence explains many of the other misconceptions. Both the artificial booms that each attribute to their presidents of choice – Clinton for liberals, Reagan for conservatives- and the inevitable busts that each blame on  presidents of the other party- Carter and Obama for conservatives, Bush 1 and Bush 2 for liberals – can all be traced back to the predicable results of Federal Reserve monetary policy. Even if all of the other economic interventions were eliminated and this one intervention were left in place, most of the economic problem would still exist.

The Tea Party claims to oppose Obama’s “socialism,” but fails to see the Federal Reserve as a fundamentally socialist institution. Its stated purpose is to transfer wealth from one individual or group to another at the direction of central economic planners. It doesn’t get much more socialist than that. A few conservatives might object to the way that a particular Fed chairman conducts the business of the Fed, but almost none object to the Fed itself. Yet compared to the transfer of wealth that occurs when the Fed inflates the currency, all of the U.S. government’s welfare programs combined pale in comparison. Since the Fed transfers wealth to Wall Street and corporate America, one might understand their reluctance to oppose that aspect of it. But what about a small group of government hacks attempting to direct the entire economy? If that’s not “socialism,” then what is?

OWS is similarly disinterested in the Federal Reserve, even though it exists to transfer wealth from the 99% to the 1%. For both groups, ignorance is probably the majority of the problem. The Fed has managed to stay out of the spotlight for most of the past century, taking the credit for supposed recoveries and avoiding all blame for the business cycle itself. Yet, even if it did what it purported to do, it should still be Public Enemy No. 1 to both OWS and the Tea Party. Until most Americans understand how destructive this institution is, no amount of “reform” is going to make our economic problems go away.

So, the next election will be influenced by two grassroots movements committed to solving America’s problems. One says that the problem is government. They are right. The other says it is corporations and the financial elite. They are also right. As a friend of mine likes to say, both groups “are in the ball park, but they haven’t found their seat.” One can only hope for a moment of clarity on both sides. If they could only see things as they really are, they’d be marching side by side.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

© Thomas Mullen 2011

Why Progressives Will Enjoy Atlas Shrugged, Part I

I had the opportunity to see Atlas Shrugged, Part I on Saturday in the only theater in which it is being shown in Tampa, FL. It is running at Cinebistro, a specialty theater where you can enjoy a high-end meal and fine wine served at your seat, which is very similar to a first class airline seat. Admittedly, it is just the kind of venue that progressives might associate with an elitist gathering of selfish capitalists. However, the movie itself tells quite a different story than they might expect if their understanding of Rand is limited to her interviews with Phil Donahue or Mike Wallace.

Like libertarians, Rand’s Objectivist economic theory was rooted in what we today call “the non-aggression axiom,” which Thomas Jefferson and the liberal faction of America’s founders called “the law of nature.” According to this philosophy, each individual has an inalienable right to keep the product of his labor and to dispose of it as he sees fit. The non-aggression axiom forbids any individual or group from using force to take away the justly acquired property of another. Neither does it allow for anyone to interfere with voluntary contracts, as long as those contracts do not involve the initiation of force against anyone else.

This prohibits the government, which is by definition the societal use of force, from redistributing wealth or enacting laws which go beyond prohibiting aggression. Establishment media figures who interviewed Rand immediately focused on the implications of her philosophy for social safety net programs, charging that Rand’s philosophy would not allow for programs for the poor or handicapped. While this is true, it obscures the most important implications of Rand’s philosophy for economic policy in the United States.

What would likely startle progressives watching the film is its emphasis on the evils of what free market proponents would call “crony capitalism.” This is completely consistent with the novel, which demonstrates that the beneficiaries of government regulation supposedly enacted for “the common good” or “the benefit of society” are really the super-rich. Indeed, the film never criticizes the beneficiaries of social programs. Instead, it spends all of its time demonstrating the difference between those “capitalists” who acquire their wealth through government privileges and those true capitalists who acquire their wealth by producing products that consumers voluntarily buy.

This is a crucial distinction that has eluded progressives from Woodrow Wilson to Michael Moore. After seeing Moore’s film, Capitalism: A Love Story, I pointed out in my review of that film that there was very little that libertarians would disagree with. All of Moore’s criticisms of what he calls capitalism are really the result of crony capitalism. The biggest culprit in the economic collapse of the last decade was the Federal Reserve, a central planning/wealth redistribution institution that Rand explicitly condemns in her novel. Unfortunately, Moore incorrectly concludes that the economic distortions, inequitable distribution of wealth, and widespread harm to middle and lower income Americans were the result of a free market.

Rand would agree completely with progressives on the injustice of today’s American corporate state. That might also surprise progressives who probably assume that Rand would have supported the mainstream Republican policies of George W. Bush. Not only would Rand have condemned Bush’s version of state capitalism, but she was openly critical of Republican hero Ronald Reagan. When asked by Phil Donahue about Reagan during his administration, Rand said in so many words that he should have stuck to acting.

The only opportunity that progressives might have to disagree with anything in the film is the portrayal of the labor union official who tries to sabotage Dagny Taggarts launch of a new railroad line. This encounter takes all of about 3 minutes of the 113 minute film and is not a condemnation of labor unions in principle, but rather the illegitimate power that corrupt union officials can wield because of government privileges. 

However, the true villains in the film are not union officials, beneficiaries of entitlement programs, or any other group associated with progressive philosophy. The villains are exclusively corporate executives and the government officials they get in bed with to illegitimately acquire wealth. The heroes are those who acquire their wealth by productive achievement and voluntary exchange. If one had to sum the film up in one sentence, it is an effective demonstration of the evils of crony capitalism and its difference from a truly free market.

I encourage progressives to see this film and to read Rand’s novel. If there is one thing that I hope they take away, it is that even great wealth can be acquired legitimately, when it is the result of human beings trading the products of their labor with the mutual, voluntary consent of all parties. Once progressives begin making the distinction between legitimately acquired wealth and wealth acquired because of government privilege, they will find libertarians and all other proponents of truly free markets standing by their side, fighting the evil corporate state.