Category Archives: The New Deal

>Government’s Old Shell Game

>Most Americans have seen the hilarious skit on Saturday Night Live, where the CEO’s of the Big Three automakers return to Congress with the “turnaround plan” demanded of them as a condition of receiving (stolen) bailout money. In the skit, the CEO’s drive cars manufactured by their respective companies from Detroit to Washington in order to make amends for flying corporate jets en route to their first appeal for our money. Of course, all three cars break down on the way, making the CEO’s late for their appointment with the (looting) Congressmen. The punch line of the skit is that the only plan that the automakers have come up with is to return to Congress every six weeks to ask for more money. To top it off, the GM CEO promises that by the time that they are ready to accept the December payment – provided that car sales rebound – they would actually need even more money.

It is sometimes said that life imitates art. As funny as the Saturday Night Live skit was, real life proved even funnier. The CEO’s did manage to marshal the resources of their Fortune 500 companies (referencing the 2006 list) and come up with three Detroit-manufactured vehicles that could make it to D.C. However, as in the comedy, the CEO’s show up at Congress three weeks after asking for $25 billion and actually ask for more! Rather than outrage, Americans should really take the opportunity to find some humor in this. As the last vestiges of our Republic are destroyed, one can either laugh or cry. Let’s recognize this ridiculous exercise for what it is – a farce – and have ourselves a good, hearty laugh. We deserve it. Then, let’s stop laughing and turn our attention to the real villains in this immorality play: the United States Congress.

As tempting as it is to focus our attention on the pompous CEO’s of these horribly run companies, let’s not forget why they became so horribly run. It seems to be routinely forgotten that it was Congress that created the labor union problem, with its National Labor Relations Act of 1935 and subsequent violations of property rights. This is why the American auto companies can’t afford to compete. It is also forgotten that Congress created Fannie Mae/Freddie Mac and the Federal Reserve (the three entities entirely responsible for the housing bubble), Medicare and Medicaid (the programs entirely responsible for the both the bubble-prices of healthcare and the lion’s share of our $50 trillion in unfunded entitlement liabilities), the Department of Education (the agency entirely responsible for the next bubble – tuition prices), and every other economic problem that the United States faces. It is no less than tragic that Americans still have not figured out that, left to themselves, with a government limited to enforcing contracts and protecting them against violence, they would trade freely with each other indefinitely to their mutual benefit. Instead, Americans still look to this body of criminals to SOLVE problems that said criminals created. How are they continually fooled?

There are a number of answers to that question, but there is one strategy employed by our ruling class that is particularly frustrating. Students of philosophy may call it the Hegelian Dialectic, while political strategists may call it “framing the debate.” For us plain folks, you might just call it the “heads I win tails you lose” strategy. Every time that Congress wishes to commit some new crime, they present it with a ready-made debate, eagerly facilitated by our so-called journalists. In each case, the issue is presented as if there are only two alternatives, both of which advance government’s purpose to our detriment. Any alternatives beneficial to the people are excluded entirely. It’s the oldest manipulation trick in the book, not much more sophisticated than the old shell game where the pea actually isn’t under any of the shells. Unfortunately, we fall for it hook, line, and sinker, every single time.

This latest farce with the auto companies provides a good example, although there are hundreds (maybe thousands) more. When the idea of stealing our money to give to the failing automakers first came up, there was immediately “fierce debate” in the media about whether the automakers “deserved” the money. Some argued that it was the companies’ own fault that they were in the shape that they were in. Others argued that even if given the money, the automakers would still eventually fail. Congress pompously demanded a turnaround plan from the automakers as a condition of their receiving the money. The media provided (and is still providing) the façade of spirited debate about all of these straw man issues. Every angle to come at this problem is argued, except one: Does Congress have the RIGHT to take our money and give it to somebody else?

Once the deafening silence on this issue is acknowledged, the underlying assumption behind all of the rest of the arguments becomes clear. We no longer have any individual rights. In debating whether or not the bailout money would keep the companies from failing, the obvious assumption is that if the bailout would save the companies, then Congress has the right to forcibly steal our money to save them. In debating whether or not the companies themselves had caused their own demise, you must assume that if they did not, then Congress has the right to steal our money to help them. When demanding that the automakers come up with a turnaround plan to ensure that they do not need taxpayer money again in the future, Congress assumes that they have the right to steal our money as long as the automakers present a reasonable plan.

Not one journalist, not one talk show host, not one panelist – no one anywhere – no matter how liberal, conservative, or even libertarian they claim to be, has made the argument that Congress DOES NOT HAVE THE RIGHT to forcibly take money from one person and give it to another. This argument has been excluded from all debate.

There is a very good reason for this. It is that there is no reasonable argument that can be made on these grounds justifying this theft of our property. The Declaration of Independence tells us that governments are instituted to secure our rights. The Declaration also says that those rights are unalienable, meaning that no government – not even a democratically elected government – can take them away. No majority can vote them away. Foremost among these rights is our unalienable right to the fruits of our labor – our property. THIS was the right that the American Revolution was fought over. Read your history. King George wasn’t denying the colonists free speech, or freedom of the press. The colonists didn’t tar and feather censors. They tarred and feathered TAX COLLECTORS. As I’ve said before, it is your property that tyrants covet, not your right to free speech or freedom of religion. This hasn’t changed in two hundred years, nor will it ever change. Government’s job is to protect our property from theft by other people. There is no circumstance that justifies them committing this crime rather than defending us against it.

Therefore, by stealing our money – for any reason – Congress is contradicting the sole reason for its existence. It doesn’t matter if Congress thinks its actions will save jobs (they won’t), if their actions will save the economy (they won’t), or even if they believe the majority of Americans support their bailout. Even if every American citizen alive save ONE was in favor of giving the auto companies this money, Congress WOULD NOT HAVE A RIGHT to give it. To do so is incompatible with liberty.

Seen in this light, it is obvious why it is imperative that the subject of rights does not come up in any discussion of government bailouts. At all costs, Americans must be distracted away from their rights and lured into arguing about something else. Thus, we argue about CEO bonuses, private jets, energy efficient vehicles (and why Detroit doesn’t make them), and a long list of other unimportant details, while ignoring the one and only issue that matters: that this money is the property of each individual American and that government has no right, under any circumstances, to take it from us. Period.

The automaker bailouts are not unique in this regard. This same parlor trick was played on us with the bailouts of the financial companies. Would the executives keep their golden parachutes? If not, then Congress had the right to steal our money. Would the financial system collapse if Congress did not act? If so, then Congress had the right to steal our money. Would 401K’s and other retirement accounts be decimated without the bailout? If so, then Congress had the right to steal our money (did you notice that they were decimated anyway?).

Over many decades, government has employed this simple subterfuge to bait us into abandoning our impregnable position – our rights – and dupe us into arguing the practical merits (or lack thereof) of their crimes. By taking the bait, we disguise the crimes of our government as ineptitude, and relegate ourselves to complaining about poor results rather than recognizing these usurpations for the crimes that they are.

When the banking bailout was proposed, we objected. For one, brief, shining moment, we were Americans again. We told our representatives that they were NOT to take this money. For one glorious day, our government blinked. Then, they told us that some unimaginable doom awaited us if we did not surrender our property to them. We believed them. They told us that our retirement accounts would be devastated if we did not allow them to violate our rights, so we let them take our money. Our retirement accounts were devastated anyway, and we deserved it. By surrendering our own rights, we violated those of our neighbors. The money we let them take was not theirs OR ours to give.

We have another chance. We can call them again and order them not to give this money to the automakers. Yes, I said ORDER them. Rights are not something that you request of your government. They are something that you DEMAND be respected. Our government is about to once again violate our unalienable right to the fruits of our labor. We must order them not to do so. Do not let them derail you with spurious arguments about what might happen if they don’t steal your money. Stick to your guns and keep bringing the argument back to the only issue that matters: this money belongs to you and they don’t have the right to take it. Make no threats of violence or harassment, but accept no compromise or offer to “agree to disagree” either. Hold their feet to the fire and remind them that this government is YOUR servant. You will be surprised how much power you actually wield.

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

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>Obama and the Ghost of FDR

>President-elect Barack Obama has not even taken office yet, and already the entire world seems to be celebrating the death of the last vestiges of capitalism. With the Democrats in control of both the executive and legislative branches of government, calls for a “new New Deal” are as commonplace today as the expression “it’s a free country” once was (you don’t seem to hear that much anymore. I wonder why?). It is not as if the “Change” Obama proposes to bring will be that radical. The United States has not practiced free market capitalism since at least before the last Great Depression, despite the ludicrous claims that capitalism is to blame for the next one. However, Obama will have to come up with something original if he is to leave an imprint upon history comparable to that of the original New Dealer. Not only did FDR turn the Hoover-created depression into the ten-year Great Depression, he has now actually reached from beyond the grave to take down the world’s largest automaker. Even apocryphal stories of the holy Obama walking on water pale in comparison to that.

It is nothing less than astounding that GM can fail so spectacularly as a direct consequence of the policies of the first FDR, while the entire world not only ignores the fact that the New Deal caused it, but actually demands another New Deal as the solution. Not even O. Henry gave us irony like this.

There is actually very little debate about what has caused the destruction of the American auto industry. Occasionally, a weak attempt is made to imply that the Big Three should not have concentrated on trucks and SUV’s while foreign competitors were making more energy-efficient vehicles. However, it is very easily demonstrated that the U.S. automakers had no choice but to concentrate on vehicles that had the necessary margins to cover their huge labor costs, both for current and retired workers. Decades of concessions to powerful labor unions have driven their costs so high that they are simply unable to make an automobile that competes with foreign imports.

There are those that argue that “unregulated capitalism” caused American manufacturing jobs to migrate overseas, where manufacturing labor was cheaper. However, this fallacy refutes itself. If “market forces” truly were in play, how did U.S. labor costs get so high? Did “greedy capitalists” simply abandon their profit ambitions and decide to pay their employees more than they could afford to? Surely, this would have required not merely irresponsibility but utter foolishness from the same crowd that MADE GM the largest automaker in the world. What caused this decades-long failure of basic business sense?

Of course, everyone knows the answers to these questions, but want to pretend that they don’t. The reason that manufacturers, especially the automakers, continually promised labor unions more than they could afford to pay was because government FORCED them to do so. It really is that simple. Under the euphemism “collective bargaining,” the government made it illegal for a manufacturer to refuse a demand from a union. An illusion of choice was sustained by merely requiring the employer to “make a reasonable counter-offer,” but the courts were there to see that “reasonable” meant that if the union asked for the moon and the stars, the employer would have to at least agree to a few planets. In the end, the employer could not choose freely as far as what to pay their employees or what benefits to offer. Without free choices, market forces are suspended.

To make this as plain as it can possibly made, this game is played like this: The union demands compensation beyond what the business model will support. The employer replies that they are unable to agree if they wish to stay in business. The government says, “Just give it to them or we’ll shoot.” Another “victory for the workers,” is won and the inevitable end draws nearer.

The entire union concession/cost escalation dynamic goes back to the National Labor Relations Act of 1935 and other New Deal legislation. It was these fundamental departures from capitalism that sowed the seeds of the eventual destruction of American manufacturing. What is honestly horrifying is that Americans can observe this government coercion of industry and seriously refer to it as “unregulated capitalism,” or to the series of concessions made by manufacturers at gunpoint as “market forces.” We are truly through the looking glass where a bull is stumbling through the china shop and the storekeeper is reprimanding the broken glass.

While it might seem unfair to blame a man that has been dead for over six decades for the failure of a company in 2008, one must consider the dominance that America enjoyed in the manufacturing sector to begin with. At one time, American manufacturers flooded the world with high-quality, low-cost goods, while still paying wages many times higher than their competitors overseas. There was no sector where America was more dominant than automobile manufacturing, an industry that America literally invented. It would not be brought to bankruptcy overnight. Year after year, decade after decade, the companies grew a little less profitable as government forced them to raise their labor costs IN OPPOSITION to market forces. It was not until decades later that those costs rose beyond the point where the companies could remain competitive.

However, the length of time it took for the disease to run its course does not change the nature of the virus that caused it. Indeed, the same reasoning could be applied not only to the entire manufacturing sector, but to other sectors of the American economy as well. The collapse we are experiencing is the result of an entire economy that has been rendered profoundly unproductive by systemic problems that all relate to government intervention into markets. We have still not found a cure for cancer or the New Deal. To be fair, the poisons we use to try to kill cancer before the they kill the patient are far less deadly and have a much higher rate of success than the medicine we are about to apply to our current economic crisis. The survival rates for many cancers continually improve. The survival rate for American businesses might not be significant enough to measure.

So, Obama will have to be creative to achieve staying power comparable to FDR’s. While Obama’s stated economic policies are terribly destructive, there is not much left of the American productive structure to destroy. More than likely, his interventionist and redistributive policies will merely apply the coup de grace to an economy that at this point merely retains the superficial façade of its former capitalist glory. In order to truly emerge from the shadow of the Ghost of FDR, Obama will have to find a completely new, original way to rend the fabric of our once-free society. One can only dread what that might be.

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>Our Last Emperor

>Within hours of his historic victory, the official story of Barack Obama’s presidency began to be written by the corporate media machine. The general consensus of all of the coverage is that Obama is inheriting huge problems in the economy and foreign policy of the United States, and that he alone will have to solve them. Associated Press writer Jennifer Loven’s article of this morning, carried the headline, “Great Expectations: Obama will have to deliver.” The New York Times featured an article called “For Obama, A Towering Economic To Do List.” Perhaps most ominously, an article from Bloomberg contained this passage,

“The Democratic president-elect has much more on his agenda, amounting to what may be the broadest overhaul of the U.S. economy since Franklin D. Roosevelt’s New Deal. Beyond job creation and big investments in public works, Obama intends to shift the tax burden back toward the wealthy, roll back a quarter-century of deregulation, extend health-care coverage to all Americans and reassess the U.S. government’s pursuit of free- trade deals.”

Fate has not been kind to Barack Obama. His task is not monumentally difficult – it is impossible. An entire nation and, to some extent, an entire world, is looking to this relatively young man to bring back to life an American Empire that is beyond resuscitation. We are presently witnessing the spectacular failure of an ideology that has dominated the world for the past century. Like his predecessor, Obama brings terribly bad (although superficially different) ideas to the White House. Like his predecessor, Obama will make a bad situation a lot worse, albeit with different tools out of the same toolbox. However, the end of the Empire that will occur on his watch is inescapable, no matter who occupies the White House. The Empire is ending because, like all empires, it is unsustainable.

Make no mistake, Obama’s policies will make things much worse. For an economy that has never really recovered from the original New Deal, the policies described in the Bloomberg passage alone should be enough to put America’s “mixed economy” out of its misery. Following the example of past American emperors, particularly from the (in past decades) more socialist Democratic party, Obama may do damage in one term that another president might take two to do. Nevertheless, this collapse is not going to be remotely his fault, although he may take much of the blame.

As I’ve written here, we are experiencing the deflation of the mother of all bubbles, the socialism bubble. America’s problems are not the result of the mistakes of specific leaders or of the failures of specific policies. America’s problems are systemic. They are the result of building the edifice of our society and economy around the idea of central planning and an all-powerful federal government. The media ludicrously portrays the welfare state, the worldwide military force, the central economic planning via the Federal Reserve and alphabet soup regulatory agencies, etc. as failing because they have been poorly managed. Sometimes they have. The Bush Administration jumps to mind. However, it is crucial to realize that there is no way to successfully manage them. They are part and parcel of an ideology that is doomed to fail regardless of the skill of its execution. When America has prospered in past decades, it has been in spite of these institutions, not because they have been managed well. Until Americans realize this, the “change” they seek will never come.

The real tragedy is that neither the majority of Americans nor Obama himself understand this. So, all look to Obama to take some action, although most really can’t say what it is. Each time I hear Obama or one of his followers dutifully mouth his one word slogan, “Change,” I am haunted by Charlotte Iserbyt’s insightful question/retort, “From what, to what?” I have occasionally asked an Obama supporter this question. Despite long, uncomfortable silences on each occasion, I have yet to hear a reply. They do not know what they mean. They just want government to make their lives better. They do not realize that government, by its very nature, does not have the power to do so.

Not long ago, I stumbled upon Mel Gibson’s Apocalypto while channel surfing just before going to sleep. It is not a movie for the faint of heart. It depicts life at the end of the Mayan empire, complete with human sacrifice in state-of-the-art digital clarity. I was struck by the words of the sacrificer to the maniacally cheering crowd. He mentions a short list of afflictions of the people – poor crops, disease, drought – and then goes on to say,

“They say this strife has made us weak. That we have become empty. They say that we rot. I say we are strong. Great people of the banner of the sun, I say we are strong. We are a people of destiny. Destined to be the masters of time. Destined to be nearest to the gods…”

He then goes on to brutally murder two captives in order to appease the gods and renew the land.

On Tuesday night, I was reminded of this scene while watching Barack Obama’s victory speech in Chicago. The similarities were more striking than one might at first think. As in the film, tens of thousands were gathered to implore their government to save them. As in the film, Senator Obama reviewed the list of problems afflicting his people (two wars, the financial crisis, healthcare costs, etc.). As in the film, President-elect Obama’s proposed solutions will do nothing to relieve the suffering of his people. As in the film, the tens of thousands gathered erupted into wild applause and adulation at each meaningless pronouncement. I am not sure what I found more horrifying: the sight of thousands of people cheering a brutal murder, or the sight of the citizens of the so-called “land of the free” worshipping their government. Each is an outward indication of systemic societal flaws within.

Perhaps President Obama’s legacy will find some luck. The great majority of Americans still believe that FDR resolved the Great Depression, when in fact he caused it. Perhaps Obama will get some credit for the eventual recovery in America, even though it will happen in spite of his policies rather than because of them. Unfortunately for him, it would be better if Americans finally saw their present form of government clearly for what it is.

After the end of the Empire, there will still be a United States of America, just as there is still an Italy, France, Spain, and England. However, this moment in American history is different. In the past, the productivity of the American economy has eventually been able to overcome the disastrous policies of an FDR or an LBJ. That is no longer the case. The accumulated effects of government intervention and government-created systemic problems that have been built into the American economy have finally destroyed that productivity. The parasite has killed the host. This crisis is going to force some substantive change, whether for better or for worse.

The real question confronting America is what will come next. None of the empires of the past were succeeded by freer societies for their people. Will America take a different path? No nation in history has achieved the liberty of its people that the United States did during its freest, most prosperous period. It is possible that this spirit of liberty is not completely extinct. Following the reign of this our last emperor, we will have the opportunity to truly remake the United States. Instead of repeating the mistakes of history, we can make history once again. After the fall of our empire, we will have the opportunity to restore our republic and reclaim our freedom. That is the real change that we need.

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>The Bursting of the Socialism Bubble

>In the midst of what “debate” there has been about the eventual bailout of the financial sector, it is clear that even most of those opposed to the bailout do not understand what is happening. The unfortunate aspect of some of the commentary is that there is a faction arguing that without the bailout, the stock market will not crash. Thus, the debate is shifted to “which course of action can best protect stock market values?” They cannot be protected. The government argues that the credit squeeze could result in unemployment, while the other side argues that unemployment will not necessarily result if the bailout is not passed. Another position blames the crisis on too little regulation. All of these positions are wrong. There will be a painful adjustment in the stock market and massive unemployment, whether the government bails out the financials or not. The only question is how long it will last. That is reality when any bubble deflates.

The most unfortunate result of all of this misunderstanding would be for the American people to reverse their position and support the bailout just because there are severe market losses if it does not pass. Their initial instinct was correct, whether for the right reasons or not. The losses that these companies suffered due to massive malinvestment are real, and that must eventually be reflected in the value of their stocks.

Similarly, it will be unfortunate if the American people are convinced that more regulation is needed to prevent this from happening again. More regulation will not prevent a problem that was in part caused by too much regulation.

We have heard about the “tech bubble,” the “housing bubble,” and even the “dollar bubble.” All of these are real. The dollar bubble is about to burst, with global catastrophic consequences, but even that is not the biggest bubble that is out there. The biggest bubble, which has been building literally for the past century, is what I will call “the socialism bubble.”

What is the socialism bubble? Let’s define “bubble” first. The term “bubble” is used in economics to describe a large misallocation of resources (malinvestment). Anyone with even a passing familiarity with economics knows the basics: the central bank artificially infuses money and credit into the economy, that money flows toward projects that appear to be profitable under the artificially created conditions, but aren’t, and those projects ultimately fail, causing the bursting of the bubble. The worst part of the bursting of a bubble is that the greatest misallocation of resources has been human resources, and those people now have to find new jobs. They have to be reemployed elsewhere, in more profitable ventures, just like the capital goods that were misallocated to the projects. That is why unemployment accompanies recessions.

Like any other bubble, the socialism bubble is also a misallocation of resources. It has just taken longer to form and is much huger in scope. The principles behind it are the same, however. It represents government intervening into the economy to create artificial conditions that misallocate resources. Under these artificial conditions, the entire economy appears to be profitable, but isn’t. When the inevitable bubble bursts, all of the resources, including human resources, that were misallocated, become unemployed. We are about to experience the massive correction following this socialism bubble.

How did it happen? One must look back to before it started to understand it completely. It started at the turn of the last century. The United States of the 19th century had the closest thing to laissez faire capitalism ever achieved in history, arguably followed next by Great Britain. The defining principle of laissez faire capitalism is VOLUNTARY EXCHANGE. With everyone acting in their rational self interest, the minds of all participants were leveraged by the system to consistently produce optimal results.

In the laissez faire marketplace of the 19th century, wages generally declined over time. A pitiable lack of understanding of economics caused social reformers to condemn the free market for this.[1] They ignored the fact that the general price level fell faster than wages, making workers richer in real terms. They attempted to improve on the results that laissez faire capitalism had produced with government policy.

However, there is only one alternative to voluntary exchange: INVOLUNTARY EXCHANGE. Government economic policies FORCE economic agents to make choices that they otherwise would not make. No matter how one tries to euphemize socialism, that is what it is. By attacking voluntary exchange, socialism attacks the mechanism that creates wealth. That is the true root of the problem.

One way in which this manifests itself is in the cost of production. Government cannot come to a company that makes automobiles and force them to pay their employees more, provide them healthcare or pensions, pile one regulation on top of the next in terms of how the company operates its business, and then expect the company’s cost of making that automobile not to rise. As the cost of production rises, the company must find a way to keep the cost of producing their product below the market retail price. They might decide to manufacture SUV’s, which have larger margins, even though a spike in gasoline prices could put them out of business. See General Motors. The truth is that none of the American auto manufacturers are able to produce an automobile that is competitive in the market. Government will come up with a host of villains to blame for this, but look at the balance sheets of the Big Three and you will see why they are not viable. Concessions to labor unions (mandated by government) have made it too expensive for them to operate.

Similar government intervention is behind virtually all of America’s loss of manufacturing infrastructure. It is simply not economically viable to manufacture anything in the United States anymore. This is not a natural result of free markets. As previously noted, wages and other costs of production fell under the laissez faire system. Falling prices are a natural result of economic growth and innovation. Only the artificial conditions created by government intervention – the use of force to coerce economic agents – have made it more expensive to make things in America.

The cost of production is not the only pressure that socialism has put on the American economy. The welfare programs currently consume 11% of GDP. Keynesians would say that this is ok, because the recipients spend that money and increase demand. Hopefully, the coming calamity will discredit this economic school of charlatans once and for all. Wealth is created by production, not consumption. This redistribution destroys voluntary savings and ultimately capital. It also eliminates the other conditions that accompany a period of voluntary savings that facilitate natural expansion of the productive structure.

In any case, increasing socialism has put artificial pressures on the American economy for almost a century, and those pressures have accumulated to make America profoundly less productive. Like the communist countries, we have lived in a dream world in which government could use coercion to change economic reality. We have pretended that a business venture can spend more than it takes in and continue to survive. For a time, the free market aspects of America’s “mixed economy” allowed her to overcome these negative pressures, but that time has passed. Economic reality is about to assert itself in devastating fashion.

For at least two decades now, America has been producing far less than she consumes. All things being equal, this would not have gone on for long. However, all things have not been equal. The United States has a central bank, and the privilege of printing the world’s reserve currency. This is why the socialism bubble has been become so enormous.

Instead of a drop in consumption and a rise in unemployment[2] as its manufacturing sector migrated overseas, America went right on consuming, and those employees found new jobs in the “service economy.” With the Federal Reserve providing an unlimited supply of fiat currency, and with the ability to ultimately export that inflation overseas by importing foreign goods in exchange for U.S. dollars, America has been able to maintain the same standard of living as it enjoyed in its productive days. As long as foreigners accepted U.S. dollars, the dream world could persist. The bubble continued to inflate.

The ominous part of this is that today a large percentage of the American labor force is now misallocated by this bubble. There are tens of millions of American workers that are employed in ventures that will cease to exist once the socialism bubble bursts. We have seen the beginning of this with the failures of large retailers and restaurant chains, but that is only the tip of the iceberg. Worse yet, unlike previous recessions, there are no manufacturing jobs for these displaced workers to redeploy to. The productive structure must be rebuilt, and that doesn’t happen overnight.

Therefore, Americans must realize that a stock market crash[3] and mass unemployment are inevitable, whether government intervenes or not. The only question now is how long those undesirable conditions will last. There is no “solution,” government or otherwise, that will allow us to avoid this correction. If the government does not intervene, the stock markets will crash faster and the layoffs will begin sooner, but the total period of adjustment will be far shorter. If the government intervenes, no matter how they do it (including by allowing the Federal Reserve to massively inflate the currency), the adjustment period will be stretched out, with continued new malinvestment even as liquidation of current malinvestment occurs. That was the story of the Great Depression.

The only course of action that can speed up the recovery is a return to the laissez faire capitalism that made America great in the first place. This would include eliminating unnecessary regulation, abolishing the central bank and restoring sound money, eliminating minimum wages and other artificial price controls, capping and eventually phasing out the entitlement programs, eliminating other massive government spending like military welfare for other countries and unnecessary war, and restoring protections of property rights. In other words, Freedom. Don’t you think it’s time we tried it again?

[1] The lack of understanding of “real wages” was certainly not the only misconception of the social reformers, but it was a major misconception and representative of others.
[2] The European mixed economies have already experienced this adjustment, debased their currencies, regrouped under the European Union and an new currency, and are presently pursuing the same failed ideology to destroy this new economy as well.
[3] It is conceivable that the Federal Reserve could inflate the currency so much that the stock market remains at $11,000. However, if $11,000 only buys 10 loaves of bread at that point, it would still represent the same devaluation as a crash.

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>Is the Freedom Movement Really Ready for Freedom?

>Ron Paul’s campaign for the Republican presidential nomination has ignited a revolution. For the first time in a century, a real movement against the entrenched system in Washington has arisen, and it is a movement of capable people who don’t just complain – they get things done. After a complete debacle for the neo-cons in Nevada, the Republican Party has actually had to mobilize itself in several states to prevent Ron Paul supporters from taking over state conventions and voting in their own delegates. They have resorted to breaking their own rules to prevent a party takeover. This is a sign that their political days are numbered.

Almost universally, Ron Paul supporters oppose the Iraq war. Whether conservative, liberal, moderate, or independent, Ron Paul has brought together a coalition that recognizes that the United States government had no right to invade Iraq. Regardless of their positions on other issues, people of all parties in this movement deserve high marks for taking a stand against the Iraq war.

Similarly, we are almost universally in agreement in our opposition to the expansion of executive powers, especially insofar as they have allowed the government to compromise our privacy and to threaten habeas corpus. These are direct attacks on our lives, and we have been right to defend ourselves against them. It is truly the good fight, and we will win.

So, we are certainly united in what we are against, but are we united in what we are for? Are we all really for free markets, for truly limited government, and for individual liberty? Do we all really understand what that means, and what responsibility that places upon us? Are we really ready to live in a truly free country?

Certainly the first inclination is to answer “yes” to all of the above. However, I wonder if the majority of the freedom movement is really ready for life without big government.

Are we ready to live without Medicare and Medicaid, and depend on the free market to determine the distribution of medical care? Supporting the programs means taking the money for them at gunpoint from our fellow citizens, so the moral question is easily answered. Sound economic theory as well as historical evidence indicates that the poor and elderly would have more access and higher quality care without these programs. Are we ready to trust the free market and private charities with medical care for the poor and elderly?

Are we ready to live life without a “safety net?” Like medical care, the benefits of traditional welfare are also funded by the coercive extortion of money. Similar appeals to economic theory and history prove that the poor would be less numerous and would again experience an improving quality of life without these programs. However, are we ready to admit that no one has the right to even the basic necessities of life?

Are we ready to take full responsibility to support ourselves for our entire lives? Despite the government’s official fairy tale, there is no “trust fund” for social security. The money collected from taxpayers today goes directly to pay today’s beneficiaries. While the program actually runs a surplus (although it will soon become insolvent), the government spends 100% of that surplus on other budget items, as it always has. At the end of the day, social security is just another government redistribution program funded by extorted money. Any financial analysis would show that the money collected from working Americans for social security would be better invested almost anywhere else. Are we ready to admit that no one has the right to retirement benefits, and enter our golden years without social security?

Here is one that even I have trouble overriding my own programming on. Are we ready to get government completely out of education? Are we ready to admit that, like medical care or any other good or service that is produced by somebody else, that no one has a right to education? Are we ready to trust the free market for this as well?

To the average American, the questions I have asked would sound like complete lunacy. However, to someone who understands and accepts the principles of liberty and wishes to live by them, I argue that the answer to every one of those questions must be “yes.” Reason, history, and economics all tell us that these programs are immoral and destructive, not only to society as a whole, but even to the recipients of the benefits. Only our conditioned fear tells us that we cannot live without them. Are we ready to overcome that fear?

There are certainly many more intrusions by the federal government into our private lives, but I have chosen these programs because this is where the money is. Despite what we are led to believe, the Iraq and Afghanistan wars amount to only 5% of the $3 trillion budget. Ending the wars in Iraq and Afghanistan would eliminate less than half of this year’s deficit. The entire military budget makes up only 20%, and some of that would still be necessary even if we brought our troops home from all 130 countries that they are stationed in.

By contrast, Medicare, Medicaid, Social Security, Welfare, and the Department of Education combine for over 55% of our $3 trillion budget (The Department of Education is only 2%, but after that no other expenditure has a significant percentage at all). Without them, there would be no deficit. Without these programs we could eliminate the income tax and begin paying down the national debt at the same time. The financial benefits to our country would be staggering.
I am interested in the answers that CDR members would give to the questions I’ve posed. Can you answer every one of them yes? If not, I would like to hear your arguments supporting why you cannot, and specifically how you would reconcile the programs with the principles of individual liberty, property rights, and the proper limits of government. In a free society, how does government derive the right to seize the funding for these programs from its citizens? Can we ever really be free while they exist?

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