December 21, 2014

More anti-libertarian nonsense: Libertarians are heartless

TAMPA, March 28, 2013 – This week’s anti-libertarian nonsense is “libertarians are heartless.”

There are many variations on this theme. Libertarians oppose government-run education so they must not want poor people to get an education. They oppose government-run healthcare so they must want poor, sick people to die. They oppose government-subsidized housing so they must want poor people to be homeless, too (if they aren’t already). Libertarians are selfish, amoral…You get it.

Libertarians also oppose state religions, but no one makes the claim that libertarians are against religion. I wonder why? It seems to follow.

The people who make these claims don’t understand what libertarianism is and don’t really understand the nature of government or their relationship to it, either.

Libertarians do not object to you helping the poor. They merely object to you forcing someone else to help the poor.

Libertarianism answers only one question: When is violence or threatening violence justified? The libertarian answer is only in self-defense. That includes defending your life from an immediate attack upon it or defending yourself against a previous theft of property or other crime.

This is where libertarians face reality and their opponents don’t. Libertarians understand that all government action is violent action. That’s not because people in the government aren’t doing it right. It’s because that is what government is designed to be. Violence is its raison d’etre.

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

God is a non-interventionist

As technology has advanced and the world has “grown smaller,” it has become increasingly evident that little miracles don’t really happen. By “little miracles,” I mean people levitating, disappearing, parting seas, or making the sun stop in the sky. If they did occur, we’d be watching them on You Tube. But they don’t. That’s a good thing, because it leaves us less distracted from the real miracles: that we are here, that we live in a universe governed by natural laws that explain the world around us and that we have been blessed with reason to discover those laws.

In addition to the natural, physical laws that cause the planets to rotate around their stars and the plants to photosynthesize sunlight, there are also natural, moral laws. Like the physical laws, we are able to discover these by reason. First, we gather facts that we can observe directly with our senses. We then use reason to draw conclusions from those facts.

One observation we have made is that all human beings are created equal. No, they aren’t all the same color, height, shape, or sex. They don’t all run as fast or play the piano as well. There is a wonderful diversity to human life in that no two human beings are exactly alike. Yet, there is nothing so different about any one human being that gives him any innate right to exercise authority over another. In that respect, we are all truly equal.

From that observation, we can draw the conclusion that comprises the most basic, fundamental moral law of nature. As John Locke put it,

““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…”

Reason also leads us to the conclusions that life is good, that whatever promotes life is good, and that whomever or whatever created life, the world around us and the natural laws that govern it must also be good. Some people explain the miracle from a purely scientific point of view. We are here simply because certain materials interacted with others and started a chain reaction. Where those materials came from they do not know. Others insist that it is the work of not only a sentient being, but a loving God.

However, the latter group has always faced a philosophical dilemma. How could a loving God allow terrible things to happen to innocent people? How could he allow atrocities committed by humans, such as those by Stalin, Hitler, or Pol Pot? How could he allow natural disasters like earthquakes and tsunamis to kill thousands of innocent people, when he has the power to prevent them?

The only answer most of us are ever given is “It’s a mystery.” Indeed it is, but that isn’t very satisfying. We’ve been endowed by this creator with a natural curiosity about the nature of our existence. This compels us to ask “Why?” While no one can give a definitive answer, I’d like to suggest one that fits the facts. God is a non-interventionist.

What does that mean? It means that God does not override his own natural laws in order to prevent some of their consequences. Imagine if he did? At any given time, a good percentage of the nearly 7 billion people who inhabit this planet are asking him to violate the most fundamental natural law of cause and effect. Were he to grant even a small percentage of those requests, we would live in a chaotic world that would be impossible to understand or predict. One could not even know for sure that the next step would take one forward instead of backward. No human progress would be possible.

Similarly, God does not override the decisions of men, even if it would save lives or prevent suffering. That was the whole point of the Genesis story, wasn’t it? While Adam and Eve were in the garden, they did not know the difference between good and evil. There was no suffering, but no real joy either. God did not want robots that did his will merely because he programmed them to do it. He wanted sentient beings that would choose to do his will. In order to choose to do his will, they had to have the ability to choose not to. That has never changed.

So, God has the power to prevent suffering, but chooses not to because to override man’s free will or the immutable laws of nature would be worse. He has already provided everything necessary for human beings to live in peace, happiness and prosperity.  We need only use our reason to discover the natural laws, to continue to understand them better, and to follow them.

The United States is right now the most powerful nation on earth. Whether that will be true in fifty years, we do not know. However, today its government has the power to intervene in the affairs of almost any other nation. Often, there is the temptation to use this awesome power to intervene between a dictator and his people or between an aggressor nation and an ally. When have the consequences of intervention ever been better than those of non-intervention would have been? Never.

Yet, we continue to intervene in a most ungodly way, with those who claim to be most devoted to God exhorting us most vociferously. When will we ever learn?

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

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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Corporations and Labor Unions: Great Ideas Corrupted By Government

There are no two institutions in American society that are more associated with the struggle between right and left than corporations and labor unions. Outside of foreign policy, there is nothing that liberals are more hostile towards than corporations, nor anything that conservatives are more hostile towards than labor unions. For most Americans, corporations and labor unions lie at opposite ends of the socio-economic spectrum. Corporations are “conservative and capitalist,” while labor unions are “liberal and socialist.”

This is an illusion. In all but the most superficial respects, corporations and labor unions are virtually identical to each other. They are both voluntary associations formed by individuals to achieve an economic goal. They would both provide enormous economic benefits to society if they were not completely corrupted by government.

A corporation is a group of people agreeing to pool their capital to create a larger venture than any of them could launch individually. The stockholders agree that none of their personal assets will be put at risk if the venture fails – only the assets of the corporation

The stockholders also make these terms with the corporation’s creditors, customers, and other parties. In this way, the stockholders can cooperatively take more risk than they would if their personal assets were at stake. With greater risk comes greater reward. Thus corporations are able to innovate, produce, and expand more rapidly than smaller partnerships or sole-owner proprietorships. This benefits consumers by offering them more choice and higher quality products at lower prices.

The benefits of corporations are derived from the voluntary nature of every transaction. The stockholders, creditors, and customers all consent to doing business with the corporation, knowing the risks and the limited liability of the stockholders. All parties are exercising a natural right to associate and exchange their property as they see fit. One can never harm another merely by exercising one’s natural rights.

The prospect of the corporation becoming “too large” or dominant in a particular industry is countered by the equal right of all other members of society to form their own corporations and compete with the dominant one. In fact, it is this natural market occurrence – new competitors entering the market when there is an opportunity to offer consumers the same or better products at lower prices – that drives explosive innovation and growth and confers enormous benefits  on the rest of  society.

All of the associations necessary to realize these benefits can be achieved by voluntary contract. There is no reason that a government must enact a body of laws indicating how these corporations should be formed or how they should operate. Neither is there any reason why the government must create an “artificial legal person” in order to insulate stockholders from liability. That can be achieved by voluntary contract as well. All that is necessary is that the various contracts made between parties be enforced. However, voluntary association is not the government’s purpose in enacting corporate laws. [i]

The government corrupts the entire nature of corporations in virtually every way. First, it grants the corporation limited liability that applies not only to those who have consented to it, but to everyone. This completely skews a natural risk/reward balance and enables the corporation to commit torts against third parties without consequences to the stockholders. It overrides the right of individuals who did not voluntarily release the corporation from liability to pursue compensation for damages. It also has the effect of encouraging corporations to take more risk than they would if the stockholders’ personal assets were at risk with respect to these third parties.

Second, the enormous body of regulations constructed around corporations harms both the stockholders and the rest of society. The stockholders have the right to form and operate their corporation anyway that they see fit, as long as they do not invade the life or property of non-contracted parties. Regulations override their decisions and force them to operate the way the government tells them to, regardless of whether it is the best way or not. This adds tremendous costs to operating the corporation, which is then passed on to consumers.

Worst of all, these unnaturally high operating costs create impediments to the rest of society in exercising its most important right in this area: to form new corporations and compete with existing firms. This inevitably results in a few companies dominating each sector of the economy. Not only are consumers punished with higher prices and less choice than they could expect in a free market, but when these government-protected corporations get into financial trouble, those same consumers are often punished again when the government bails the corporations out with taxpayer funds. Without easy entry into the market for competitors, any corporation providing a service for which there is high demand becomes “too big to fail.”

Thanks to the corrupting hand of government, corporations are motivated to do exactly the opposite of what they would do if that artificial force were absent. Instead of trying to produce better products at lower prices, the corporation has an incentive to lobby the government for higher tariffs which keep out foreign competition. This allows them to keep operating inefficiently and charging higher prices than they could if they had to compete with the true market prices offered by those competing firms.

They also benefit by lobbying for more regulations that actually drive up their own operating costs. Why would they do something so illogical? They do it because those higher costs provide an entry barrier to new competitors. The established firm can pass those higher costs on to consumers, while the new competitor is either unable to start-up at all or unable to compete until it can match the established firms’ economies of scale. In the long run, government involvement with corporations results in lower quality, higher prices, and less choice for consumers than would occur in a free market.

The dynamics at play in regard to labor unions are virtually identical. Just like the stockholders of a corporation, the members of a labor union are exercising a natural right to enter into agreements with each other in order to achieve results that they would not be able to achieve individually. They form a partnership wherein all members agree not to accept compensation below a certain agreed upon amount. Compensation can take the form of any combination of wages, benefits, or working conditions.

It is important to recognize that the relationship between employee and employer is a buyer/seller relationship, with the employer being the buyer who purchases services from the employee. Like all buyer/seller relationships, both parties benefit when the transaction is voluntary. The seller benefits by getting the very highest price for his product that the market will bear. The buyer benefits by getting the highest quality product that he is able to obtain for the money he is willing and able to spend. If either party in any buyer/seller transaction does not believe that he is benefitting from the transaction, he can refuse to go through with it.

In the case of labor unions and employers, the union members benefit by higher compensation for their services. By bargaining collectively, they can control the supply of a particular type of labor demanded by employers and thus drive up the price. However, the employers actually benefit as well. As they are free to choose to hire people outside the union, the union must ensure that their product (labor) is superior enough in quality to persuade the employer to pay more for union employees than for cheaper, non-union employees. Such are the incentives in a free market, where all transactions are voluntary.

Under these conditions, labor unions would have an incentive to offer continuing education or training courses, to monitor the productivity of their members, and to set minimum standards for entry into the union as well as criteria for expelling non-productive employees. All of this would drive up quality, productivity, and profitability, further encouraging employers to pay more for union employees as a wise investment in more profitable products.

As with corporations, the benefits conferred upon society by labor unions depends upon contracts being enforced and all transactions between parties being voluntary. However, just as it does with corporations, government completely corrupts the nature of labor unions, eliminating many of the benefits they would otherwise provide. With interventions like the National Labor Relations Act of 1935 and subsequent legislation, the government destroys the voluntary nature of the employment contract, in many cases forcing employers to hire union workers. This violates the rights of employers to purchase services from whomever they wish to and eliminates competition for the labor unions, encouraging them to behave in a manner completely contrary to how they would behave in a free market.

Instead of encouraging their members to be more productive, labor unions actually encourage lower productivity from their members. It is not uncommon for a union member to be threatened by his coworkers for working too fast or being too productive and skewing the lower expectations negotiated by the union in the interest of employing more dues-paying members to accomplish the same work. Instead of setting higher standards for entry into the union, the union actually forces new employees to join as a condition of taking the job.

Finally, with competition from non-union employees eliminated, the union has no incentive to control the price they are charging for their services. In a free market, there would be a price point at which the presumably lower-skilled non-union workers would be a more profitable buy for employers than the presumably higher-skilled union workers. However, once the government removes the ability of the employer to make this choice, there is no longer any control on the price of union labor. This is why unions played such a large role in the demise of the American auto industry and American manufacturing in general.

Despite the unnatural, corruptive influence of government, corporations and labor unions still manage to provide many benefits to society. The insight that each must have about themselves and each other is that all of the benefits they provide derive from the extent to which they are voluntary associations which enter into consensual agreements with other parties. Conversely, all of the harm that they cause and all of the animosity that they and their supporters have for each other are the result of the coercive interference of government.

Instead of appealing to the government to assist them in invading each other’s rights, they should recognize that the government is actually their common enemy, preventing each from benefitting themselves and each other. If they wish to secure their rights and achieve positive results for themselves and society, they should kick the government out of their affairs and follow the law of nature.


[i] Special thanks to libertarian thinker and activist Steve LaBianca for his help in developing this analysis of the nature of corporations.

Government Solutions Are Anti-Intellectual

One of the first things that children are taught is that might does not make right. When a fight breaks out among children, their parents tell them that the person who threw the first punch was wrong. Not only was the aggressor wrong, but he was acting unintelligently. It is the one who has run out of ideas that resorts to the use of force. The bully is the dummy, while the child who seeks to resolve disputes through conversation and agreement is the intelligent one.

Most adults continue to recognize this fundamental law of nature, at least most of the time. An adult who resorts to initiating violence to solve disputes is recognized as childish and unintelligent – except when it comes to public policy.

Somehow, we have forgotten that all government action represents the use of force. This is obvious when the government is utilizing its military during wartime, but it is no less true when the government provides healthcare, education, or regulates business activity. Regardless of what problem the government is attempting to solve, it is applying the use of force in order to solve it.

When the government runs a health care program, those who must pay for it are forced to pay. When the government guarantees loans for education, taxpayers are forced to pay when those loans default. Even the most minor laws are backed up by the threat of force. If anyone doubts this, he should neglect to pay a traffic ticket and see what happens.

America was founded upon the principle that government action was only justified when one individual or group had committed aggression against another. As Thomas Jefferson put it,

“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.”

How far we have drifted from this basic understanding of the natural law. Today, Americans not only look to government to address every aspect of life that they find displeasing, but they hold up those who advocate this use of brute force as the intellectuals and those who argue that most issues should be addressed through consensual agreement as unsophisticated or unintelligent. While Jefferson said that governments are instituted solely to secure our rights, we now have a government that violates them on a massive and systemic scale.

Instead of trying to understand elaborate theories on how government intervention into our lives is good for us, we should remember what we learned when we were five years old. Only dummies resort to the use of force.

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

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Austrian Economics Is Scientific (Keynesianism Is Not)

On February 9th, Rep. Ron Paul of Texas chaired his first meeting of the House Monetary Policy Subcommittee that he now leads due to the Republican victories in last November’s congressional elections. Congressman Paul invited several expert witnesses to testify to the committee on their opinions about monetary policy. Among these were Austrian economist Tom Dilorenzo.

Much has been made of Rep. Lacy Clay’s attack on Dilorenzo’s credibility due to his alleged association with a “politically incorrect” group called the League of the South. However, Clay also attacked the Austrian school of economics itself, calling the “Austrian deductive method a non-rigorous scientific method.” Clay bases this allegation on the fact that Austrian theory is not based upon “an empirical method to study economics.” He refers to the fact that the Austrian school does not recognize the Keynesian theoretical models or the aggregate data that those models rely upon to “prove” their theories scientifically.

However, as Robert Wenzel has pointed out, Nobel Prize winner F.A. Hayek has already addressed this criticism and argued that economists should indeed use the deductive method, rather than an empirical one to understand economic principles. He even suggests that Robert Rubin would likely agree with Hayek’s argument, because of what Rubin called “the very nature of reality–its complexity and ambiguity.”

It is somewhat futile to try to win this argument with entrenched government policy makers. The Keynesian school advocates massive government intervention into the economy in order to protect us from the supposed shortcomings of the free market. When crises in the economy occur, the Keynesians recommend even greater intervention in the form of increased government spending, regulation, and monetary expansion.

The Austrian school advocates no government intervention into the economy at all. They argue that monumental crises are actually caused by intervention, so their cure is to cease whatever intervention has brought on the crisis, to relax regulations that impede adjustment in the labor market, and to allow the economy to rebalance itself through natural market forces.

Therefore, governments are not likely to reject Keynesianism, which grants them enormous power, and listen to the Austrians, who would strip it all away. One is reminded of the medieval governments that refused to acknowledge that the world was round and called upon appointed court scientists to legitimize their assertion that it was in fact flat.

However, it is important for investors to understand which theory within the “dismal science” truly does pass scientific muster. If you cannot dissuade the government from basing their policies on the wrong theory, you can at least choose the right one yourself to protect your own wealth and economic viability.

Anyone who has taken a basic chemistry class in high school remembers how you prove or disprove a theory. You conduct experiments to determine whether the predictions that your theory makes are correct. For example, your theory might predict that mixing two colorless chemicals in a test tube will result in the mixture turning blue. To prove it, you must not only conduct the experiment once, but over and over again, yielding the same result. If your test tube turns blue under the same conditions every time, you have proven your theory. If not, your theory is considered invalid and a new one must be formulated.

Austrian economists like F.A. Hayek predicted the Great Depression when the Keynesians said that the economy was fine. Once the crisis hit, the Austrians argued that the Keynesian policies prescribed to cure it would fail, as they were just an increase in the interventions that had caused the crisis in the first place. When massive government spending and devaluation of the currency failed to pull America out of the Depression, the Keynesians argued that more of the same to underwrite WWII would finally do the trick. Yet, the Depression lasted throughout the war and only subsided when it was over and there were massive cuts in government spending, consistent with the predictions of the Austrians.

The Keynesian answer to this anomaly? Ignore the results and just state that Keynesian policies did cure the Depression, regardless of indisputable facts to the contrary. This is science?

The Keynesians were also explicit that high unemployment and price inflation could never coexist together. The Austrians made no such claims, as they recognized that monetary expansion causes both price inflation and the malinvestment that leads to unemployment. In the 1970’s, Austrian theory was again proven correct and Keynesian theory proven wrong.

Most recently, the Keynesians argued that the technology and housing bubbles were not bubbles at all, but sustainable increases in wealth caused by their wise stewardship of the economy. If you listened to them, you were either wiped out by the NASDAQ crash or left owning a house with an underwater mortgage, or both. If you listened to the Austrians, you got rid of your technology stocks early during the formation of the bubble and avoided buying houses whose price had been bid to unsustainable levels by the combination of monetary expansion and government intervention.

Even after all of this proof is in, the Keynesians are still employing the only defense they have left that their theory is sound. Deny, deny, deny. With government and consumer debt threatening to cause cataclysmic economic collapse, the Keynesians are encouraging government and consumers to borrow and spend more. The Austrians advise consumers to pay down their debts and investors to avoid the next bubble. They urge investors to protect their wealth in gold and other commodities, as they have for the past decade. Those that have listened to them have turned huge profits during this historic economic calamity.

Imagine that you are back in your high school chemistry class lab, conducting experiments. In the row behind you, an Austrian economist is testing his theory. The test tube turns blue one time after another, just as he predicted it would. In the row ahead, a Keynesian economist is testing his theory. His test tube turns a different color every time and then finally explodes, lighting his beard on fire. Which one would you deem the better scientist? Which one would you bet your life savings upon in the next experiment? If you wish to take the scientific approach, listen to the Austrians.

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

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Release the Kraken

I prefer the 1981 film version of Clash of the Titans for many reasons. Among them is its nuanced portrayal of Zeus’ decision to release the Kraken upon the city of Joppa. He clearly does this reluctantly due to the immense power and possible unforeseen consequences of letting loose this uncontrollable force. When Poseidon opens the undersea gate and watches the creature emerge, he is clearly awestruck by the size and destructive potential of the beast. One can imagine what question must have been preeminent on his mind. “How am I going to get this thing back into the cage?”

There is no better metaphor for the United States and its government since the turn of the 20th century. It was at that time that government was released from its chains – and it has been on a rampage ever since.
In his seminal book, The New Freedom, Woodrow Wilson wrote,

“We used to say that the ideal of government was for every man to be left alone and not interfered with, except when he interfered with somebody else; and that the best government was the government that did as little governing as possible. That was the idea that obtained in Jefferson’s time. But we are coming now to realize that life is so complicated that we are not dealing with the old conditions, and that the law has to step in and create new conditions under which we may live, the conditions which will make it tolerable for us to live.”

While Wilson’s unqualified dismissal of America’s founding principle of government might startle 21st century readers, the reasoning he employs to justify it is even more incredible. Just a few pages after declaring that Jefferson’s system is no longer viable, he goes on to say that the Americans of his time are actually living under Alexander Hamilton’s system. He is to a great extent correct on this. By 1912, the Republican Party, philosophical descendants of Hamilton’s Federalists, had indeed made great strides in establishing the Hamilton platform of corporate welfare, protectionism, and a large and adventurous military establishment.

However, this system was completely antithetical to Jefferson’s truly free market, whereby the government merely enforced contracts and protected individuals from aggression against their rights. Here, Wilson has made a colossal non sequitur – that Jefferson’s system should be scrapped because Hamilton’s system isn’t working. The confusion – between crony capitalism and truly free markets – persists to this day.

Thus, we have not only released the Kraken, but we have done so for completely illogical reasons. It has been rampaging over our lives, liberties, and properties now for over a century and shows no signs of tiring. It is time to either get it back in its cage or find a man on a flying horse to save us.

Orlando Sentinel Op Ed: Vitriol Has Been a Proud Tradition

In the past, it has taken a war for the government to summon the courage to attack the very first right protected in the “Bill of Rights.” While constantly under attack, the right of free speech has withstood the invocation of all manner of horrors to convince people that it must be violated by the government to keep us safe. Now, it seems, the solitary act of a mentally ill man is enough to persuade Americans to falter.

The shooting in Arizona on January 9 was tragic. However, the argument that “irresponsible speech” had somehow helped to motivate it is completely separated from reality. In fact, the assertion that political speech is more “extreme” now than in the past is false. The spewing of raw invective at political figures is one of America’s oldest and proudest traditions.

But I Paid Into It…

Critics on the left have quite correctly pointed out that Tea Party activists who oppose President Obama’s “socialism” are hypocritical in that they do not oppose Social Security for themselves. The most common rebuttal to this criticism is usually something along the lines of Social Security being fundamentally different because the recipients pay into it. However, this argument is no different than arguing for a right to steal your younger neighbor’s car because an older neighbor has stolen yours. Allow me to explain.

Most people are aware Social Security has begun paying out more in benefits than it collects in payroll taxes. However, it had run surpluses for decades that most beneficiaries honestly believe is funding the shortfall until the demographic imbalance caused by the baby boom evens out. Since they “paid into it all of their lives,” supporters of Social Security distinguish it from Aid to Dependent Children or other wealth transfer programs. Inherent in this thinking is both factual inaccuracy and flawed logic.

First, even if those surpluses had gone into a “trust fund,” no one disputes Social Security has always been a predominantly “pay-as-you-go” program. In other words, the overwhelming majority of the money collected from payroll taxes went to fund benefits for current beneficiaries. Thus, payroll taxes were taken from one group of people and paid out to another, just like public welfare.

One might argue that the surpluses generated previously meant that at least part of the money being paid to current beneficiaries was their own money, held in trust for their retirement. However, this is also completely untrue. The surpluses have not been held in cash since 1939. Instead, when the program runs a surplus, the government is legally obligated to use the money to purchase U.S. Treasury bonds, which are nothing more than securities documenting that you have loaned the federal government money. So, by law, any surplus collected in payroll taxes for Social Security must be lent to the federal government (which immediately spends it on operating expenses). In return, Treasury Bonds are put into the trust fund.

For those who remember and decry this change in 1939 as a betrayal, remember that the FDR administration had also taken the U.S. off the gold standard (domestically). Had the government continued to merely hold reserves in cash, the reserves would have been outstripped by inflation by the time the benefits were payable to most beneficiaries.

Most people think of the treasury bond arrangement as the government putting their money into a “secure investment” that will pay them interest with very little risk. However, this is logically absurd. Treasury bonds are not “an investment.” An investment is a loan or advance of capital made in the hopes of earning interest from a producer of goods or services. The fundamental question anyone asks before risking their money with a bond issued by a private business is “How are you going to pay me back?”

The answer that would be given by a private sector business would be, “By using the capital you have loaned us, we are going to expand our productive capacity. With the new products we will produce and sell, we will be able to pay back your investment with interest and still make a profit.” Thus, if you purchase a bond issued by a computer manufacturer (i.e. lend it money), then the computer manufacturer is able to repay you with interest out of the new computers it was able to produce with the money it borrowed from you.

However, the federal government does not produce computers. The federal government does not produce anything. So, how does it answer the question, “How will you pay me back?” There is only one answer: “We will tax people in the future to pay back your loan principle and interest.”

Thus, even the so-called “trust fund” does not represent a store of your own money, held in trust for your retirement. 100% of your money was spent the moment it was received by the government. Most went to underwrite the benefits of current beneficiaries. The rest was spent on other government boondoggles and replaced by promises to repay you by taxing other people. Not one dime of current benefits represents a “payback” of one’s own money. Social Security is every bit as “socialist” as Aid to Dependent Children, Medicaid, Medicare, or any other government transfer of wealth. Where do you think it got its name?

There is a bit of irony here that probably also escapes most Americans. While the federal government’s modus operandi for many years now has been to merely pay off the interest on its debt and issue new debt to cover the principal as bonds come due, let’s consider what would happen if they actually started repaying the principal on their bonds.

The longest term bond is a 30-year Treasury note, which means you loan the government the money for 30 years. Suppose that in 1970, you were a 34-year-old, dutifully paying your Social Security taxes. Most of your money went to pay current beneficiaries, but a small portion (your share of the surplus) went into 30-year Treasury notes. In 2010, you are one year from retirement and ask the government, “Where are you going to get the money to pay back the principal and interest on that 30-year Treasury bond?” As bizarre as the answer might seem, the answer would be, “Why, from you, of course.”

However, the most socialist aspect of Social Security is not that it represents a transfer of wealth. It is that the program is mandatory. The only way for the government to accomplish a transfer of wealth from one party to another is to force people to participate. This is why George W. Bush’s proposal to “privatize” Social Security would not have made it any less “socialist.” People would still have been forced to participate; only they would now have the option of handing their money over to W’s tax-subsidized buddies on Wall Street rather than to the federal government. Imagine if he had been successful in implementing this in 2004.

Free market capitalism and socialism truly are opposites, but the fundamental difference is one of rights, not economics. True free market capitalism recognizes every individual’s right to keep the product of his labor and dispose of it as he sees fit. Social Security denies this right. It must be responsibly phased out, without cutting off present beneficiaries, and replaced with nothing. That prospect should scare no one at this point. With a government that is $14 trillion in debt and planning to borrow more every year for the foreseeable future, I would trust the most irresponsible individual I know before the federal government – with his retirement money and mine.

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

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© Thomas Mullen 2011