Archive for the “Socialism/Statism” Category

Orwell, unsurprised.

On October 17th, there were two near-simultaneous protests in downtown Boston. One, at which I spoke, was in opposition to increased government intervention in the provision of health care, staged by local tea party activists. The second was in opposition to the wars in Iraq, Afghanistan and Pakistan.

Address to the Boston October 17th Tea Party

Like all goods and services that are created by one human being and consumed by another, medical care is not a right; the use of government force to provide medical care is therefore morally wrong, and tantamount to theft.

I am not going to scrutinize the details of the various pieces of healthcare-related legislation that are making the rounds in Washington. I haven’t read any of them – and to tell you the truth, I don’t see much of a point in doing so. As we have seen, many (if not most) of our congressmen don’t bother to read these bills; and if they won’t do the job we pay them to do, I’m certainly not going to do it for free. Perhaps we shouldn’t blame them for failing to fulfill their responsibilities! After all, what’s the point in reading a bill, when the text could be altered, in the dead of night, only hours before the final vote is taken? If you’re like me, you don’t have time to read a thousand pages of lobbyist legalese – because you’re too busy simply trying to make ends meet.

In this era of big government, laws are no longer general principles applying equally to all citizens: rules enabling free individuals peacefully to regulate their social affairs. In the words of Nobel Prize-winning economist Friedrich Hayek, today’s so-called laws are in fact “instructions issued by the state to its servants concerning the manner in which they are to direct the apparatus of government and the means which are at their disposal.” Laws do not apply equally to all, because they are not intended to. The TARP, the stimulus package, and all of Obama’s central economic planning measures divide the American people into a variety of castes, so that money can be taken from some and given to others, whether those others are bankers, trade unions, or too-big-to-fail corporations. We also must remember that government, in the words of Mises, is but the “social apparatus of coercion and compulsion” – and that behind its every action lies the threat of force, however veiled and indirect.

We no longer live in a democratic republic. The system of government you learned about in 8th grade civics class no longer exists. The trappings of democracy have of course been retained – but no matter who is in office, the imperial goose-step continues. Every few years, we elect a new dictator, who presents the American people with his all-encompassing “vision,” and instructs the Congress on how and when it shall be carried out. In effect, the president writes the laws; and the powers that he cannot wrest from the legislators he simply wills into existence, by executive order. It is nearly impossible to argue with the proponents of statism, because they see nothing wrong with such a system – or do so only when it is controlled by the leader of the opposing party.

Still, we must strive against the plans of the statists. But when we do, we must also remember that they do not believe in freedom. They do not wish to live in a world where men are independent and take responsibility for their own welfare. They have no use for economics; and though they do not understand capitalism, they are not interested in learning about it from the likes of us. I have found that policy discussions are useless, unless they begin from a point of principled agreement, however small. To the libertarian, health care is a good like any other – and we all prefer inexpensive goods to expensive ones; we all favor quality over shoddiness. The left, however, has long claimed that health care (as well as other goods like education, housing, and now even the internet) is a right. Until they realize that no one can have a right to the product of another person’s skill and labor, they will continue to espouse their tangled and false philosophy.

I know that I cannot win an argument with a collectivist. Their minds are equipped with an override mechanism, an Orwellian “faculty of stopping short, as though by instinct, at the threshold of any dangerous thought.” All we can do is make simple points, and hope that one of them penetrates the fog of contradiction, allowing a faint ray of truth to illuminate the shoddy ideological patchwork to which the statists cling. Truth begs no argument: a right is something that one is entitled to by virtue of one’s very existence. The violation of a right is by nature an act of aggressive force, and it is for this reason that we are allowed to use force in defense of our rights. No leftist, no matter how radical, will assert that his “right” to medical care means that this care can be forcibly extracted from the doctor or nurse whose time and ability the provision of such a service requires. When the statists recognize that the theft of a man’s labor is equivalent to the theft of the income derived from that labor – when they embrace non-violence as a means and not merely as an end (albeit one that is indefinitely deferred in the name of some arbitrary notion of “social justice”) – we may finally have something to talk about. Until then, we must hold fast to our principles, and suffer the consequences if necessary.

October 17, 2009

I have met Larry Summers once in my life. No, not while I was studying at Harvard. It was during the summer of 2005, when I was working as a water meter installer in Dracut, MA, and a vendor at Fenway Park. I was selling popcorn one afternoon, and I was given the old one-fingered wave by a man sitting with his family in Section 21 - the one behind home plate where the players’ families sit. I tossed a bag to him, and as I approched, I said to him good-naturedly, “Hey you look a lot like Larry Summers.” He said, “I am Larry Summers.” I said, “Nice to meet you, sir - I’m Harvard, class of ‘03.”

The price of a bag of popcorn is 4 dollars at Fenway Park. This artificially high number is due to the anti-competitive monopoly that the Red Sox have granted to Aramark to provide food services on their property. Larry handed me a fin. And as I held up a Federal Reserve Note with his signature on it, he extended his hand and grasped it firmly. I said, “Thank you, sir.” At once, I realized something - Larry Summers has probably never had a job in the service industry. In fact, he’s probably never had a job in any industry. Nope - he is a professional “economist.” His current line of work? Why, he’s Director of the White House’s “National Economic Council.”

“Wow,” you’re probably thinking. “I wish I were in charge of an illustrious grand high council of central economic planners! I’d plan me and my college buddies some profits.” Or - if you’re like many Americans - you’re probably thinking, “What’s the “National Economic Council?” Essentially, it is a stable of professional economists whose full-time “jobs” are to advise the President. Why would the President of a “free”-enterprise, capitalist society have to be advised about how best to plan our economy? Well, you see, in the early part of the 20th century, executive power began gradually to expand, and it has gotten to the point now where the government has so much control over our economic affairs that our “leaders” must constantly consult

• a bunch of Keynesians who believe dogmatically that the government is supposed to “correct” capitalism’s “flaws” and
• the great and powerful oracles at the Federal Reserve (who might divulge what the rate of monetary inflation will be, although probably not exactly whom is receiving their newly-created micro-tools of central planning).

Obama (and most of the other professional politicians who claim to represent us) have little or no real knowledge about economics (which is, of course, one of the reasons why our founders instituted a system where politicians aren’t asked to do lots of hard things like planning for our glorious future). Since they know they that have no idea what they’re doing, and since they don’t want us to know that, they like to pretend our economy isn’t centrally-planned…by staffing and funding central-planning agencies for agriculture, commerce, labor, health, transportation, energy, housing, education, security, etc. - you know, just all that extraneous stuff outside of the realm of economy. Larry was fortunate enough to lead one of those agencies - the one in charge of paying our government’s bills. Our government is now 11 trillion dollars in debt. Gosh, I’m glad that we have guys like Larry in charge.

A bill was introduced last month that would create an 8-member commission to study, among other things,

• “The effect on the Nation, on those who serve, and on the families of those who serve, if all individuals in the United States were expected to perform national service or were required to perform a certain amount of national service.”
• “Whether a workable, fair, and reasonable mandatory service requirement for all able young people could be developed, and how such a requirement could be implemented in a manner that would strengthen the social fabric of the Nation and overcome civic challenges by bringing together people from diverse economic, ethnic, and educational backgrounds.”

This bill would require that a final “report” be submitted to Congress no later than 2 years after the passage of the act. Do you think that the eight wise men just might find a “fair and reasonable” way for the government to confiscate more of our wealth, by taking from us a part of our very lives, instead of just a part of our money? For those of you who may be shrugging your shoulders and thinking, “What’s the big deal?” - I only ask you to remember that you are the owner of your body, not the state. A mandatory period of “national service” is no different - in principle - than a military draft. If you were a draft protester in the 1970’s, or if you are an anti-war activist now, don’t be fooled by the government’s supposedly good intentions in this particular case. Don’t think that, once you give the government the power to treat its citizens merely as means - pawns to be directed according to centralized social engineering plans - you will be able to limit the government’s power only to those ends that you think are justified or worthwhile. Principles matter, and this is why - occasionally - free people have taken the time to write them down.

Involuntary servitude is no less involuntary, just because the state is the master. If you know anyone who escaped to the U.S. from the former USSR, ask them their opinion of a system in which the state is the master of its subjects. As for me - I will never submit to a draft, and I will never be a domestic slave.

The People’s Bank of China holds about $2,000,000,000,000 in U.S. currency as “reserves.” How did they get all this money? Well, they did it by selling products to lots of Americans, who paid for those products in dollars. Why didn’t they use the dollars we gave them to buy American products, you ask? Well, America isn’t the industrial powerhouse it once was. We don’t make products that people in other countries want to buy. But wait, you may ask, if Americans don’t produce anything, where do we get the money to afford our oversized houses, gas-guzzling SUVs, and oh-so-indispensable electronic gadgetry? Simple - we borrow money from the Chinese. After all, they’re the ones who have it. And they don’t just stuff it mattresses - they’ve been more than happy to lend some of their profits back to our government, by buying Treasury bonds. The Federal Reserve has recycled this money back in our economy, keeping interest rates artificially low, and the American standard of living artificially high.

Why do the Chinese lend money to America? For the same reason that any lender does - they expect eventually to be paid back, in full, plus interest. However, it is becoming apparent that the United States might just not decide to ever begin paying back its debts. Whenever a bond comes due, the U.S. just floats another bond to get the money to pay off the first, and so on. The Chinese then, instead of accumulating more and more of our wealth, have more and more of our debt, every year. The U.S. national debt stands at about $11,000,000,000,000 - and since it is clear that our new president has no intention of offering up even one balanced budget over the course of his first term, the national debt will continue to grow. It might seem obvious, but in order for the U.S. to make good on its debts, we will actually have to start spending less and saving more. Or we can just keeping borrowing until no one is left who is willing to lend to us, and then we can default, leaving our creditors holding the bag - which will either be empty, or filled with trillions of worthless Federal Reserve Notes (that have lost all their purchasing power due to hyperinflation). Either way, our creditors lose big.

Last week, the Chinese Premier, to whom our Secretary of State paid a special visit in order to beg him to continue giving the U.S. government the money it needs to pay its bills, said that he is “concerned about the safety of our assets. To be honest, I am definitely a little worried.” He also asked the U.S. to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.” Guarantee? In what way? Does he think that the U.S. is going to pledge some real asset as collateral - Hawaii, perhaps?

I skyped last weekend with a friend of mine who lives in Shanghai. We discussed the trade imbalance between the U.S. and China, and I asked him the question that Peter Schiff asks almost every day: why would the Chinese continue to loan us the money to buy their products, when it is clear that we are fleecing them, and equally obvious that they could get us to pay up simply by threatening to short sell the dollar and destroy out economy. Don’t they have us by the balls? He told me that the communist regime is concerned about one thing above all else - preserving stability. He told me that 20 million Chinese factory workers have lost their jobs in this depression and have gone back to the countryside, that there are hundreds of small protests every day throughout their immense land, and that the government knows that if demand for their exports were to fall even more, the resultant job losses could bring about a domestic insurrection. Couldn’t the Chinese just consume their own products, I asked? My friend reminded me that just as Americans of my generation have learned to spend beyond their means and fund their life through endless debt, the Chinese people have a culture of saving and thrift. Their government can’t force them to become hyper-consumers, not overnight. Just as it will take Americans a while to learn how to save, it will take the Chinese some time to learn how to consume. Their government is actually subsidizing large consumer purchases, in an attempt to get people spending - but the efforts have been mostly unsuccessful. And so they need us, for the time being.

On Monday, the governor of the People’s Bank of China, aka the Ben Bernanke of the East, posted a speech in which he called for a new international monetary system, one in which the reserve currency would be “disconnected from individual nations” and “able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.” When I read the first paragraph, I thought: “Wow - have the Chinese finally woken up and decided to buy gold, and return to REAL money?” This move would certainly put them in a position to dominate the world markets for a long time to come. But, as it turns out, Mr. Zhou (who once declared “If the market can solve the problem, let the market do it. I am just a referee. I am neither a sportsman nor a coach.”) is not advocating for the abolition of central banks and a return to a free-market commodity money. No - he wants more of the same. He’s not arguing for market competition, but rather for the opposite: a monopoly “super-sovereign reserve currency,” controlled by a world central bank, which he thinks will most likely evolve out of the International Monetary Fund’s SDR.

Since the Chinese will certainly have an influential seat at the table of any upcoming international monetary reform negotiations, perhaps Zhou is hoping that this new bank, this “trustworthy international institution” which will “both create and control the global liquidity,” will soon be in the market for a new global governor. With a good Keynesian like Zhou at the helm, we could all look forward to a glorious future.

A bill has been introduced in the House and in the Senate that would allow the People of the United States, through their elected representatives, the privilege of auditing the Federal Reserve System. I say “a bill,” instead of “two versions of a bill” because the text of H.R 1207 and the text of S. 604 are exactly the same. So, assuming they could just work out the difference in titles (and I don’t think either of the authors will care if we go with “sunshine” or “transparency”), if this bill passes both house of Congress, it will become law without delay.

What can we do to help the two authors (Bernie Sanders and Ron Paul) to gain support for their bill? We have to make sure that each house of Congress holds a vote on this bill - and when that vote comes around, we must make sure that every single congressperson who has not previously indicated their support (by becoming a cosponsor of the bill) understands one simple fact:

There is a large and well-organized group of voters that would like them to vote “yea.” There is no comparable constituency that would like them to vote “nay.” Using simple arithmetic, they should be able to figure out that a “yea” vote will gain them political support, and that a “nay” vote will cause them more trouble than opposition to such a self-evidently decent bill will entail for them, politically. We don’t have to make a moral argument with them (even though the moral argument is overwhelming) - we just have to appeal to their sense of benevolent self-interest.

So let’s start contacting our elected representative. Each of us has three phone calls to make, or three emails, faxes, or letters to write (one congressperson and two senators). These options are not mutually exclusive, and the cost of doing all of these things is slight, compared to your share of the 1,200,000,000,000 dollars that the Fed plans to bring into existence by fiat over the next several months (roughly $4000 per person). Even if you factor in an hour’s worth of labor costs (at a remuneration comparable to Ben Bernanke’s $191,300 salary), you’ll be making a sound investment.

3 2-minute calls @ $0.10/m = $0.60.
3 emails = FREE
3 faxes @ $1 each = $3.00
3 letter @ $0.42 = $1.26
1 hour of labor = $91.97
GRAND TOTAL = $96.83

The Fed can’t REALLY create money out of nothing. When they inflate the money supply, all they do is take some of the purchasing power out of the money that already exists (some of which is YOURS), and re-distribute that purchasing power to themselves, in the form of the new notes. Inflation is a tax. And if we allow the Fed to tax us to the tune of $4000/person, they should allow us to know what they’re using OUR MONEY for. It’s that simple. If you’re like me, and you don’t have an extra $4000 laying around that you can spare, and if you’d like to prevent another tax like this from being enacted in the future, perhaps an hour of your time and a few postage stamps will be a sacrifice you’re willing to make.

President Obama has a “bold blueprint” for our future. Sweet! We can all just sit back, relax, and enjoy the show. And now that I can stop worrying about the economy, there’s a book I’ve been meaning re-read for a while…

On one of my infrequent visits to www.facebook.com, I learned that two of my friends plan to attend Socialism 2009, which bills itself as four days of “revolutionary politics, debate, and entertainment.” I visited the facebook event page and read this event description:

The world economic crisis has shattered the free-market consensus that has dominated politics for the last generation. Meanwhile, the end of the conservative era and the election of the first African-American president have raised expectations among working people that long overdue change is at hand. With capitalism in crisis, even some in the mainstream media are admitting that Karl Marx was right.

There has never been a better time for those who want see fundamental change to get together to debate, to discuss and organize for a new society—a society based on the needs of the many instead of on the whims of a few. In other words, there has never been a better time to organize a new socialist left to meet the challenge of this new era.

Socialism 2009—expanded to two sites this year—will gather with activists from all over to take part in dozens of discussions about changing the world: How can we stop the economic madness? How we can end racism? What kind of organization do we need? What would a future socialist society look like? Yes we can organize for socialism in the 21st century! Si se puede!

I RSVPed and wrote a few comments on the event’s “wall”:

Hey guys - I hate to tell you, but the primary cause of the financial crisis was the Federal Reserve System. As you will no doubt already be aware, a central bank is not a “free-market” institution, nor the result of any sort of “free-market consensus.” If you are unsure about this fact, I refer you to plank #5 of the Communist Manifesto (courtesy of wikipedia):

5. Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

Capitalism is not in crisis, because we are not laboring under a capitalist system. We have been laboring in a “mixed economy” for some time. The state has had direct control over a system of centralized credit for almost 100 years. We are now witnessing just how well such a system functions.

It is true that there has never been a better moment (at least not in our lifetime) for fundamental changes to be made. But the first and by far the most critical change will be the abolition of the Federal Reserve and the return to a commodity money. This sort of de-centralization of power will do more to aid the poor and oppressed than will any amount of central economic planning, especially of the sort that was long ago discredited in theory by men like Mises and Hayek, and in practice by the Soviets, etc.

I received a response from one of the event’s organizers, who appeared eager to disavow any connection between Marx and Keynes:

Marxism is not Keynesian and the article does not argue on that basis. This one explains our take on Keynes.

http://www.isreview.org/issues/63/feat-keynes.shtml

In our economic system the ruling class uses whatever strategy it needs to be most effective. Sometimes that is state intervention sometimes it is neoliberal deregulation etc. The point is that capitalism is not a philosophy but a system of production that reacts based on the interests of the ruling class. Also the flaws inherent in it are not reducible to some of the institutions that have been created as part of the strategy of pursuing profit ie the fed, IMF, the government itself, etc. The problem is this economic system itself. Production on the basis of profit does not make sense.

And my reply:

I agree that the “ruling class” is not particularly beholden to any particular strategy, capitalism included. What I’m telling you guys is that - if you want to take away power from the ruling class - you should take away their control over the monetary system.

Capitalism is not a philosophy - it is the self-ordering system that results if certain principles are followed, and if government doesn’t attempt to control the economy, but only to enforce these principles. The principles are:

1) The right to private property.
2) The enforcement of voluntary contracts.

These principles are ignored left and right, and have been since money came under the increasingly direct control of the government. Inflation, for example - which is an increase in the money supply that in most circumstances will lead to a rise in the general level of prices - can only occur as a direct result of the Fed’s policies, under a system where the Fed controls the money supply. Inflation violates the individual right to private property because it devalues every individual’s savings - the money they have earned through their labor. And, as we can see, in a system where banks and other lenders know that they will be bailed out if they fail, they can make contracts that they never intend to uphold.

I didn’t say that Marxism is Keynsianism. However, Keynes was a self-styled socialist, and the root ideas behind Keynes’ philosophy - centralized control of credit and government intervention into the economic affairs of the individuals through control of the money supply - are straight out of Marx’s playbook.

If you claim not to be in favor of what Keynes proposed, are you willing to admit that plank #5 of the Communist manifesto was written in error? If so, what alternative to government-controlled fiat currency do you propose? If you are in favor of Keynes’ philosophy, are you at least willing to admit that it has nothing to do with capitalism, and therefore shouldn’t be used as an example of what is WRONG with capitalism, but rather as an example of what is wrong with a mixed economy that socialists would prefer to pretend is capitalism?

It is intellectually dishonest to make the claim that the economic crisis is a verdict on capitalism, and thus to claim that socialism should be the preferred alternative. If you’re going to convince people that you are right, you shouldn’t base your arguments on fallacies.

The Fed is the source of the “business cycle.” So, I guess my question is, are the socialists willing to take a stand against the Fed, and if not, why not? Once we eliminate the Fed, if the business cycle remains, then at least you’ll have a much more powerful argument for your cause.

As for production for profit not making sense - the only alternative to the price system as a means to ordering economic affairs is an economy under direct control of government planners. If you don’t like the system as it currently exists, under the control of Keynesian “experts” - who exactly do you think would be able to run an economy any better? What’s your explanation for why command economies have failed miserably every time they’ve been adopted?

I’ve read the Communist Manifesto, books on socialism by Kornai, Horvat, etc. Have you actually thought about the specifics of how a socialist system would work? Have you wondered why it’s always necessary for the government to engage in continuous acts of violence and coercion to make such a system “work,” to the extent that it even does (i.e. at a woefully inefficient level)? People work for profit, or they work out of fear. In other words, they work voluntarily, or they are slaves.

Good times.

Dr. Paul’s most concise, clearly-reasoned and simply-organized public argument against the central bank to date. Also the first time I have heard him utter the admittedly simplistic but catchy phrase that has been adopted by the sound money movement as their slogan (and that is rumored to be the title of an upcoming book by Dr. Paul). Props also for the snazzy tie!

On Wednesday morning, Cleveland’s WCPN “Sound of Ideas” program discussed the implications of Obama’s speech to Congress, in which he outlined his “blueprint for our future.” I called in and made three quick points about Obama’s “plan.” I make my remarks at 23:44, and you can listen to them in them by using the widget below. You can also download the entire podcast here. Again, the talk radio format does not allow listeners to respond to the comments of the experts, but in this case, there would really have been no need…

My points were:

1. Obama made clear that he would make sure that HIS bailout bill (the ARRP) would include language forcing banks to lend out money they had received from the taxpayers back to…the taxpayers. Is not this “stimulus” model a bit absurd?
2. Obama’s promise to “save or create” jobs is an intellectually dishonest evasion of accountability. He gives no data by which we can judge whether his policies have succeeded or failed, by our own standards, or even by his.
3. The underlying assumption behind these bailouts is that the government is and should be in a position to judge which members of society have been “responsible,” i.e. who “deserve” to succeed and who to fail. Thus reward becomes not a question of production, but of merit.

Kevin Jakes responds that nationalization is a last resort, and that other than nationalization, the indirect method of the public lending to banks in the only method of getting the banks on their feet again. Since this is just a “temporary” measure, apparently the absurdity of it is not important. He agrees completely with my second point. Tom Campanella is also “concerned” about Obama’s doublespeak, even though his is still a “supporter.” And of course, my most pressing point was ignored completely, since socialism is the order of the day! The next caller was as outraged as I am, pointing out (correctly) that so-called “stimulus packages” have never had a empirically verifiable affect on recessions. He asked the experts to provide a specific example of a successful government “stimulus,” and of course, they must decline to do so.