I developed this a few weeks back. It received a few comments on Youtube and then little else was heard of it. I wanted to share it with you.
NOTE: Please forgive the "Ron Paul 2008" plug. This was written for the campaign.We complain all the time that we need more leadership, stronger leadership, and more and better regulations. We realize that while we have the ability to make perfectly sound and rational decisions not everyone else does. We preach about how “present company excluded” there are some evil people out there looking to do harm to everyone if the government lets up just an ounce. We need to take a lesson from Henry Hazlitt, the lesson happens to be about economics.
Austrian Economics, or truly free market economics, is economics based on praxeology. Praxeology is the logic of human action and is best explained in Human Action by Ludwig von Mises. Following the Aristotelian tradition of logic and rules of thought, Ludwig von Mises created a masterpiece using deductive logic to show that freely acting individuals always choose the best uses for the resources they posses. When we move from free interaction amongst individuals to a class system, government and the governed, we get a glimpse into what Henry Hazlitt and his one lesson tries to state.
Henry Hazlitt sums up his lesson in one sentence “The art of economics consists in looking not merely at the immediate but at the longer affects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups” (p 17). Throughout the rest of the book Hazlitt goes on to show that the best economic policies are always the ones in which government does the very least. Many free market capitalists think that the government exists in order to protect private property and carry out judicial duties (sorry for being repetitive), but Hazlitt has shown that when government does the least it does it the best.
When government tries to protect property rights all that happens is institutionalized and legitimized (in the minds of many) property theft. Hazlitt knew what he was talking about; people’s self interests are sometimes at odds with each other. When we give up our arms or our right to use force to a third party, and that third party monopolizes that right what we receive is worse than what we wanted to be protected from. Is that third party, the government, beyond the average individual emotional set up, beyond the longing to act in their own self interest? No! In a democracy elected officials epitomizes its constituents and once elected is very prone to self interested acts. They are simply demagogues apt to the same longing for a better life that everyone else does, but they have all the guns.
When people call for stronger leadership they are calling for more institutionalized theft. When people want more regulations they call also for their own deaths (except when they call for regulating the government which is beyond the point I am making). My advice to anyone who reads this young blog is to live life, don’t let some Plato create for you a republic.
Today, class, we're going to cover a few of the basics of understanding government meddling in the economy. Our three topics will be taxes, spending, and the money supply. Eyes front, and Jimmy, keep your hands to yourself!
TAXES
1. Taxes are the enemy of economic growth.
2. Taxation is the process by which productive members within an economy are required to provide funding to non-productive members in an economy.
3. Taxes are on "profits" or funds that would have gone into development of new ideas, hiring of new employees, purchasing of new capital equipment, or investing in other ventures.
4. The higher the taxes, the higher the underemployment and unemployment rates as companies attempt to do more with less.
5. Tax money is wasted because it is money removed from the market to provide services for which people would not willingly pay.
SPENDING
1. Government spending does not spur economic growth. It creates the illusion of economic growth as it pumps either directly taxed dollars, or newly fabricated dollars into the economy.
2. Government expenditures regularly outpace returns, hence more dollars are manufactured, direct taxes are raised, or both.
3. Government projects are simply wealth redistribution programs. The contractor on a highway project is no more a creator of wealth than the welfare recipient.
4. The idea that a broken window due to vandalism creates economic momentum is sophomoric, because money that would have been spent in the market on another product, must go instead to replace something for which there was no prior requirement for replacement. By that measure, the destruction of war does not improve an economy, it weakens it.
MONETARY POLICY
1. A subjective standard for currency backing cannot defeat inflation. It is the ally of inflation.
2. The purpose of a central fiat bank is to allow for "elasticity" of the money supply. Elasticity equals inflation.
3. As a "need" emerges, the Federal Reserve begins Xeroxing more money, or coding more bits and bytes into bank accounts, buying government bonds to cover government checks.
4. The initial recipients of the new money benefit from enhanced spending power and, if wise, proceed to spend while the value is still reflecting the old dollar to goods ratio.
5. As the freshly photocopied dollars flood into the marketplace there are more dollars chasing fewer goods - the textbook definition of inflation.
6. Even in cases where the "price" of items remains steady, it is still inflation; the market is simply capable of outrunning (typically over short distances) the proliferation of fiat currency.
IN THE END
The solution isn't a "Fair" tax, regardless of its aim and rate. The solution is the eradication of government spending, thus eliminating the "need" for income or profit taxes, and stopping the Federal Reserve and its Parker Bros. operation.
I know it's hard to believe (for neo-cons of both left and right) but there was a time before George W. Bush. There was a time before the insanity of forsaking liberty for security (and losing both, ultimately), of the the Patriot Act (which nobody in Congress read prior to its passage), and of nonstop accusations of "Islamofascism this" and "Islamofascism that."
Let's turn back the clock to a simpler time, when rock and roll ruled, Elvis was still a hip-swiveling heartthrob, and Dwight Eisenhower was the man with power.
Visit sunny Iran where a certain democratically elected Prime Minister named Mosaddeq was an ally of the United States. He regularly voted with the U.S. in UN resolutions, promoted peace and democracy in his own country... and then, out of the blue, angered both the US and Great Britain.
His villainy? Attempting to nationalize the oil fields, revoking them from the control of BP (British Petroleum).
In fear of cheap oil being threatened as America was quickly becoming the nation on wheels, as well as terror over the collapse of Bretton Woods if the US economy was forced to cope with an unforeseen spike in the price of commodities, Ike informed the Dulles brothers at CIA that it was time to deal with the problem in Iran.
Mosaddeq was run out of the country by a CIA paid and staged military coup that restored the Shah. For the next 25 years the U.S. and Iran's restored dictatorship had close ties.
When the Iranians finally threw off the shackles of the tyranny of the shah, they made no mystery of their hatred for the U.S. All this came courtesy of our placing them under a power mad dictatorship for the sake of cheap oil (which ultimately would have been restored as the Iranians found that nationalized industrial production creates less, and not more wealth).
In 1979 the Iranians attacked the U.S. Embassy and the response of Americans was, "Why us? Why do the bad men hate us?" In truth, they don't really hate "us," they hate "U.S." and its paternalistic notion that it must meddle and interfere in the remotest reaches of Ruritania, in spite of the fact that had it not meddled in the first place, there would be little or no turmoil affecting America today.
The reason many in the middle east are angry with the United States is that as a democratic "collective government" there comes as a byproduct "collective blame" for the actions of the leadership. Therefore, "We the People," if we are to be the alleged rulers of our own fates, become the face of the government.
This is deeply ironic considering the fact that many of the most negative dealings and workings of the last century have gone on behind closed doors to stem the tides of communism, drugs, poverty, and now Islamofascism, for the sake of "defense."
Looking back in history, everything the United States government has gone to war against has resulted in more of it. In 1947 there was very little communism in the world and within two decades it had spread. Don't let anyone fool you, either: communism killed itself because it isn't an economically viable system.
Prior to the war on drugs the volume of drug use and proliferation was low. Today the numbers are staggering as our prisons are filled with non-violent criminals while the dealer and merchants roam free.
When the government declared war on poverty, poverty increased. The great society failed, but people rarely discuss it. We're still carrying the baggage for its failures in Medicare and socialized medicine waits just beyond the next election.
In light of all this, let's now look at the war on terror. Are Americans safer? Do they feel safer? The borders are still wide open. The people are now the ones under scrutiny by the government, because anybody could be a terrorist. Inform on your neighbors, turn in your parents. It sounds more like life under Stalin or Mussolini than Jefferson or Jackson.
Ultimately, however, if you want to know whether a country is free or repressed look at which direction its guns are pointed.
My friends, the guns are pointed at us.
What is the nature of a free market? At what point does an economy go from free to planned? What are the benefits and costs of each? It is my understanding that a free market economy is the only economy capable of fostering growth and cultivating the broadest spectrum of wealth to all people while raising living standards universally.
An evil doppelganger often confused with free market economies is mercantilism, a genuine planned system in free market clothes that provides benefits to those with political and government connection and authority. Kings, bureaucrats and those who hold their favor translate national pride and jingoism into a feast upon the consumers of their realms through protective tariffs, cost of entry prohibitions via registrations and licensing, and wealth redistribution via unearned subsidies given to poorly managed businesses incapable of competing on their own.
Examples of these corrupt mercantilist programs are the wheat boards of Australia and Canada. Canadian wheat prices, set by the wheat board, are artificially high under the current government monopoly (Going with the grain, 2007). In recent months the Australian Prime Minister stripped the wheat board of its power after unveiling a bribery scandal (Going with the grain, 2007).
The argument by many is that free markets breed the ills of mercantilism because the businesses corrupt the honorable statesmen. They argue that tighter governmental controls and regulations, ultimately socialization, would cure this unseemly and unethical social disease. These same individuals discuss the social inequality inherent within a free market society, demanding a solution from the free market proponents.
One example often cited is the island nation of Cuba. Fidel Castro’s “workers’ paradise” is the gleaming emblem of modern utopia for socialists and Marxists. Cuba, they say, has a statistically lower infant mortality rate and higher literacy rate than Canada or the United States (Benson, 2006). What isn’t mentioned is that, according to the Miami Herald, Cuba also has a higher incidence of abortion than either (Dorschner, 2007) possibly contributing to fewer unhealthy or unwanted births. Also absent from the discussion is the fact that the only literature available to those “literate” masses is state sponsored and approved reading material, so they are far from “educated.” Benson states elsewhere that Cuba has a low patient-to-doctor ratio and “no homelessness” (2006). Typical of his ilk he ignores the fact that low patient-to-doctor ratios do not mean greater health. Neglected from the conversation as well is the fact that there are no homeowners in Cuba as all property is in the possession of the state.
The common pitfall unseen by advocates of socialist or planned economies is the redistribution of earnings. If, by the sweat of his brow, a person earns more than is subjectively deemed “fair” the state relieves him of that burden in order to provide for those incapable and often unwilling to support themselves. With this being the result of continued labor, the will to work diminishes and can even vanish if the burden of carrying the weight of the world grows too difficult.
However, even the above deconstruction avoids the heart of the question: what is the value of labor and to whom does it belong? If A offers to exchange time spent at labor for B’s land, meat or gold is A entitled to B’s later profit from that labor? By that same token, is B then entitled to A’s later profit from his investment or sale of that land, meat or gold? Obviously not in the latter, so why should it be in the former? Is C, then, who was not party to the agreement, entitled to A or B’s profits? To ask the question is to answer it. So it is with taxation; who, other than some “divine” power would have the capacity to claim either’s income prior laying a finger upon those earnings?
The free market is not a perfect system. The difference between the free market and a planned economy is that the successful participants in the free market system have no illusions of utopia where scarcity is a thing of the past and humanity’s naturally competitive tendencies, apparent from the first nursery visit, vanish like sweet Coca-Cola carbonation. Instead, the proponent of a free market advances the cause that through thoughtful work and the employment of one’s mental as well as physical strength, an individual can rise above the level of simple subsistence thanks to shedding the shackles of state and societal subservience.
Many today, even in libertarian circles, argue in favor of the "Fair" tax recently proposed by Congress. While a portion might say that the IRS is unfair and unjust in its function, those who argue in favor of this new tax miss a greater point: Taxes are never "fair;" they redistribute wealth from producers without their consent to non-producers.
If you disagree with the assessment that all tax recipients are non-producers, think about something:
The greatest idea since ice cream, pre-sliced bread and Chinese takeout actually came well before any of those three. The freedom of the consumer (emptor, in the original Latin) to choose, opened doors long thought to be walls of solid stone. Goods never before dreamed became as commonly available as bread and water.
As a matter of fact, as time passed, the consumer almost became king (rex in the original Latin). Power transferred into the buyers' hands as governments were relegated to the tiny fenced-in territories, specified by wise men upon bygone and decaying pieces of parchment (compacts and constitutions in their original contexts).
Having tasted some freedom to choose where and how they would live, a concept largely unimagined until the 17th century, men flourished, invented, thrived and moved well beyond the level of mere subsistence and servitude.
Those with the ambition to rule, however, do not share their power, and the peace was short lived. Tyrants, a breed once believed dead, quietly waited and regrouped in shadows as free men breathed sweet air.
These tyrannical men had learned much. The sovereign was no longer respected. Men did not fear the hand of God against them if they disobeyed a king. So, instead of a single focal point for the beam of their tyranny, these clever men devised a prism, breaking the power across a spectrum of the politically motivated. They invented collective power, and by happy accident, collective blame.
No longer shall it be that taxes are given to an evil and "greedy" king; they go instead to "serve the public good," the Union. If the parliament writes an unjust law and the judiciary upholds it there is no recourse because "the people have spoken." A slim majority of a tiny elite group of men can now and forevermore rule the whole, and in the United States of America, 275 men now rule over 300 million.
Some argue that the number should be distributed more evenly through direct democracy. They suggest that perhaps it would be better if 150 million, plus one, ruled over 300 million. What strikes this writer as odd is that few suggest a true democracy of 300 million ruling over 300 million, or better stated, one ruling over one.
Why not fully enthrone the consumer as the ruler of his own existence? What is there to fear? Naughty men and knaves abound presently. Their number can pick a pocket through taxation, enslave through military and civil conscription, and imprison men for acts committed against no other man save the illusory "society."
Where is the enraged populace, tired of giving any portion of their earnings to unjust rulers? Why are there no mobs in the street when police enter an innocent man's home and kill him because they have mistaken his address for another? If lawyers and politicians are believed corrupt, then why is it that when they become Presidents, Justices, Congressmen and Senators that they transform into men of virtue?
The purpose of this website is to ask and answer those questions in detail.
As founder of this repository of thought and discourse on the value of liberty, I am no man of great education. I have no power or authority. I own no land. My only aim is to share my love of freedom and free people.
--M.A. Hargett,
Founder, EmptorRex.com
