Mises Institute: Molinari Explains the Difference between Monarchy and Popular Government

Mises Institute senior editor Ryan McMaken writes about Gustave de Molinari’s take on differences between monarchy and popular government. McMaken mentions how the discussion of monarchy has risen recently in the UK after the passing of Queen Elizabeth II, but I’ve known even some American who bemoaned the loss of the monarchy from the US revolution.

With the impending burial of the United Kingdom’s Queen Elizabeth, republicans from London to Sydney have ramped up their efforts to end the British monarchy. The resulting war of words between monarchists and their opponents has highlighted the sheer diversity of opinions over the desirability of monarchy. Indeed, it would be impossible to enumerate all the different criteria on which different groups and individuals judge monarchy as an institution. However, for those of us who favor the ideology known as laissez-faire liberalism—also known as “classical” liberalism or libertarianism—a fundamental question we must ask ourselves in judging monarchies is whether or not they are useful in limiting state power.

This is not a new question and fortunately the question has already been addressed by the nineteenth-century Belgian-born French liberal Gustave de Molinari. Molinari is known today as an early proponent of truly radical laissez-faire, all the way to privatizing the military functions of states.

He favored neither monarchy nor republicanism on principle, and thus was willing to entertain any regime type so long as it could be used to limit the exercise of state power. In exploring this idea, Molinari did note that in cases where a monarchy is genuinely at odds with popular sentiment, the resulting “opposition of interests” can work as a brake on the expansion of state powers. Moreover, he suggested monarchs are also potentially more inclined than elected officials to engage in long-term thinking when it comes to the stewardship of a polity’s resources. These benefits are not due to any additional virtue or self-restraint on the part of monarchs, but are simply by-products of the public recognition that the relationship between ruler and ruled is fundamentally exploitative. 

Molinari on “the Old System”

For Molinari, a chief benefit of monarchy was that monarchs are likely to take a long-term view of the viability of the government institutions under their control. In his 1899 book The Society of Tomorrow, Molinari explains:

Under the old system the political establishment, or the State, was the perpetual property of that association of strong men who had founded, or conquered, it. The members of this association, from the head downwards, succeeded by hereditary prescription to that part of the common territory which had fallen to their share at the original partition, and to the exercise of those functions which were attached to their several holdings. Sentiments of family and property, the strongest incentives known to the human race, combined to influence their action. They desired to leave to their descendants a heritage which should be neither less in extent nor inferior in condition to that which they had received from their fathers, and to maintain this ideal the power and resources of the State must be increased, or at least maintained in all their integrity. 

According to Molinari, this way of thinking imposed a sort of fiscal conservatism on monarchs who feared that imprudent extension of state prerogatives and responsibilities would imperil the economic soundness of his regime. Specifically, policies that brought about the economic ruin of the general population would also spell the ruin of the monarchy itself. Molinari writes:

There was also a fiscal limit to the imposts which they exacted from their subjects, any overstepping of which involved personal loss, often personal danger. If they abused their sovereign power as possessors, whether by exhausting the taxable potentiality of the population or by squandering the product of an impost which had become excessive, their State fell into poverty and decay, and they themselves lay at the mercy of rivals who were only too alert and ready to seize any opportunity of enrichment at the expense of the decadent or defenceless. 

As Molinari notes, economic and financial missteps could lead not only to bankruptcy, but to total destruction of the regime at the hands of rival princes. But foreign rivals were not the only powers that might end a monarch’s dynasty. Should the monarch excessively antagonize “the governed,” they might also apply their own pressure against the monarch through rebellion:

The governed were able to check any abuse of sovereign power on the part of government through the pressure which was exerted on the ruler by his hope of transmitting his power to his children, and by that form of competition which constituted the State of War.

It is important to note that Molinari was no naïve ideologue who entertained flights of fancy about an imagined “good old days” of monarchy. His writings make it clear Molinari was well acquainted with the bloody realities of military conquest, and the means by which monarchs in ages past had consolidated political power. He nonetheless concluded that monarchy theoretically could—by accident—act as a restraint on state power. This was simply by virtue of the fact that in practice those who were subject to the monarch were suspicious of their rulers and did not regard the interests of the people to be synonymous with those of the dynasty. Rather, in this view, “the governed” accepted monarchs simply as a utilitarian instrument of staving off foreign invasion and violent disorder. At the same time, this instrument was to be viewed with substantial alarm whenever it attempted to exert its influence beyond its specific remit. 

The Problem with Popular Government 

Molinari contends that whatever benefit might have been gained from this arrangement between ruler and ruled was abolished by the advent of popular government. 

The embrace of popular government was in conflict with earlier thinking in which coercive government institutions were identified with the monarch’s regime alone, and as such represented a threatening and competing power in opposition to the interests of the governed:

The chief feature which distinguishes the new order and separates it, in theory at least, from that which preceded it, is the transfer of the political establishment, of the State, to the people themselves. With it, naturally, passed that sovereign power which is inseparable from ownership of the domain and the subjects of the State. 

This blurring of the lines between the rulers and ruled meant views changed as to the purposes of the regime and the prerogatives which the regime’s revenues—extracted, of course, from the taxpayers—might be used. Thus, the exercise of regime power was no longer a focus of the public’s suspicion, but now was subject to loud public demands for ever greater spending in accordance with the supposed general will. Molinari explains how this was magnified by competition between political parties which extended their own power by promising the public a share of the revenues:

These associations, or political parties, are actual armies which have been trained to pursue power; their immediate objective is to so increase the number of their adherents as to control an electoral majority. Influential electors are for this purpose promised such or such share in the profits which will follow success, but such promises—generally place or privilege—are redeemable only by a multiplication of “places,” which involves a corresponding increase of national enterprises, whether of war or of peace. It is nothing to a politician that the result is increased charges and heavier drains on the vital energy of the people. The unceasing competition under which they labour, first in their efforts to secure office, and next to maintain their position, compels them to make party interest their sole care, and they are in no position to consider whether this personal and immediate interest is in harmony with the general and permanent good of the nation. 

This state of affairs is also characterized by a shift from long-term interests under the old system—i.e., the interests of a multigenerational dynasty—toward short-term interests. This was due to the fact that “the theorists of the new order” substituted “temporary for permanent attribution of the sovereign power.” 

Ultimately, all this combined to “aggravat[e] the opposition of interests which it was [the elected governments’] pretended purpose to co-ordinate.” These changes also “weakened, if they did not actually destroy, the sole agency which has any real power to restrain governments.”

The Problem with Constitutional Monarchy

Molinari was also careful to show that constitutional monarchy was not to be confused with the older form. Much of Molinari’s career in France had coincided with the constitutional monarchy of Louis Philippe who oversaw substantial growth in the powers of the French state. The experience no doubt also helped solidify Molinari’s recognition of the fact that constitutional monarchies are functionally indistinguishable from constitutional republics. The constitutional monarch, rather, supported the popular elements of the regime be offering additional support for the elected ministers. Molinari explains:

In a constitutional monarchy the chief office in the State remained subject to hereditary transmission, but its occupant was declared irresponsible and his action was limited to the sole function of nominating, as responsible minister, the man chosen by the majority of the national representatives. 

In other words, the constitutional monarch is essentially a mere servant of the popular regime, and as such offers no true counterbalance to the alleged national will. 

What Type of Monarchy Actually Restrains the State?

For Molinari, then, monarchy is only useful when it is seen as remote from the will of the people, and thoroughly distinct from the nonstate portion of the polity the liberals called “society.” Under these conditions, society—from which the monarch extracts resources—is inclined to jealously guard its own liberties and prerogatives in the face of monarchical power. 

Molinari, however, no doubt understood that the possibility of encountering this sort of relationship between ruler and ruled in the nineteenth century was remote at best. Yet, by describing monarchical regimes in these terms, Molinari helps to illustrate the dangers posed by popular government. The ideologies underlying popular ideologies like nationalism, democracy, and republicanism suggested that there was no fundamental difference between state interests and the interests of those from which the state extracts resources. As a trenchant critic of states of all kinds, Molinari knew this was a grave error. With states, there is always a relationship of exploitation between the state and those over whom the state rules. The decline of monarchy has done nothing to abolish this grim reality. 

Mises Wire: To Avoid Civil War, Learn to Tolerate Different Laws in Different States

Ryan McMaken at the Mises Institute discusses limits on federal power in relation to the Supreme Court’s Dobbs decision, overturning Roe v Wade. To Avoid Civil War, Learn to Tolerate Different Laws in Different States

Most commentary on the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization—which overturns Roe v. Wade—has focused on the decision’s effect on the legality of abortion in various states. That’s an important issue. It may be, however, that the Dobbs decision’s effect on political decentralization in the United States is a far bigger deal.

After all, the ruling isn’t so much about abortion as it is about the federal government’s role in abortion. State governments are free to make abortion 100 percent legal within their own borders. Some states have already done so. The court’s ruling limits only the federal government’s prerogatives over abortion law, and this has the potential to lead to many other limitations on federal power as well. In this way, Dobbs is a victory for those seeking to limit federal power. 

The decentralization is all to the good, and there’s nothing novel about it. Historically, state laws in the US have varied broadly on a variety of topics from alcohol consumption to divorce. This was also true of abortion before Roe v. Wade

Moreover, decentralizing abortion policy in this way actually works to defuse national conflict. This is becoming even more important as cultural divides in the United States are clearly accelerating and become more entrenched. Rather than fight with increasing alarm and aggression over who controls the federal government—and thus who imposes the winner’s preferences on everyone else—people in different states will have more choices in choosing whether to live under proabortion or antiabortion regimes. In other words, decentralization forces policymakers to behave as they should in a confederation of states: they must tolerate people doing things differently across state lines.  This will be essential in avoiding disaster, and laissez-faire liberals (i.e., “classical liberals”) have long supported decentralization as a key in avoiding dangerous political conflicts. Ludwig von Mises, for example, supported decentralization because, as he put it, it “is the only feasible and effective way of preventing revolutions and civil … wars.”

The Impulse to Use Federal Power to Force Policy on Everyone

Law has never been uniform across state lines in the United States, although this was not for a lack of trying on the part of the federal government. As the power of the federal government grew throughout the twentieth century, the central government repeatedly sought to make policy uniform and put it under the control of federal courts and regulatory agencies. Prior to Roe v. Wade, abortion was a state and local matter only. Before the drug war, the federal government did not dictate to states what plants they should let their citizens consume. Before the Volstead Act, “dry” states and “wet” states had far different policies on alcohol sales. Some states had lenient divorce laws. Some did not. Some states allowed gambling. Even immigration was once the domain of state government. Although some federal law enforcement agents existed in the nineteenth century, “law and order” was overwhelmingly a state and local matter prior to the rise of agencies like the FBI. 

The cumulative effect of making all these areas the prerogative of federal regulators, agents, and courts has been to convince many Americans that the United States government ought to federalize most areas of daily life. In the modern way of thinking, only less important or trivial matters are to be left up to the state and local governments. For many Americans, they learned to just think that it was abnormal for the state next door to have different gun policies or drug policies than one’s home state. 

Drugs, Alcohol, and Guns

In the past decade, this impulse to intervene in neighboring states has been highlighted by the de factoend of nationwide marijuana prohibition in the United States. Beginning in 2012 with Colorado and Washington State, recreational marijuana use has become essentially legal in nearly two dozen US states. This means a resident of one state can travel to a neighboring state to consume a drug that is illegal in his or her home state. Some state governments have a hard time dealing with this. Politicians in antimarijuana states complained that their citizens had too much access to prohibited substances. Not surprisingly, attorneys general in Nebraska and Oklahoma sued Colorado in federal court in an attempt to force Colorado to reimpose marijuana prohibition on its citizens. Fortunately, these lawsuits—which if successful would have greatly expanded federal power over states—failed. 

Alcohol prohibition grew out of the same desire to force some states’ preferences on all other states. In 1917, only twenty-seven states embraced statewide prohibition. It took a constitutional amendment to impose prohibition on all the rest. 

Moreover, laws governing the purchase and carry of firearms vary broadly from state to state, with “constitutional carry” allowing permitless carry in some states. Some states allow for private gun sales without any background checks. Other states greatly restrict these activities. Naturally, policy makers who oppose the freedom to carry firearms have sought for many decades to impose uniform gun policy nationwide. 

Federal Centralization Run Amok: The Fugitive Slave Acts 

The most notorious case of using the federal government to impose nationwide uniformity is likely the Fugitive Slave Acts (passed in 1793 and 1850). Contrary to the myth that slave owners hated a strong federal government and wanted only local control, slave drivers enthusiastically and repeatedly invoked the federal fugitive slave laws. This was done in order to force Northern governments to cooperate with Southern states in kidnapping runaway slaves and returning them to their “owners.” The Dred Scott decision extended federal protections of slavery even further, and the ruling allowed many slave owners to argue they could even take their slaves into nonslave states and territories, regardless of state and local laws prohibiting slavery.

Many abolitionists refused to acknowledge federal prerogatives and actively opposed federal agents who attempted to enforce federal laws extending slavery beyond the slave states. Some Northern governments explicitly refused to cooperate with the Fugitive Slave Acts. So successful were these efforts to undermine federal law that South Carolina secessionists listed the failure of federal slave laws as a reason for secession in 1860. Slavery advocates were enraged by the idea that their neighbors in other states weren’t being forced to help prop up the slave system. 

After Roe, States Are Quickly Decentralizing American Abortion Law

In all of these cases, the perceived “answer” offered by proponents of legal uniformity was to bring in the federal government to force people in state A to do the bidding of people in state B. Thanks to the overturning of Roe, however, many states are moving in exactly the opposite direction. 

Some states have moved toward prohibiting abortion within their own borders. But proabortion states are also taking some key legal steps toward further decentralizing policy. Policy makers in Massachusetts have moved to protect the state’s citizens from extradition to antiabortion states for abortion-related crimes. The state’s governor also signed an executive order prohibiting the state’s agencies “from assisting another state’s investigation into a person or entity” for abortion-related activities. New York’s governor has signed legislation “that shields [abortion] providers and patients from civil liability” in abortion-related claims. The message here: “Those laws in antiabortion states have no power here.”

Centralization Breeds Conflict

This is the way the system was designed to work. People can choose to live in state A, where abortion is illegal. But should some of those people travel to state B to get an abortion, state B ought to be under no obligation to help state A enforce its laws either inside or outside the state. To demand anything more than this inevitably ends up involving the federal government to impose new obligations on every state. (This strategy of centralizing power should not be confused with trying to directly change laws within those states. It is, of course, a good thing to pressure governments to end unjust laws from within, but such efforts are totally different than calling in the federal government to end abortion by federal fiat.)

As we have seen with abortion, slavery, drugs, and guns, when the feds are involved, every national election ends up being a referendum on whatever issue is deemed so important that the federal government must impose one way of doing things on everyone. This only makes national politics even more nasty.

The end of Roe v. Wade may end up emphasizing the political and cultural divisions in America by forcing many Americans to recognize that the United States is not one place. It is many places. This is not a problem, however, if we relearn that rather than employ federal coercion to “solve” the world’s problems, it’s perhaps better to tolerate others doing things differently in other parts of the world. On the other hand, if Americans can’t shake the idea that the regime must force one way of life on everyone, we can expect national political divides to grow ever more bitter. 

Mises Wire: The State – It’s Oligarchs All the Way Down

It’s turtles all the way down.

There is an old saying about the world resting on top of a giant world tortoise, and a question about what the holds up the tortoise with the answer being “It’s turtles all the way down.” In this article from the Mises Institute, Professor Jason Morgan of Reitaku University in Kashiwa, Japan, writes about government as a hierarchy of oligarchs in The State – It’s Oligarchs All the Way Down.

The standard history of post-Soviet Russia goes something like this. During the Soviet era, there were no real prices because of the Communists’ incessant, blanket meddling in economic activity. Nobody knew what anything was really worth. Not a loaf of bread, not a mine full of uranium. It was all owned and redistributed by the state. When the Soviet Union collapsed, the state of course disappeared. Suddenly, there were no prices, and no owners. It was like a gigantic economic free-for-all. A “Wild West,” as the saying goes. Everything was up for grabs.

In a fashion that Mises readers will immediately understand as textbook Hoppean-Rothbardian, in the midst of this chaos the worst of the worst rose to the top. The hyenas moved in to tear at the Soviet carcass. Ruthless and cunning opportunists took over formerly state-run factories and extraction operations. A kind of national gang culture emerged, and the logic of this gangland mentality worked to sort out the spoils among the strongmen. Some people, those who were particularly well endowed with craftiness, came out ahead, appropriating to themselves billions upon billions of dollars’ worth of oil, gas, and mineral rights, among other commodities. Those nouveau riche from the Russian criminal class we now call “oligarchs.” And the king of all the oligarchs, the baddest dog in the junkyard, turned out to be a former KGB colonel and deputy mayor of St. Petersburg, Vladimir Vladimirovich Putin.

A by-now-infamous 2009 episode in the Russian town of Pikalyovo sums the whole thing up perfectly. Prime Minister Putin (then on theatrical break from his main job of president) showed up to order a factory complex restarted so thousands of breadwinners could get back to work. One of the factories was owned and supplied by Oleg Deripaska, one of Putin’s rival oligarchs. Putin humiliated him at a public meeting, ordering Deripaska to sign an agreement which would reopen the factory complex, thereby showing the world that Putin was in charge of every operation in Russia. When Deripaska had signed the agreement, Putin twisted the knife by making Deripaska return to him his pen. Oligarchs gonna oligarch. Putin is the man, and he will show up in any town to have a shootout with anyone foolish enough to cross him. One big O.K. Corral: this is how most of us in the West understand Russia today.

But let us think a bit more carefully, going back to our Hoppe and Rothbard for help. What is a state? A state is a gang of criminals. A state is organized crime on a massive scale. A state is oligarchs everywhere. It always is, always has been. Political scientist James C. Scott’s most recent book, Against the Grain (2017), details how the “earliest states” preyed on human endeavor. States extract protection money (euphemistically called “taxes,” sometimes also called “tribute” or “war bonds”) from as many people as the criminals who sit in the state’s central chambers or on the state’s throne can reach.

Russian oligarchs post–Soviet era are hardly unique. States are just this, just as we see in the relationship between Putin and the beta oligarchs. The only thing shocking about the Russian case is that it is more transparently corrupt than usual. Most states clothe their theft behind anthems and flags and tales of heroic deeds. The Russian Federation lost its politico-mythic backing when it rose out of the ashes of the USSR. But it is trying to get it back. Stalin has been rehabilitated in Russia as a great man. Putin’s invasion of Ukraine will one day be remembered as the glorious sacrifice of the brave for the motherland. All states are gravity fields for propaganda and fake news. Give Russia time, and she will look just like all the other states again. You won’t be able to see through the shop windows the smash-and-grab going on inside. Everything will look grand and state-like. The Russian state will normalize, and nobody will call its elite “oligarchs” anymore.

Thus, statists have a natural incentive to legitimate one another’s plundering schemes. Presidents and prime ministers and kings drink to one another’s health at sumptuous galas paid for with private property taken from all the rest of us (who never get invitations to the ball). I wouldn’t be surprised to find crowns and ermine capes coming back in fashion among state leaders soon. Statists think they’re gods, and they act like they own everyone else’s money. Not just Russia, not at all.

Indeed, this Hoppean-Rothbardian insight, that states are basically groups of oligarchs who give themselves titles and medals, can be expanded far beyond the Russian example. For if the current crop of Russian oligarchs are just standard statists, then the narrative about the collapse of the Soviet Union must also be called into question. It wasn’t that the Soviet Union collapsed, in this sense. It was that one form of oligarchy gave way to another, with a messy period of transition in between. The Soviet Union was “Communist,” but communism was never about the equal distribution of wealth or the alleviation of social problems. As Hoppean-Rothbardians, we must not take statist excuse making at face value. Communism was, and remains, a system for gathering total social and economic control into the hands of a very few. In other words, a cover story for oligarchy. The current Russian oligarchs aren’t doing anything new. Before them there was Stalin, of course, and Brezhnev and Khrushchev and Lenin, and the handful of other divines who took everything from the Russian people and lived in opulent palaces with servants and harems and caviar.

And it isn’t just Russia. What state does not have oligarchs running it? It’s a trick rhetorical question, because, as I’ve been saying, states and oligarchies are the same thing. Communism, democracy—it’s all from the same barrel. Unjust enrichment comes in many different flavors. But the main ingredient is always taxation and consolidation of ownership into the hands of the elite. The exclusion of the hoi polloi from the fruits of their expropriated labor is what makes the state the state. There are grand halls and massive monuments in the state’s capitals, marble utterances of the state’s political theology scattered across the land. The state has its own saints and martyrs, its own calendar of holy days. The state is a kind of religious ritual, only the tithe is not optional. And it’s a lot more than 10 percent. That’s what a state is, theft dressed up as solemn duty. People die all the time for the state. Graveyards are filled with the state’s dead. The state charges the bereaved for those cemeteries’ upkeep. More taxes. No matter what happens, the state always wins in the end.

So let’s use this knowledge to examine the current situation in Ukraine. A world-class oligarch, who relaxes in a Russian Versailles, is going up against a very minor Ukrainian oligarch to his west. This arriviste oligarch has the ambiguous backing of a massive cabal of big-time oligarchs in Western Europe and the United States. This cabal calls itself the North Atlantic Treaty Organization, and it is a very exclusive club. Members have access to an impressive array of security options, including all the best equipment of some of the biggest militaries in the world. The ostensible leader is the American president, whose son has grown extraordinarily rich by conspiring with the oligarchy in Ukraine, where the North Atlantic Treaty Organization oligarchs are now glaring across the borderlands at the oligarchs in the Kremlin. The Atlantic oligarchy wants to crowd in on the turf of the Russian oligarchy, and a Ukrainian oligarch is caught in the middle. The people who are normally taxed by the oligarchs are also the ones who are being shelled and who are being sent out in tanks to do the shelling. More deaths for the glory of the state—which doesn’t exist, being simply a euphemism for “oligarchy.”

There is more. An upstart oligarchy in Beijing hovers over the tense scene, appearing ready to broker “peace” among the other oligarchs when its own interests will be best served. And the Beijing oligarchy has its own coterie of beta oligarchs, including the tribute bearers in Taiwan, Hong Kong, the Korean Peninsula, and Japan, all of which are filled with political cronies with access to their own income streams ultimately deriving from the paychecks of lowly taxpayers. When the time comes, the taxpayers in those places will also die for the oligarchs. American Marines are on Okinawa waiting their turn to die, too. The oligarchs are going to live, though. They are going to do just fine. War and peace—the oligarchs make money either way. “L’état, c’est moi!” Yes, exactly.

The fact that the United States Department of Justice managed to slap sanctions on Russian “oligarchs” in record time after Putin’s invasion of Ukraine, and is now deploying a special “task force” to appropriate the property of Putin and his network of grifters, tells us everything we need to know about what is going on in Eastern Europe right now. The task force—can you believe the chutzpah?—is aimed at “Russian Elites, Proxies, and Oligarchs.” Abbreviation: REPO. The state taketh, and then the state taketh some more.

Lenin called World War I a war among the capitalists of Europe. He was wrong. It was a war among oligarchs, statists who extract wealth from legitimate economic activity at the barrel of a gun. And when some oligarchs step out of line, they are killed off and the other oligarchs take the spoils. Ditto for Ukraine. It’s not the “West” versus the Russian oligarchs there. It’s the oligarchs versus the oligarchs versus the oligarchs. It’s oligarchs all the way down. Read Hoppe and Rothbard, and don’t fall for the latest round of fake news about the always, everywhere criminal state.

Mises Institute: Decentralization Is a Step toward Self-Determination

Ryan McMaken at the Mises Institute writes that Decentralization Is a Step toward Self-Determination about state pre-emption laws.

For decades now, advocates for freedom and free markets have disagreed over whether or not political decentralization and local self-governance are important principles in themselves.

Most recently, this debate flared up here at mises.org over the issue of state-level preemptions of local government. Specifically, Connor Mortell objected to the State of Florida’s prohibition of local policymaking autonomy on the issue of covid lockdowns and mandates.

In response, a number of readers both in social media and in the comment section here at mises.org insisted that centralization of political power is fine so long as it’s the good guys who are doing the centralization.

We’ve certainly been here before. Indeed, this debate is essentially identical to the one over whether or not the US Supreme Court’s 2005 Kelo decision was a good thing. In that case, both sides were in agreement that eminent domain powers—practiced by any level of government—are a bad thing.

The disagreement was over whether or not states and the federal government ought to be able to prohibit local governments from exercising local eminent domain powers.

Lew Rockwell, building on Murray Rothbard’s decentralist views, took the position that eminent domain is bad (of course), but faraway governments ought not be in the business of meddling in local affairs to prevent it.

In an article titled “What We Mean by Decentralization” Rockwell writes:

The Kelo decision, in which the Supreme Court refused to intervene in the case of a local government taking of private property, touched off a huge debate among libertarians on the question of decentralization. The most common perspective was that the decision was a disaster because it gave permission to local governments to steal land. Libertarians are against stealing land, and so therefore must oppose the court decision.

And yet stealing isn’t the only thing libertarians are against. We are also opposed to top-down political control over wide geographic regions, even when they are instituted in the name of liberty.

Hence it would be no victory for your liberty if, for example, the Chinese government assumed jurisdiction over your downtown streets in order to liberate them from zoning ordinances. Zoning violates property rights, but imperialism violates the right of a people to govern themselves. The Chinese government lacks both jurisdiction and moral standing to intervene. What goes for the Chinese government goes for any distant government that presumes control over government closer to home.

Rockwell doesn’t mention it, but he’s likely taking a page from Ludwig von Mises here on the matter of “self determination.” For Mises, self-determination was a key element in limiting the power of political regimes and opposing the “princely principle” of political centralization and maximization of a state’s area of control.

Mises and “Self-Determination”

As Mises put it in Nation, State, and Economy, the “doctrine of freedom” offers an alternative—“the principle of the right of self-determination of peoples, which follows necessarily from the principle of the rights of man.”

Mises goes on to clarify that this type of self-determination is also about local control:

To call this right of self-determination the “right of self-determination of nations” is to misunderstand it. It is not the right of self-determination of a delimited national unit, but the right of the inhabitants of every territory to decide on the state to which they wish to belong.

What does this mean in practice? Mises insists on the right of inhabitants to choose their own state. By this he means that localized groups of people with similar cultural and political interests—even down the level of a village—must have the freedom to function independently of the impediments of a larger centralized state. 

Murray Rothbard, not surprisingly, was in agreement with this, and noted the implications of Mises’s position: that self-determination at the local level is a key step in securing self determination not only for small groups, but for individuals themselves.

The reasons for this are numerous, and they’re why most libertarians (i.e., the liberals of the eighteenth and nineteenth centuries like Thomas Jefferson and Benjamin Constant) preferred local government to government by larger, less local regimes. Like his liberal predecessors, Mises understood that larger “national” regimes tend toward abuses committed by large majorities on smaller linguistic, cultural, ideological, and ethnic groups.1

These problems tend to be made less bad by more localization. 

Decentralization of this sort is also important, because it allows individuals greater ability to exercise their freedoms by more easily changing the regime under which they live. Rothbard explains that decentralization

means greater competition between governments of different geographical areas, enabling people of one State to zip across the border to relatively greater freedom more easily; and it exalts the mighty libertarian principle of secession, which we hope to extend on down from the region to the city to the block to the individual.

Rothbard speaks of state boundaries—here meaning the American political units called “states” and not to be confused with the Weberian sovereign state—but of course he also applied the same principle down to local governments:

Pending total privatization, it is clear that our model could be approached, and conflicts minimized, by permitting secessions and local control, down to the micro-neighborhood level, and by developing contractual access rights for enclaves and exclaves. In the U.S., it becomes important, in moving toward such radical decentralization, for libertarians and classical liberals—indeed, for many other minority or dissident groups—to begin to lay the greatest stress on the forgotten Tenth Amendment and to try to decompose the role and power of the centralizing Supreme Court. Rather than trying to get people of one’s own ideological persuasion on the Supreme Court, its power should be rolled back and minimized as far as possible, and its power decomposed into state, or even local, judicial bodies.

“Uniformity” Is No Virtue

Nonetheless, one recent commenter at mises.org argues local autonomy is unacceptable because travelers ought not have to deal with a patchwork of different legal regimes:

[In Wisconsin] I drive 40 miles to work and 40 back. I pass through at least 8 different towns on the way. If every town had different gun laws, my freedom to protect myself [with legal concealed weapons] would be compromised or curtailed altogether.

The conclusion we are presumably supposed to draw is that some centralized political authority must intervene to ensure uniformity among laws, presumably in a way that protects the rights of residents. Of course, this sort of reasoning takes the naïve view that the central government is likely to implement laws that favor the legality of concealed weapons. Experience suggests this is a rather fanciful notion, and we can see the benefits of local control if we consider the case of a state that takes an unfavorable view toward firearms.

Consider New York State, for example, where the state government heavily restricts the use and ownership of firearms. It is likely that many towns and cities in the northern and western part of the state, however, would prefer to allow more freedom in firearms usage in their jurisdictions. If these local communities were allowed local control,  at least the residents in those communities would have greater freedom with firearms. But as it is, the presence of a strong centralized state government ensures these freedoms are heavily curtailed everywhere within the state. Thus, the overall amount of freedom is greater in a scenario with decentralized political power.

The argument that laws ought to be uniform is equally suspect when dealing with passing across state borders. For example, consider a commuter who must drive from southern Maine to the northern end of the Boston metro area. This is a trip of only about eighty miles, but requires the commuter to travel through three states. Two of these states tend to be permissive on guns—Maine and New Hampshire—but Massachusetts tends to heavily restrict firearms usage and ownership.

If uniformity in law is important, then we must therefore insist that the federal government intervene to ensure that we aren’t inconvenienced by the fact gun laws change every time we cross state lines. 

But, of course, we know how well that would work out. Inviting federal lawmakers to “protect rights” or make gun laws “uniform” would almost certainly result in far more restriction than is currently the state in many states. Unfortunately, uniformity across state lines tends to favor the areas with the most restrictive mandates.

The Problem with Asking Higher Levels of Government to Protect Our Rights

Another objection is that a profreedom position requires support of any regime that lowers government regulations or mandates, regardless of how immense or distant that regime is:

Government at any level, other than at the individual level, is illegitimate … it makes more sense to support any individual action that comes closer to enforcing the NAP [i.e., the nonaggression principle] whether it is the president, governor, or mayor.

This is the logic behind the EU: the national governments are imposing tariffs, so we need the European Commission to ensure “free trade.” Indeed, the EU has long been sold as a profreedom institution, because it supposedly lowered trade barriers erected by more local government units. Of course, we can see where that led. The net effect of the EU has been the exact opposite of the expansion of freedom. Instead, the EU has given the world a giant bureaucracy that limits trade with the non-EU world and imposes countless regulations of its own.

The same logic could also be employed to call in the World Trade Organization to force down Trump’s tariffs. After all, if the US is raising taxes on trade, we need somebody to “enforce the NAP.” Why not strengthen the WTO so it can dictate tax rates to member states? The problem with this should be obvious: calling in some international body like the WTO to better “protect rights” is just asking for trouble. Americans would soon find themselves in a position similar to that of the British under the EU. Would surrendering more local prerogatives to an international group of politicians be a solution to high tariffs? This could potentially work in the short run, but experience has taught us that the potential for lost freedom in the longer term is enormous. 

  • 1. On this, Benjamin Constant writes: “It is clear that different portions of the same people, placed in circumstances, brought up in customs, living in places, which are all dissimilar, cannot be led to absolutely the same manners, usages, practices, and laws, without a coercion which would cost them more than it is worth.”

Mises Institute: The Property-Based Social Order Is Being Destroyed by Central Banks

The Mises Institute has the article The Property-Based Social Order Is Being Destroyed by Central Banks

Readers of the Mises Wire are no doubt familiar with the negative consequences of central banking and the inflationary capacity of fiat currency and how such a system drives malinvestment and leads to boom-bust cycles. Not only does the business cycle lead to the misallocation of resources from their natural ends of the structure of production, but it also drives resources into financialization, rather than the “real” economy. This financialization, which has been taking place since at least the First World War, has served, over time, to structurally undermine the morality of property in the eyes of the general public. As the increased popularity of socialism, at least in rhetorical terms, among the youth indicates this “evaporation” of property may reach a critical mass within the not-too-distant future.

The Social Effects of Financialization

In his book The Present Age, sociologist Robert Nisbet traces the origin of financialization to the First World War and the decision to finance the war via credit, rather than taxation. He argues that the other negative social effects of the war, combined with the flush of cash and credit into the system drastically altered American’s traditional propensity to save and instead to spend. These changed habits led to the “roaring twenties” where instead of acquiring wealth through hard work and thrift and a focus on producing goods and services, Americans turned to financial means of acquiring wealth. 

This began what Nisbet calls the “evaporation of property” where ownership of hard tangible goods has evolved into the “soft” ownership of highly liquid and mobile forms of property such as stocks. This concept of evaporating property originated in the work of Joseph Schumpeter, an economist and contemporary of Mises in Austria (though not a member of the Austrian school) who identified and explained this phenomenon in his classic work Capitalism, Socialism and Democracy.1 Schumpeter criticizes the shareholder mechanism of ownership for separating legal ownership from those responsibilities and actions that are traditionally associated with it. He argues that the owners of publicly traded firms are comprised of three groups of people: the salaried executives and managers, the large shareholders, and the small shareholders, and that “no element of those three groups … takes the attitude” that is generally meant by the word property. The employees, he states, often do not identify with the shareholding interests, and the large shareholders, even if they behave how financial theory predicts, are “at one remove from both the functions and attitudes of an owner.” Schumpeter considers small shareholders to be the least tied to ownership, saying that they often care little and if anything are mobilized by others for “their nuisance value.” He goes on to say that in the end, small shareholders end up feeling ill used and “almost regularly drift into an attitude hostile to ‘their’ corporations, to big business in general and, particularly when things look bad, to the capitalist order as such.”

For Schumpeter, the heart of the problem is that “the capitalist process, by substituting a mere parcel of shares for the walls and machines of a factory, takes the life out of the idea of property” and that “this evaporation of what we may term the material substance of property—affects not only the attitude of the holders but also that of the workmen and the public in general. Dematerialized, defunctionalized and absentee ownership does not impress and call forth the moral allegiance as the vital form of property did.”

Easy Money vs. Private Property 

Nisbet laments that this highly liquid form of property leads to economic perversity where “more and more capitalism tends to ‘exalt the monetary unit’ over the type of property that theoretically alone gives the monetary unit its value.” Nisbet takes especial issue with slick operators who seem to believe “that by raiding a decently run corporation, artificially jacking up its price on the stock market through the use of high-yield credit, including junk bonds, they are in consequence improving the management of the corporation.” 

The sad fate of the once iconic Toys “R” Us is one such example. When Toys “R” Us filed for bankruptcy several years ago, some thirty thousand people lost their jobs. The surface argument is that the brick-and-mortar retailer simply couldn’t keep up with the new online world and was losing out to the Amazons and the Walmarts. However, when examined closer, the case can be made that the company’s doom was sealed when it was purchased by a consortium of private equity firms in the mid-2000s. Thanks to the abundance of credit facilitated by the Fed’s loose monetary policy the firms actually only fronted 20 percent of the buyout, with the rest being borrowed. After the acquisition, the firms then saddled Toys “R” Us with the debt used to purchase them in the first place, adding over $5 billion in debt to the $1.86 billion the company held before the deal. By 2007, 97 percent of the company’s operating profits were being consumed to pay interest expenses. The firms also charged the company hundreds of millions of dollars in fees and The Atlantic reports that “according to one estimate, the money KKR and Bain partners earned from those fees more than covered the firms’ losses in the deal.” Who knows how Toys “R” Us would have fared without being saddled with $5 billion in debt. Perhaps it would have had the flexibility to innovate, or perhaps it would have failed, but in the end it didn’t have a chance to find out.

Were Nisbet alive, he would not have been surprised by such an event in the slightest. Loose money leads to loose morals and loose people who see no problem in such a scheme that demonstrates very little actual economic value being produced. 

Rather than exercising the responsibilities typically associated with property and ownership, these private equity firms treated Toys “R” Us worse than a rented mule and in doing so created loads of anticapitalist sentiment. One can’t help but think of Bruce Springstein’s 2012 song “Death to My Hometown,” in which he attacks such firms by lamenting that even though no “shells ripped the evening sky” or “blood soaked the ground” and “no armies stormed the shores for which we’d die” “marauders raided in the night” and “just as sure as the hand of God they brought death to my hometown.” Springstein concludes with a warning to “be ready for when they come for they’ll be returning sure as the rising sun.”

A people that comes to view the capitalist class as rampaging Huns in suits who “ate the flesh of everything they’ve found” is not a people that will be living under a market system for much longer. And when one looks at what happened to Toys “R” Us and similar firms, how the stock market was booming in the midst of the covid lockdown disaster, or how, as Ryan McMaken recently pointed out, GDP is expected to go through the roof even though the true unemployment rate is dismal, it is not hard to understand why people have such hostile opinions of capitalism.

Similarly, all this financialization has made it much more difficult for people to preserve their wealth against inflation and to save and invest in the traditional manners. Instead, people are driven into the stock market. As Jörg Guido Hülsmann notes in his book The Ethics of Money Production, people “must invest their money into the financial markets, lest its purchasing power evaporate under their noses.” He goes on to note that while such a thing may be good for financial brokers, it is not good for the average citizen who is incentivized into debt due to chronic inflation, pushed into a state of financial dependency, and now at the mercy of the financial winds.

The GameStop saga is example of this idea in action. Flush with cash from government “stimulus,” numerous average joes have taken up day trading and pumped the price of a stock into the stratosphere that is in no way connected to reality. The first wave of “meme investors” soon learned that the financial system is not exactly friendly to their method, as the actions of brokers like Robinhood quickly demonstrated. In the long run the reality is that most day traders will lose money and when that happens there is little doubt that their small foray into “financial capitalism” will leave these small investors with the attitude that Schumpeter predicted: hostile to the company they supposedly own and to the capitalist system in general. 

Misplaced Hostility Toward the Marketplace

Hostility towards capitalism seems to be growing everywhere one looks. It is not surprising that envy fueled leftists despise capitalism, but on the political right more and more populists have taken to bashing capitalism and the “market fundamentalists” who are supposedly running the GOP. Yet, populist conservatives have so far seemingly failed to notice the way in which the Federal Reserve and our inflationary fiat currency have contributed to all of the social problems and ills that they are greatly concerned with. Perhaps such populists can be given a pass for not being familiar with Hülsmann’s work on the cultural consequences of fiat money, but what is perplexing is that midcentury authors who conservative populists are more familiar with, such as Robert Nisbet and Wilhelm Röpke, wrote at length about the scourge of inflation and its negative social consequences and yet the issue still raises nary a peep out of the likes of Tucker Carlson and Sohrab Ahmari.

While such a situation is distressing, those within the Austrian tradition should see an opportunity here to harness the populist energies that seem to be growing larger by the day and to reveal to the aggrieved masses that the true target of their wrath should be the state and central banking system. Had Bruce Springsteen had access to a sound economic education he would have been singing at Ron Paul rallies, rather than at those of Bernie Sanders. The task of ensuring the next Springstein is lambasting the Federal Reserve and not capitalism itself begins now.

1.All quotes from Joseph A. Schumpeter, Capitalism, Socialism and Democracy, 3d ed. (New York: Harper Perennial Modern Thought, 2008), pp. 141–42.

Mises Institute: Gun Laws and Decentralization: Lessons from “Constitutional Carry”

José Niño at the Mises Institute writes Gun Laws and Decentralization: Lessons from “Constitutional Carry”.

Few political movements can boast of success like the firearms movement in the United States. Often overlooked is how before the 1980s there was no concept of licensed, let alone unlicensed, concealed carry in the overwhelming majority of the country. The sole exception was Vermont, which through an idiosyncratic state supreme court decision in 1903 has had unlicensed carry for over a century. “Vermont Carry,” the concept of unlicensed concealed carry, would be the Holy Grail for Second Amendment advocates for up to a century.

In the intervening decades, in large part motivated by notable transgressions on the right to bear arms during the 1930s and 1960s, activists took to using gradualist methods in their efforts to relax gun control laws at the state level. Starting in the late 1970s, Georgia kicked off the modern licensed carry movement after it joined states like Connecticut, New Hampshire, and Washington in enacting some form of licensed concealed carry. Soon thereafter, states began adopting licensed carry one by one, and by the twenty-first century, most of the nation had some form of licensed concealed carry. 

At first, the idea of unlicensed carry seemed like a quixotic prospect only odd states like Vermont were capable of adopting. However, the dam broke after Alaska ended America’s century-long unlicensed carry dry spell by signing its own constitutional carry bill into law in 2003. An even more pronounced momentum shift took place in 2010 after then Arizona governor Jan Brewer signed SB 1108, Arizona’s constitutional carry bill. From there, a wave of states have followed suit in making constitutional carry the law of the land.

Constitutional carry’s success is not a coincidence. It reflects a concerted effort by many disaffected gun owners who realized the federal government was not responding to their demands to scale back infringements on gun ownership. Rather than engage in the pie-in-the-sky federal campaigns that the average conservative organization would generally be involved in throughout the post–World War II era, many gun owners shifted their political sights toward state legislatures.

Indeed, there is something to be said about Barack Obama’s occupancy of the White House serving as a lightning rod for gun owners at the state level. At the time, many gun owners were thoroughly spooked by Obama’s campaign promises to enact gun control legislation. Their fears became more pronounced when the Obama administration pushed for a far-reaching gun control package in the wake of the 2012 Sandy Hook massacre.

Although Obama’s gun control desires never came to pass, gun owners became sufficiently motivated to not only take action against his gun control attempt at the federal level but to shift their attention toward the state level. Several creative Second Amendment organizations picked up on the grassroots dissatisfaction of the Tea Party and leveraged that energy for state-level projects such as constitutional carry. By the time Obama left office in 2016, there were eleven states with constitutional carry as law.

Constitutional carry’s momentum maintained its course in the Trump era. Five states—New Hampshire, North Dakota, South Dakota, Oklahoma, and Kentucky—passed constitutional carry legislation of their own when Donald Trump was in office, thus showing signs of a movement that has a life of its own and a willingness to press forward regardless of the partisan winds blowing in DC.

Presently, there are eighteen constitutional carry states, following Utah and Montana deciding to quickly pass said legislation in the opening weeks of the Biden administration. Furthermore, states such as Alabama, Louisiana, Tennessee, and Texas are seeking to jump on the legislative bandwagon. From the looks of it, the concept of lawful individuals carrying firearms without a license is not going away any time soon.

Undoubtedly, the level of polarization present in the US can be leveraged in a positive direction. Large swathes of red states are filled with “deplorables” who have no love lost for both Democrats and Republicans in DC. One way they could poke DC in the eye is by passing legislation such as constitutional carry.

Contrary to what the promoters of traditional politics say, political confrontation can yield positive results. When states start taking matters into their own hands and buck prevailing trends emanating from DC, Americans can carve out their own “freedom domains,” if you will, where they can enjoy particular freedoms other states and the federal government would generally deprive them of.

In turn, when enough states adopt niche policies like constitutional carry, lagging states and the federal government alike will get the message that they are out of touch with the policy wants of large portions of America. At the same time, America is witnessing an ever-expanding Second Amendment sanctuary movement, with similar actors using local means to push back against gun control. Dissatisfaction is high and people are beginning to express it in a concrete, political form. As they say, the squeaky wheel gets the grease, and sufficient pressure from below could be the wake-up call federal lawmakers need in order to act on their constituents’ demands.

Pulling a “Mr. Smith Goes to Washington” likely won’t bring about any meaningful political change in a gridlocked Congress. Perhaps real political reforms will be the product of frequent visits to one’s respective state legislatures instead. Getting acquainted with state politics—something many politically active Americans have neglected to do in our federally obsessed political culture—is the first step in casting aside the ossified strategies of yesteryear.

Meaningful reforms will not come from DC but rather state legislatures and lower levels of government that are more prone to yield to grassroots pressure.

Mises Institute: Government’s Money Monopoly and the “Great Reset”

From the Mises Institute, Government’s Money Monopoly and the “Great Reset”

The unbacked paper money system is an economically and socially destructive system—with far-reaching and harmful economic and social consequences beyond what most people would imagine. Fiat money is inflationary; it benefits some at the expense of many others; it causes boom-and-bust cycles; it corrupts the morality of society; it will ultimately end in a major bust; and it leads to overindebtedness.

The Institute of International Finance (IIF) estimates that global debt climbed to $277 trillion by the end of 2020, amounting to a staggering 365 percent of world gross domestic product (GDP). As the graph below shows, global debt versus GDP has risen in recent years, suggesting that the increase in debt has outpaced the rise in GDP. This buildup of excessive debt, the path to overindebtedness, results from an unbacked paper money system.

In close cooperation with commercial banks, the central banks artificially lower the market interest rate through credit expansion, which increases the money supply. Consumption increases and savings decline, while capital expenditures go up. Taken together, this means that the economy is living beyond its means. While the injection of new credit and money at artificially low interest rates causes an initial surge in economic activity, this boom will and must be followed by bust.

Learning from the Austrian Business Cycle Theory

The Austrian business cycle theory (ABCT) points to this with rigorous logic. The reason is that once the injection of new credit and money has run its course—after wages are raised, cost of capital lowered, etc.—market interest rates return to their original levels, that is the levels which prevailed before the issuance of credit and money out of thin air. Once market interest rates start to rise, the boom slackens and collapses.

Higher market interest rates prompt people to reduce consumption and increase savings from current income. In addition, new investment projects that are considered profitable in times of artificially suppressed market interest rates turn out to be unprofitable. Firms start to rein in spending, cut jobs, liquidate assets. Painful as it is for most people, this is the process through which the economy cleanses itself of overconsumption and malinvestment caused by the boom.

As a rule of thumb, the higher the debt burden on an economy, the higher its debt in relation to income, the more problematic it is when a recession hits. Generally speaking, a decrease in output worsens borrowers’ ability to service their debt. However, once debt has reached relatively high levels, a recession can cause debtors to default on their payment obligations. In fact, it can cause the debt pyramid to collapse, sending the economy into depression.

Critics of the ABCT may argue that the unbacked paper money system, despite its sky-high debt, did not collapse in the 2008–09 crisis, nor did it collapse in the politically dictated lockdown crisis of 2020–21. Doesn’t that suggest the ABCT got it wrong? The answer is no; the important point here is that when applying the ABCT to past or current real events, it is important to take “special conditions” into account appropriately.

Once that is done, it becomes evident that central banks have taken control of market interest rates in recent years. Market interest rates are no longer “freely” determined in the market, but effectively dictated by monetary authorities. Indeed, central banks can—and do—prevent market interest rates from rising, which means that they are actually disrupting the corrective force that could turn the boom into bust, keeping the boom going for longer.

This policy has consequences that should also be taken into account. When central banks successfully intervene in the credit market and fend off the bust, the misallocation of scarce resources continues and gets even worse—adding to the scale and scope of the inevitable crisis in the future. What more, the monetary policy of preventing a bust by any means allows anticapitalist forces to destroy what little is left of the free market system. And that is exactly what is happening around the world.

An Uncomfortable Truth: The State Feeds on Crises

The politically dictated lockdown crisis has slowed down economic activity in many countries around the world and in extreme cases brought it to a standstill. Recession, business failures, and mass unemployment are the results. In the meantime, the governments—which have caused the disaster in the first place—have “come to the rescue”: they are letting their central banks put ever-greater amounts of money in the bank accounts of consumers and producers.

In relying on this money flow, a growing number of people and business models become dependent on government handouts. It does not take much to realize that this whole process is clearly playing into the hands of those political quarters that want to grow the state even bigger, push back the remaining capitalist elements in the economic system, and establish a collectivist-socialist regime—that it operates the switches to a truly “socialist transformation.”

When consumers and businesspeople receive generous financial support from the government, resistance against a policy that destroys many firms and jobs is greatly reduced—compared to a situation where those who suffer from such government policies receive no compensation. In other words, by running the electronic printing presses, state power is greatly increased at the expense of civil liberties and freedom.

History shows that emergencies and crises strengthen the power of the state; and also that it is very difficult to ever take power away from the state once it has seized it. And the more powerful the state becomes, the more it will be used by resourceful special interest groups—such as the military-industrial complex, Big Banking, Big Tech—as the economic theory of so-called rent seeking would explain to us.

The Trouble with Oligarchic Democracy

This development is accelerated in democracies, because democracies develop into oligarchies, as the sociologist Robert Michels (1876–1936) argues. Why is that? In representative democracies, political parties are formed. These parties are organizations run by the most determined, power-hungry people. They become the “oligarchic party elite” and are in a position to set their own agendas, regardless of the will of the party base or party voters.

Various oligarchic party elite groups begin to work together, paving the way toward an “oligarchic democracy,” in which the powerful few rule over the many powerless. In other words: Michels argues that the idea of democracy is turned on its head. In fact, in an oligarchic democracy, it becomes possible for the political and corporate “elites” to effectively run the show, enforcing their favored political, economic, and social concept with joint forces.

Against this backdrop, the buzzwords “Great Transformation,” “Great Reset,” and “new world order” seem to be the brainchildren of today’s political and corporate elites, meant to replace what little is left of the free market system and install a so-called command economic system: While the institution of property is maintained in name, it is the central authority, the power elite, that determines what the owners of property may or may not do with their property.

In a command economic system, the oligarchic party elites would effectively dictate what is produced by whom, when, where, and at what cost, and who gets what and when from the production output; and it takes only a fairly small—and logically consistent—step to transform the command economic system into outright socialism—where the oligarchic party elites and their partners would effectively own the means of production. But socialism is a recipe for disaster.

We Must End the State’s Money Monopoly

The productivity of a command economy, let alone full-blown socialism, could not support, feed, clothe, and house a world population of currently around 7.8 billion people. In fact, a command economy or outright socialism would mean the death of millions, if not billions, of people. Ludwig von Mises (1881–1973) pointed this out as early as 1919: Socialism is impossible, it leads to chaos, impoverishment, and total loss of individual freedom.

And yet, collectivist-socialist ideologues and their supporters, politically weaponizing “climate change” and, most recently, the “coronavirus epidemic,” are pushing very hard to abolish the market system (or what little is left of it) altogether to impose a command economic system, or even a socialist regime, on mankind. Although they enjoy support by large numbers of people, that does not mean that socialism is inevitable, as Marxist-socialist thinkers wish to make their audience believe.

Mises understood that peaceful and productive cooperation among men at national and international levels requires private property and unimpeded division of labor, or what it boils down to: the free market system, or capitalism. He also pointed out that society lives and acts only in individuals, and that it is in the interest of every individual to stand up for the defense of the free market system. Mises noted in Socialism (1951):

society…was created by mankind. Whether society shall continue to evolve or whether it shall decay lies—in the sense in which causal determination of all events permits us to speak of freewill—in the hand of man. Whether Society is good or bad may be a matter of individual judgment; but whoever prefers life to death, happiness to suffering, well-being to misery, must accept society. And whoever desires that society should exist and develop must also accept, without limitation or reserve, private ownership in the means of production.

Against this backdrop, it should be clear that the unbacked paper money system is not only a cause of crises, it is also the central instrument for those political forces—namely the oligarchic party elites and their supporters—that want to overthrow the existing economic and social order and install a collectivist-socialist dictatorship. Because without the state being in a position to increase the money supply at will, people would sooner or later feel the true costs of the state’s machinations.

And once people understand the true costs of the politically orchestrated economic transformation to their own lives and the well-being of their families and communities, resistance would certainly ensue that has the potential to put an end to a political system that increasingly erodes individual freedoms and liberties. Ending the state money production monopoly and allowing a free market in money is perhaps the most effective line of defense against world tyranny.

Mises Institute: New Lockdowns and More Regulations Are Disastrous for US Jobs

Economist and fund manager Dr. Daniel Lacalle at the Mises Institute writes New Lockdowns and More Regulations Are Disastrous for US Jobs

United States jobless claims have picked up, since the elections and the second wave of coronavirus have slowed down the economic recovery. Uncertainty about tax increases and changes in labor laws, including an increase in the minimum wage, add to the fear of new lockdowns, as employers see the devastating effects of these lockdowns in European employment.

While the United States has been able to recover fast and reduce unemployment to 6.8 percent, the eurozone jobless rate has risen to 8.3 percent before we consider the large number of furloughed employees who remain idle. The second wave of coronavirus in Europe has seen new government-imposed lockdowns and the impact on the economy is already severe. Estimates for the fourth-quarter gross domestic product assume a double-dip recession and another increase in unemployment.

Misguided lockdowns have created a deep and long-lasting impact on the economy and a dramatic social crisis, proving again that the response to the pandemic should have been similar that of Asian countries, which have successfully preserved health and the economy.

Employers all over the United States fear that a Biden administration will impose lockdowns, following the example of some European countries and thus generating a new decline in the economy and a wave of bankruptcies and job losses. Instead of giving simple and effective protocols for business to endure the crisis, some governments, whose members are completely disconnected from the day-to-day problems of small businesses and employers, resort to the drastic and ineffective measure of lockdowns, because it gives more power to governments and because the large corporations do not feel the impact as much as small enterprises. Governments like the idea of lockdowns, because it gives the impression of taking drastic measures to control the pandemic when, in reality, lockdowns simply destroy the business fabric and have proven to be extremely ineffective at reducing the mortality or hospitalization rates. The concerns about a Biden-enforced nationwide lockdown are not exaggerated. Dr. Michael Osterholm, a coronavirus advisor to Joe Biden, said a nationwide lockdown of four to six weeks would help bring the virus under control in the US and revive the economy. I am sorry to say that experience has shown us that none of those two things will happen. Massive lockdowns did not help European countries control the virus, rather the opposite, and have destroyed the economy with long-lasting implications for jobs, bankruptcies, and wages. Meanwhile, countries that have not implemented lockdowns and have provided simple and effective protocols have achieved better results in health and the economy.

Many citizens in the United States ask themselves if the country will recover its record level of employment and its low unemployment rate of 3.5 percent seen in March 2020, before the pandemic. Even if the United States avoids government-imposed lockdowns, which would delay the job recovery for at least another eighteen months, there is grave concern about the likelihood of more regulation, union control, and higher taxes that will make it more expensive to hire personnel and more burdensome both in terms of hiring as well as reducing payroll.

The United States has been an example of job creation during the growth period but, more importantly, rapid job recovery in a complex crisis like the covid-19 one. Adding rigidity to the labor market and increasing taxes will prove disastrous for small and newly created business, which are the largest job creators in the United States.

It is as simple as this. The United States cannot have the wage growth and low unemployment it deserves by copying the labor market legislation of Greece, Spain, or France, countries with extremely rigid job markets and high union intervention…and historically high unemployment.

The European Union used to have the same unemployment rate as the United States. Massive disincentives, a misguided excess of regulation, and heavy taxes have created a divergence by which unemployment in Europe stands at almost twice the rate as in the United States.

The fallacy of “protecting workers” with high taxes to employers and heavy intervention in the labor market only protects governments. Unemployment is higher, wage growth is weaker, and the flexibility loss means lower opportunities for youth employment. Youth unemployment in the eurozone and European Union is simply unacceptably high even in growth periods, and it is due to the barriers to employment created through aggressive intervention in the job market and government control. Incentives to hire are poor while disincentives to work are high.

If anything has been proven by the past two decades, it is that more government, higher taxes, and union intervention do not protect workers, they perpetuate unemployment and reduce wage growth and opportunities.

Lockdowns added to higher taxes and labor rigidity would likely prove very negative for the United States recovery. You cannot recover if you impose the burdens that some European countries have imposed. Labor market interventionism does not protect workers, it empowers politicians.

Mises Institute: Joe Biden Wants a Huge New Tax on Gun Owners

This article from the Mises Institute discusses the gun control policies from Joe Biden’s Presidential platform, including the buyback program and alternative $200/firearm tax and registration in Joe Biden Wants a Huge New Tax on Gun Owners

Joe Biden’s gun policy platform offers support for almost all conceivable forms of government restrictions on the Second Amendment. This includes bans and restrictions on sales, expansion of registration and background checks, expansion of buyback programs and gun-grabbing statutes, and the closing of all sorts of “loopholes.”1

While we are only at the policy platform stage, where proposals are grandiose and imprecise, Biden’s legislative agenda will clearly be anti–Second Amendment and not a program to reduce crime and violence. First, he wants to stop the “gun violence epidemic” with restriction on rifles when it is handgun shootings, not rifles, that are a problem and one that is mostly confined to big cities controlled by leftists. Second, he wants to go after “assault weapons” and “weapons of war” when he should know that rifles like the AK and AR “sporters” are not military-grade fully automatic weapons. Third, he would like to hold gun manufacturers civilly liable for criminal acts committed with guns, a move which would shut down the industry, the true goal.

In support of the government’s buyback program, i.e., the carrot, Biden has added a gun tax for anyone who wishes to keep their rifles and high-capacity magazines. If you want to avoid the buyback and keep your guns and high-capacity (greater than ten rounds) magazine, you would have to register both under the National Firearms Act, which triggers a $200 tax for each rifle and magazine—the stick. The stick behind the stick is a penalty of up to ten years in federal prison and a $10,000 fine. Registration involves filling out a thirteen-page registration form and providing fingerprints and a photograph of yourself.This is certainly bad enough for gun owners and Americans in general, but if history is a teacher the end results could be much worse, potentially catastrophic.

Joe Biden was sold to the American voter in 2020 as a moderate of the Democrat Party.  He was not a conservative, but neither was he an AOC progressive or a Sanders socialist. His image as a white moderate male was also used to help sell the voters on Barack Obama.

There was also a time when Biden was actually a pragmatist on Second Amendment rights. As the ranking member on the Judiciary Committee, he helped pass the 1986 Firearm Owners Protection Act, which overturned decades of anti-gun court rulings and regulations to restore most gun owner rights and reexpanded commerce by eliminating restrictions on how and where guns could be sold. The legislation’s passage helped lay the foundation of the modern gun rights movement. According to Biden the pragmatist circa 1985:

During my 12.5 years as a Member of this body, I have never believed that additional gun control or Federal registration of guns would reduce crime. I am convinced that a criminal who wants a firearm can get one through illegal, nontraceable, unregistered sources, with or without gun control. In my opinion a national register or ban of handguns would be impossible to carry out and may not result in reductions in crime.2

Despite his recognition of the futility of using gun control to reduce crime and gun violence, the “pragmatist” turned to the dark side when it became politically expedient to do so. In 1993 he helped pass the Brady Handgun Violence Prevention Act, which required background checks through a new national checking system (the National Instant Criminal Background Check System [NICS]). The next year he helped obtain a ten-year ban on assault weapons and high-capacity magazine sales.

As vice president, he was President Obama’s point man in developing legislative proposals and executive orders to shore up gun control at the national level, and yet even that administration admitted that gun control is almost a futile endeavor and that their efforts amounted to little more than feel-good measures.

While no law or set of laws will end gun violence, it is clear that the American people want action. If even one child’s life can be saved, then we need to act. Now is the time to do the right thing for our children, our communities, and the country we love.3

Indeed, with more than a century of experience we know that gun control does not reduce crime but rather increases it, as John Lott has demonstrated. According to Lott’s evidence and that of independent researchers, no form of gun control has positive effects and most forms have negative effects on crime, murder, and mass shootings. Indeed, the most noteworthy policies that improve these problems are the elimination of gun-free zones and the expansion of concealed carry laws.4

With respect to Biden’s proposed gun tax, what are the expected outcomes? The tax is certainly not designed to raise revenue, as it would raise little and entail a good deal of bureaucratic spending. It would no doubt encourage gun buybacks and reduce gun ownership at the margin, but to what end? It would mostly impact responsible gun owners economically impacted by the lockdowns and unemployment. These are the gun owners who reduce crime rates because of the deterrence factor they provide. The gun tax would also encourage the diversion of guns and high-capacity magazines to the black market.

Most importantly, would the gun tax reduce access to guns and in turn reduce crime and violence? Biden has already admitted that the answer is no: “a criminal who wants a firearm can get one through illegal, nontraceable, unregistered sources, with or without gun control.” Efforts to reduce gun violence through policies of red tape and taxes are doomed to fail and only lead to further inroads of enhanced policies of restrictionism and even outright prohibition.

For example, in order to address the real and imagined problem of narcotics addiction, which was already in decline at the end of the nineteenth century, the Harrison Narcotics Tax Act was passed in 1914 to regulate and tax the production, importation, and distribution of opiates and cocaine products.

However, the courts interpreted the legislation to mean that doctors could prescribe these drugs in the course of normal treatment, as a dental anesthetic or for short-term pain management, for example, but not as a treatment for addiction. This turned regulation into prohibition and quickly turned the imaginary crimes of blacks and Asians into very real crimes all across the country. Desperate addicts were willing to pay high prices and commit crimes to satisfy their addictions, and smugglers and drug dealers quickly developed a black market.

Similar negative consequences resulted from the Marijuana Tax Act of 1937, which started as a tax to reduce imagined crimes by minorities, i.e., Reefer Madness, only to quickly devolve into an outright prohibition. Fortunately, we as a people have recognized this mistake and are moving to legalize cannabis and hemp, i.e., marijuana, in a state-by-state process that works in the face of federal and international law.

As horrific and far-reaching as the consequences of the war on drugs have been, the consequences of “commonsense” gun control laws are potentially much greater in the long run. In a very important contribution, Stephen Holbrook demonstrates that the Nazis used gun registration information instituted and collected by the Weimar Regime to rapidly disarm the Jews and other political adversaries. This in turn greatly facilitated the Holocaust.5 A disarmed American population would similarly be much more vulnerable to political repression.

But putting this possibility aside, Biden’s gun control proposals, including the gun tax, offer no possibility of improved security, while most of them will make us less secure and more prone to crime and violence. Most importantly, they are all an affront and threat to our liberty as enshrined in the Second Amendment to the Constitution.

Mises Institute: Why Governments Hate Decentralization and “Local Control”

Ryan McMaken at the Mises Institute talks about Why Governments Hate Decentralization and “Local Control”. No one with power wants to have to exercise that power through intermediaries; they want direct control.

In recent decades, many have claimed that advances in communications and transportation would eliminate the different political, economic, and cultural characteristics peculiar to residents of different regions within the United States. It is true the cultural difference between a rural mechanic and an urban barista is smaller today than was the case in 1900. Yet recent national elections suggest that geography is still an important factor in understanding the many differences the prevail across different regions within the US. Urban centers, suburban neighborhoods, and rural towns still are characterized by certain cultural, religious, and economic interests that are hardly uniform across the landscape.

In a country as large as the United States, of course, this has long been a reality of American life. But even in far smaller countries, such as the larger states of Europe, the problem of creating a national regime designed to rule over a large diverse population has long preoccupied political theorists. At the same time, the problem of limiting this state power has especially been of interest to proponents of “classical” liberalism—including its modern variant, “libertarianism”—who are concerned with protecting human rights and property rights from the grasping power of political regimes.

The de facto “answer,” to the this problem, unfortunately, has been to empower national states at the expense of local self-determination and institutions which had long provided barriers between individual persons and powerful national states. Some liberals, such as John Stuart Mill, have even endorsed this, thinking that mass democracy and national legislatures could be employed to protect the rights of regional minorities.

But not all liberals have agreed, and some have understood that decentralization and the maintenance of local institutions and local power centers can offer a critical obstacle to state power.

The Growth of the State and the Decline of Local Powers

Among the best observers and critics of this phenomenon are the great French liberals of the nineteenth century, who watched this process of centralization unfold during the rise of absolutism under the Bourbon monarchy and during the revolution.1

Many of these liberals—Alexis de Tocqueville and Benjamin Constant in particular—understood how historical local autonomy in cities and regions throughout France had offered resistance to these efforts to centralize and consolidate the French state’s power.

Alexis de Tocqueville explains the historical context in Democracy in America:

During the aristocratic ages which preceded the present time, the sovereigns of Europe had been deprived of, or had relinquished, many of the rights inherent in their power. Not a hundred years ago, amongst the greater part of European nations, numerous private persons and corporations were sufficiently independent to administer justice, to raise and maintain troops, to levy taxes, and frequently even to make or interpret the law.

These “secondary powers” provided numerous centers of political power beyond the reach and control of the centralized powers held by the French state. But by the late eighteenth century, they were rapidly disappearing:

At the same period a great number of secondary powers existed in Europe, which represented local interests and administered local affairs. Most of these local authorities have already disappeared; all are speedily tending to disappear, or to fall into the most complete dependence. From one end of Europe to the other the privileges of the nobility, the liberties of cities, and the powers of provincial bodies, are either destroyed or upon the verge of destruction.

This, Tocqueville understood, was no mere accident and did not occur without the approval and encouragement of national sovereigns. Although these trends were accelerated in France by the Revolution, this was not limited to France, and there were larger ideological and sociological trends at work:

The State has everywhere resumed to itself alone these natural attributes of sovereign power; in all matters of government the State tolerates no intermediate agent between itself and the people, and in general business it directs the people by its own immediate influence.

Naturally, powerful states are not enthusiastic about having to work through intermediaries when the central state could instead exercise direct power through its bureaucracy and by employing a centrally controlled machinery of coercion. Thus, if states can dispense with the inconveniences of “local sovereignty” this enables the sovereign power to exercise its own power all the more completely.

The Power of Local Allegiance and Local Customs

When states are dominated by any single political center, other centers of social and economic life often arise in opposition. This is because human society is by nature quite diverse in itself, and especially so across different regions and cities. Different economic realities, different religions, and different demographics (among other factors) tend to produce a wide range of diverse views and interests. Over time, these habits and interests supported in a particular time and place begin form into local “traditions” of various sorts.

Benjamin Constant, a leading French liberal of the nineteenth century, understood these differences could serve as effective barriers to centralized state power. Or, as noted by historian Ralph Raico: “Constant appreciated the importance of voluntary traditions, those generated by the free activity of society itself….Constant emphasized the value of these old ways in the struggle against state power.”

In his book Principles of Politics Applicable to All Governments, Constant complains that many liberals of his time, having been influenced by Montesquieu, embraced the ideal of uniformity in laws and political institutions.

This, Constant warns, is a mistake and tends to create more powerful centralized states, which then proceed to violate the very rights that Montesquieu thought could be preserved through uniformity.

But political uniformity can lead down very dangerous paths, Constant insists, concluding, “It is by sacrificing everything to exaggerated ideas of uniformity that large States have become a scourge for humanity.” This is because large politically uniform states can only reach this level of uniformity by employing the state’s coercive power to force uniformity on the people. The people do not give up their local traditions and institutions easily and therefore, Constant continues,

It is clear that different portions of the same people, placed in circumstances, brought up in customs, living in places, which are all dissimilar, cannot be led to absolutely the same manners, usages, practices, and laws, without a coercion which would cost them more than it is worth.

This may not be “worth it” to the people, but it appears to be worth it to the regime. Thus, states over the past several centuries have expended immense amounts of time and treasure to break down local resistance, impose national languages, and homogenize national institutions. When this process is successful, a nation’s laws end up reflecting the preferences and concerns of those from the dominant region or population at the expense of everyone else. When it comes to these large centralized states, Constant writes:

one must not underestimate their multiple and terrible drawbacks. Their size requires an activism and force at the heart of government which is difficult to contain and degenerates into despotism. The laws come from a point so far from those to whom they are supposed to apply that the inevitable effect of such distance is serious and frequent error. Local injustices never reach the heart of government. Placed in the capital, it takes the views of its surrounding area or at the very most of its place of residence for those of the whole State. A local or passing circumstance thus becomes the reason for a general law, and the inhabitants of the most distant provinces are suddenly surprised by unexpected innovations, unmerited severity, vexatious regulations, undermining the basis of all their calculations, and all the safeguards of their interests, because two hundred leagues away men who are total strangers to them had some inkling of agitation, divined certain needs, or perceived certain dangers.

For Constant, the diversity among communities ought not be seen a problem to solve, but rather as a bulwark against state power. Moreover, it is not enough to speak only of individual freedoms and prerogatives when discussing the limits of state power. Rather, it is important to actively encourage local institutional independence as well:

Local interests and memories contain a principle of resistance which government allows only with regret and which it is keen to uproot. It makes even shorter work of individuals. It rolls its immense mass effortlessly over them, as over sand.

Ultimately, this local institutional strength is key because for Constant state power can be successfully limited when it is possible to “skillfully combine institutions and place within them certain counterweights against the vices and weaknesses of men.”

Unfortunately, it appears even the last few institutional vestiges of localism are under attack from the forces of political centralization. Whether it is attacks on Brexit in Europe, or denunciations of the electoral college in the United States, even limited and weak appeals to local control and self-determination are met with the utmost contempt from countless pundits and intellectuals. Two centuries after Tocqueville and Constant, regimes still recognize decentralization as a threat. Those who seek to limit state power should take the hint.

Mises Institute: Talk of “Unity” Is Both Hypocritical and Delusional

Professor Gary Galles at the Mises Institute says political Talk of “Unity” Is Both Hypocritical and Delusional

In Joe Biden’s address after being declared president-elect by news organizations, he promised to be a leader who “seeks not to divide but to unify.” Making that assertion after the campaigns we have seen, not to mention the light-years-apart treatment of the candidates, while Donald Trump is still adamantly disputing the election because of alleged Democrat malfeasance is, at a minimum, ironic. And it would be the height of hypocrisy if only a few of Trump’s claims of cheating are true. But we need to go further and recognize that even the possibility of Joe Biden uniting us is a delusion.

Agreement on the specific ends we want to achieve is unattainable because our desires are mutually inconsistent. Our agreement is very limited on even very broadly defined issues, and once we look further than vague, aspirational language and feel-good generalities, Americans disagree on virtually everything.

All of us want to be fed, clothed, housed, educated, etc. We agree in that sense. But we disagree about virtually every aspect of who, what, when, where, why, and how. We want different types and amounts, in different ways, at different times and places, and for different people. We are vastly different in the tradeoffs we are willing to make among our desires, not to mention who we think should pay our bills. Once we consider any of the myriad actual choices faced, the fact of scarcity necessitates that our specific ends conflict, rather than align.

Consider a mundane example played out daily in our homes—breakfast. Does everyone in your family agree on “the most important meal of the day”? Does everyone even eat breakfast? Does each member have coffee, a cold caffeine drink, or neither? Juice? What kind? Are all agreed on when, where, what, or how much to eat? Do we agree on who should pay for breakfast, cook it, and clean up after it? Do we agree on the “dress code” that should apply, either at breakfast or afterward?

Diverse individuals have diverse preferences. Multiplying this single example by the uncountable decisions that must be reached in society every day makes our fundamental disunity clear. And we are no more unified when we get to public policy. We are not in agreement about people’s rights and government powers that some view as essential but others view as unforgivable. The same is true of many foreign policy choices. We cannot be unified as “one nation under God” when some vehemently reject any reference to God. We cannot be unified about abortion when some view it as murder and others consider it sacred. Policies that take from some to give to others also inherently create disagreement from those whose pockets are involuntarily picked. Reducing what we take from some, entailing giving less to others than they wish, also triggers disagreement. So long as government dictates such choices, political unity is unattainable.

In fact, politics as currently practiced eviscerates the one thing Americans could agree about. This reflects the far-too-little-recognized fact that we have greater agreement on what all of us want to avoid than on what all of us want. None of us wants what John Locke called our “lives, liberties, and estates” violated. That is, each of us wants rights and property defended against invasion. Respecting all of our property rights reduces the risk from predation for each of us. But creating added rights and privileges for some at the expense of others’ equal rights and privileges makes government the most dangerous predator, even when who is selected to do so is determined by majority vote.

Each of us would like the freedom to peacefully pursue our own goals. As Lord Acton put it, “liberty is the only object which benefits all alike, and provokes no sincere opposition,” because freedom to choose for ourselves is always the primary means to our ultimate ends. That is why the traditional functions of government are to protect us from abuse by our neighbors and foreign powers, while its greatest threat is supposed protectors becoming predators against citizens. That is why Acton recognized that liberty requires “the limitation of the public authority.” But we are incredibly far from agreement on that today.

Well-established property rights and the voluntary market arrangements they enable let individuals decide for themselves, limiting each of us to persuasion rather than coercion. Except in the very unusual case where we must all make the same choice, this allows us to better match our choices to our preferences and circumstances. And unlike minority votes in elections, every dollar “vote” matters.

In fact, we should recognize that markets are our primary means to transform our disagreements into mutually beneficial cooperation, while restrictions on markets hobble that essential function.

Say I offer you a widget for sale at $10 and you say yes. That does not mean we agree on its value. We disagreed. I valued it at less than $10 worth of other goods and services, or I wouldn’t have sold it for that. You must have valued it more than $10, or you wouldn’t have bought it for that. Importantly, however, we have transformed our disagreement on values into an exchange that gives both of us benefits we consider to be worth more than the costs.

In contrast, talk of political unity is primarily rhetorical cover for those who are in power to coerce those who disagree with them. They benefit themselves at others’ expense, taking others’ resources and making them acquiesce in what they object to. And unlike markets, in which greater disagreements about value create greater net benefits from voluntary arrangements, “unifying” political initiatives are just ways to control who will be forced to do what for others, driving Americans apart while hamstringing cooperative arrangements and squandering the wealth they would have created.

Grand invocations that “I will unify us” are actually shorthand for “We disagree about many things, but those in this group are unified against others’ preferences, and we mean to get our way, regardless of their well-being and desire,” which is made clear by the demonization of anyone who doesn’t support the supposed “unity” position as divisive. That kind of unity is tyranny. Strengthening our union actually runs along a different path than the unity of 50 percent plus one, unified against the interests of others. It is uniting in a common commitment to honoring one another’s rights and the liberty this makes possible for all of us. Without unity in that, we can never achieve the kind of unity that is actually desirable and achievable. The alternative is the prospect of more of what we have experienced of late, which resembles what Thomas Hobbes called “a war of all against all.” But if we are united only by the ongoing fight to win that war against other Americans, we are selling out the birthright we have from our Declaration of Independence and Constitution.

Mises Institute: On Foreign Policy, Trump Is Still the Lesser Evil

From the Mises Institute, On Foreign Policy, Trump Is Still the Lesser Evil

Covid-19 has occupied nearly all media attention, but foreign policy remains an important topic for many Americans who are exhausted by the prevailing order of never-ending wars. Lost in the usual cacophony of politics in the Trump era—which has been marked by outrage politics and a lack of introspection in discourse—are any in-depth discussions about making changes to America’s foreign policy quagmire. For some people who became disenchanted with the nation-building adventures of the Bush and Obama eras, the election of Donald Trump in 2016 presented a glint of hope.

Although he is no dyed-in-the-wool noninterventionist, Trump questioned a number of the shibboleths of the contemporary foreign world order that places America as the unquestioned savior of the world. Some members of the foreign policy blob (or the Blob) were so taken aback by Trump’s criticism of the North Atlantic Treaty Organization (NATO) during the campaign trail that some feared he would have the US completely leave the military alliance. If only!

History has repeatedly shown, however, that what is said on the campaign trail does not exactly translate into tangible results. Although Trump was able to get NATO member countries such as Germany to pull more of their weight by increasing military spending to comply with NATO standards, NATO remains intact and is still being used to counter the alleged Russian Bear. The fact remains that NATO is a dinosaur of the bygone Cold War era and serves no real national interests in the present.

Nonetheless, Trump’s conversation about having European countries spend more on defense is somewhat encouraging, inasmuch as it makes the idea of countries with an American military presence assuming their defense functions slightly more palpable. Ideally, this would occur outside the NATO framework, as countries start providing for their own defense while America scales back its military presence in said countries and focuses more on its domestic affairs. Alas, we don’t operate in such circumstances.

It is amusing how foreign policy elites’ feathers continue to be ruffled by an administration that hasn’t done much to scale back the military-industrial complex (despite a lot of negative talk directed toward it from the president himself) nor to reduce America’s global footprint abroad. Take, for example, former vice president Dick Cheney. The former member of the Bush brain trust expressed his dismay with President Donald Trump’s supposedly “transactional” foreign policy of weighing the costs and benefits of a number of alliances and partnerships the US has made with other countries over the years. Yes, a transactional foreign policy is not ideal, but it’s a marginal improvement over the missionary role America has taken during the last century. A transactional foreign policy actually takes into consideration that there are actual costs—human and financial—when projecting power abroad.

Many on the mainstream right correctly observe that there are no free lunches in matters of domestic economics. But when foreign policy comes up similar logic escapes them. With over eight hundred bases across the globe and a military budget larger than the next ten highest-spending militaries combined, the US is clearly putting too much of an emphasis on policing the world, when there are plenty of countries that are willing and capable of defending themselves if given the chance. Plus, the US has many domestic problems—from economic uncertainty to social tension—that it will need to sort out in the next few decades.

Most of the liberal and conservative establishment is trapped in outdated twentieth-century notions of foreign policy strategy and is not aware of notable geopolitical realignments taking place across the globe. US policymakers will have to live with the fact that the US cannot police every corner of the world. Additionally, should the US government get overzealous, there will be countries ready to resist American efforts to expand its influence and make potential interventions costly.

The talk about an “America First” foreign policy has been refreshing, but the U.S. has yet to commit to a coherent withdrawal policy. You either have the likes of Liz Cheney leading a bipartisan coalition in the US House to roadblock any withdrawal efforts, or even worse, when the administration announces some form of troop reduction, the generals remain quiet or say that the withdrawal must be “conditions based.” All these roadblocks make one wonder who really calls the shots on foreign policy. With how radically the US state has transformed over the last century, the straightforward policymaking guide that the Constitution originally laid out looks more and more like a dead letter. Unelected bureaucrats and foreign policy officials seem to be the ones actually running the show while presidents function as mere placeholders.

On a more positive note, the Trump administration has made some solid nominations for the positions of ambassador to Afghanistan and ambassador to Germany. William Ruger (the nominee for the Afghanistan ambassadorship) and Douglas Macgregor (the nominee for the German ambassadorship) are both critics of the US government’s perpetual war strategy and overreliance on a militarized foreign policy. As evidence of how dangerous their views are to the foreign policy establishment, both nominees have received stiff opposition from liberal interventionist to neoconservative circles—a solid sign that they’re good choices, but also an indicator that their nominations will likely be torpedoed.

If you think change will come about by getting rid of Trump, think again. Trump’s opposition is simply nothing to write home about. A Biden-Harris administration would do very little to the warfare state. We shouldn’t be fooled by any clever marketing that Trump’s rivals put forward. They’re not a saner, more level-headed alternative to the supposedly erratic Trump. As Ryan McMaken makes clear, the Democratic duo will continue operating within the same parameter of never-ending wars and not fundamentally reorient foreign policy toward restraint. Defense contractors can be confident that business will go on as usual. This is the tragedy of modern-day politics, which is dominated by a uniparty that broadly agrees on foreign policy questions.

Marginal changes in personnel and political leadership are always welcome, but they ignore a fundamental precondition for any meaningful change in policy—a shift in political ideas; namely, a rejection of the progressive liberal ethos of American foreign policy, which international relations scholar Kevin Doremus believes has the objective of “providing global security, global capitalism, democracy, and peace.”

The irony of this foreign policy outlook is that it ignores how liberalism came about in the first place. It was not brought about by putting GIs on the ground or through subversive forms of soft power, such as color revolutions, but rather emerged in the West through organic processes such as decentralization and jurisdictional competition. While certain countries can embrace Western institutions and reap great success, Doremus observed that the “combination of universal liberal values with the unmatched US military power leads to advocates ignoring the historical and cultural contexts of other countries” and make them believe that the US government can poke and prod countries into becoming facsimiles of America and other Western liberal democracies.

Like all forms of intervention, unintended consequences are bound to occur. They can come in the form of blowback or the development of balancing coalitions such as the emerging China-Iran-Russia axis, which has surfaced in response to perceived overreach by hegemonic states such as the US. The rise of illiberalism on the international stage is largely the product of a US government full of imperial hubris that doesn’t take into account cultural differences among polities and whose first instinct is to browbeat countries that don’t conform to its agenda.

The power of ideas cannot be overstated in the struggle to chart a new path for foreign policy. As Ludwig von Mises explained in Epistemological Problems of Economics, “No one can escape the influence of a prevailing ideology.” The same dynamic is in play with regard to foreign policy. Unless there’s a massive shift in consciousness in public opinion both domestically and abroad that recognizes how social engineering does not work, the ruling class will constantly be promoting regime change endeavors and other militaristic adventures with little to no pushback.

Mises Institute: America at the Point of No Return (Book Review)

The Mises Institute has published a book review of Michael Anton’s The Stakes: American at the Point of No Return. Some people could learn a bit about their country just from reading the review.

…In one of the best sections of the book, Anton sets forward his understanding of the Constitution. He says, “Our founders sought to establish the weakest possible federal government capable of performing its essential functions, for three fundamental and intertwined reasons. First, government is inherently dangerous, so the less power it has, the better. Second, the states—being closer to the people and more responsive to regional differences and needs—are better equipped to handle most matters than a far-off centralized administration. Third, the states were prior to the federal government; the people, through their states, created the latter to serve them, not the other way around.”

Anton continues: “According to the parchment [the Constitution], the federal government is supposed to field and fund an army and navy, protect the borders, make treaties, regulate foreign trade and interstate commerce, maintain a sound common currency…and that’s about it. But if you haven’t noticed, there is almost nothing today that the federal government doesn’t do—or try to. The fact that it fails embarrassingly at most of the tasks it sets itself never circumscribes its ambitions, which seem to multiply by the year.”

Again sounding like a supporter of the free market, Anton says about the federal budget: “That leaves about a trillion for means-tested welfare—which, like Social Security, Medicare, and Medicaid, are not constitutionally authorized; they are also of dubious and uneven effectiveness at best.”

Anton notes that the founders believed that the American Revolution was grounded in universal truths, “but they did not expect their declaration to revolutionize the world—nor were they under any illusion that it, or they, had the power to do so….America is—in the words of John Quincy Adams—‘the well-wisher to the freedom and independence of all’ but also ‘the champion and vindicator only of her own.’”

Those who wish to restore these principles face a challenge of unprecedented severity. Anton argues that an elite based in certain blue states disdains ordinary Americans. “The core message of the meta-Narrative is that America is fundamentally and inherently racist, sexist, homophobic, xenophobic, Islamophobic, transphobic, and so on. The flaws and sins of America derive directly from those of its founding stock, who are natural predators, inherently racist, and malevolent.”

Elite policy is at its worst in California, now under the near-total domination of the left wing of the Democratic Party. “In modern California, hypocrisy and double-standardism aren’t merely part of the business climate; they’re endemic to the whole society….Sam Francis dubbed this system ‘anarcho-tyranny’: complete freedom—even exemption from the gravest laws—for the favored, maximum vindictive enforcement against the pettiest infractions on the disfavored.” Anton fears that if President Trump isn’t reelected, the Democrats will seek actively to suppress whomever in the red states challenges them, and they will prove very difficult to dislodge from power.

Who are the ordinary Americans the elite disdains, and who are the elite? The ordinary Americans are those whom Hillary Clinton called “deplorables,” i.e., white males who value their family, their religion, and their property, including their guns. “Funny thing, too: a core tenet of modern liberalism is supposed to be the sanctity of ‘one man, one vote.’ Except, you know, not really. The barely concealed presupposition of denouncing Republicans as ‘racists’ simply because whites vote for them is that all votes are not created equal. Votes of color are morally superior to white votes, which are inherently tainted. Which is why the left holds any election won by a Republican to be morally if not (yet) politically illegitimate.”

The elite consists at its core of wealthy financiers and business interests allied with government. It is buttressed by professionals who have attended top universities, especially those of the Ivy League. In a way that readers of Hunter Lewis on “crony capitalism” will recognize, Anton writes: “So-called ‘public-private cooperation’ will increase. This benign-sounding phrase—who could object to ‘cooperation,’ to government and business ‘solving problems together’? —masks a darker reality. What it really describes is the use of state power to serve private ends, at private direction. Hence foreign policy…will be further reoriented around securing trade, tax, and labor ‘migration’ patterns and paradigms that benefit finance and big business.”

If elite dominance continues, Anton predicts that those of us who dissent will be rigidly restricted. “Free speech as we have known it—as our founders insisted was the bedrock of political rights, without which self-government is impossible—will not survive coming leftist rule. The playbook is already being expanded to include banking and credit. Getting on the wrong side of elite-woke opinion is increasingly to find oneself locked out of the financial system: no bank account, no credit card, no ability to get a loan or pay a mortgage. Pay cash? The move to a ‘cashless society’…will obviate that option right quick.”

Anton cites an especially chilling instance of the policy of suppression. “A new regulation in the United Kingdom—which we must assume will be proposed here sooner or later—would allow Britain’s National Health Service to deny non-emergency care to those deemed ‘racist, sexist, or homophobic.’ Government bureaucrats, naturally, will be the ones doing the deeming.” Small wonder that Anton has had enough…

Mises Institute: Rand Paul Is Right about the Nazis and Socialism

Rand Paul recently pointed out that the Nazis were socialists in a book released last year. I mean, it’s in the name (National Socialists – Nationalsozialist), but then they’d be leftists, right? Some have taken Rand Paul to task for pointing this out. In this article from Mises Institute, David Gordon says Rand Paul Is Right about the Nazis and Socialism.

In “No, the Nazis Were Not Socialists,” which appeared online in Jacobin, the philosopher Scott Sehon makes a surprising claim. In the course of criticizing some remarks by Senator Rand Paul, Sehon says,

Paul seems to quote the mid-century economist Ludwig von Mises:

Under national socialism there was, as Mises put it, “a superficial system of private ownership…[sic] but the Nazis exerted unlimited, central control of all economic decisions.” With profit and production dictated by the state, industry worked the same as if the government had confiscated all the means of production, making economic prediction and calculation impossible.…

It turns out that Paul’s most clear assertion about Nazi control of the economy was, apparently, just something that the senator made up and falsely attributed to Ludwig von Mises. (blockquote ellipses and brackets in Sehon)

Had Sehon looked into Mises’s views more carefully, he would have found that Mises did indeed believe that Nazism was a form of socialism, marked by state direction of the economy rather than collective ownership. In Omnipotent Government (p. 56), Mises says,

The German and the Russian systems of socialism have in common the fact that the government has full control of the means of production. It decides what shall be produced and how. It allots to each individual a share of consumer’s goods for his consumption….The German pattern differs from the Russian one in that it (seemingly and nominally) maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets. There are, however, no longer entrepreneurs but only shop managers (Betriebsführer)….The government, not the consumers, directs production. This is socialism in the outward guise of capitalism. Some labels of capitalistic market economy are retained but they mean something entirely different from what they mean in a genuine market economy.

Sehon says that this view is false and cites an article I have not yet been able to gain access to that argues that business under the Nazis retained a large degree of autonomy. But in his well-received book The Wages of Destruction (2007), the historian Adam Tooze says this: “The German economy, like any modern economy, could not do without imports of food and raw materials. To pay for these it needed to export. And if this flow of goods was obstructed by protectionism and beggar-my-neighbour devaluations, this left Germany no option but to resort to ever greater state control of imports and exports, which in turn necessitated a range of other interventions” (p. 113). This is exactly Mises’s point. Interventionist measures in the free market such as price control fail to achieve their purpose. This leads the government to add more interventionist measures in an effort to remedy the situation, and continuing this process can quickly lead to socialism.

This is what happened under the Nazis. Businesses that were reluctant to follow the plans of the new order had to be forced into line. One law allowed the government to impose compulsory cartels. By 1936, the Four Year Plan, headed by Hermann Goering, had changed the nature of the German economy. “On 18 October [1936] Goering was given Hitler’s formal authorization as general plenipotentiary for the Four Year Plan. On the following days he presented decrees empowering him to take responsibility for virtually every aspect of economic policy, including control of the business media” (Tooze 2007, pp. 223–24).

Sehon says that there were socialists in the Nazi party, principally Gregor Strasser and his brother Otto, but that their influence ended when Hitler purged this wing of the party in the Night of the Long Knives in 1934. (By the way, Otto was more of a socialist than his brother Gregor, and the latter repudiated his brother’s views as too radical.) This is not entirely accurate. What it ignores is that Josef Goebbels, the influential minister of propaganda, held strongly socialist views despite his personal enmity for Strasser.

According to George Watson,

On 16 June 1941, five days before Hitler attacked the Soviet Union, Goebbels exulted, in the privacy of his diary, in the victory over Bolshevism that he believed would quickly follow. There would be no restoration of the tsars, he remarked to himself, after Russia had been conquered. But Jewish Bolshevism would be uprooted in Russia and “real socialism” planted in its place – “Der echte Sozialismus“. Goebbels was a liar, to be sure, but no one can explain why he would lie to his diaries. And to the end of his days he believed that socialism was what National Socialism was about.

In his article, Sehon criticizes Watson extensively for relying on a book by Otto Wagener, a Nazi who was removed from his position of authority in 1932, but he does not mention Watson’s quotation from Goebbels’s diary.

Goebbels was by no means alone among the Nazis holding power in his radical opinions. Ferdinand Zimmerman, who worked as an important economic planner for the Nazis, had been before their rise to power a contributor under the pen name Ferdinand Fried to the journal Die Tat, edited by Hans Zehrer, and a leading member of a group of nationalist intellectuals known as the Tatkreis. Fried strongly opposed capitalism, analyzing it in almost Marxist terms.

Wilhelm Roepke wrote a devastating contemporary criticism of Fried, now available in translation in his Against the Tide (Regnery, 1969). One of the best scholarly accounts of Fried’s views, which includes some discussion of his activities under the Nazi regime, is in Walter Struve’s Elites against Democracy: Leadership Ideals in Bourgeois Political Thought in Germany, 1890–1933  (Princeton University Press, 1973).

Sehon makes another misleading point in his article. He says,

Paul’s argument here goes from the undeniable premise that the Nazis had “socialist” as part of their name to the conclusion that the Nazis were, in fact, socialists. For that inference to work, Paul needs an intermediate premise like the following: If an organization has an adjective in their name, then the organization is correctly described by that adjective.

But if Senator Paul really believed this, then he would be forced to conclude that communist East Germany and present-day North Korea count as democracies, for the German Democratic Republic and the Democratic People’s Republic of North Korea both have the adjective “Democratic” as part of their name.

Sehon is right that the word “socialist” does not by itself tell us much, but unfortunately it does not occur to him to investigate what the Nazis meant by this word and why they used it.

Mises Wire: Stop Blaming Classical Liberalism for the Problems of Human Nature

This article from Zachary Yost at the Mises Institute talks about the confusing plethora of definitions in common use for liberalism – Stop Blaming Classical Liberalism for the Problems of Human Nature

In a recent essay at the new online conservative magazine IM-1776, writer Alex Kaschuta argues that the contemporary world is under “The Heavy Chains of Liberalism” that have, in her mind, destroyed humane life, abolished tradition, and left atomized individuals increasingly “free” from all social and personal restraint. These complaints are nothing new, and some of the problems she points to are all too real, however, her broadside attack against liberalism misses the mark on nearly every front.

For one thing, like many labels in use today, the word liberal has become so broad that its use encompasses many divergent streams of thought and bulldozes over important differences and nuances. Libertarians and classical liberals are intimately familiar with this problem, having adopted those labels as a means to try and deal with the bastardization of the term liberal.

In his most recent book, The Great Delusion, John Mearsheimer divides liberalism into two diverse schools of thought that are often at odds with one another. On the one hand, he identifies modus vivendi liberalism, which is largely focused on individual negative rights and is primarily concerned with state intrusion into life, and on the other hand, he identifies progressive liberalism which is much more concerned with positive rights and social engineering. Most notably, progressive liberalism is intimately connected to crusading schemes to remake the world in its universalist image. Modus vivendi liberalism, which Mearsheimer has identified with F.A. Hayek, lacks this universalist crusading impulse.

However, like many today, Kaschuta paints with a broad brush and conceives of only one liberalism in the mold of John Stuart Mill, who, she argues, “asserted that freedom lies in elevating choice and leaving aside burdensome custom, that the only way to be truly free is to unshackle yourself from the bonds of social mores, into ever freer choice.”

To be sure, there are libertarians who seem to identify maximalized individual choice and therefore control over every aspect of human existence as being the core of libertarianism. For instance, consider this line from Nick Gillespie and Matt Welch’s 2008 Reason essay “The Libertarian Moment“: “We are in fact living at the cusp of what should be called the Libertarian Moment, the dawning not of some fabled, clichéd, and loosey-goosey Age of Aquarius but a time of increasingly hyper-individualized, hyper-expanded choice over every aspect of our lives.”

It is certainly questionable to what extent such a focus on “hyperindividualism” belongs in the modus vivendi camp.

In contrast, a Misesian conception of liberalism is hardly focused on the destruction of social mores and tradition. Rather, in Mises’s words, “the program of liberalism…if condensed into a single word, would have to read property, that is, private ownership of the means of production”. Not only is this a different emphasis than maximum individual choice in every sphere of life, but Mises actually attacks Mill as “the originator of the thoughtless confounding of liberal and socialist ideas that led to the decline of English liberalism and to the undermining of the living standards of the English people…Mill is the great advocate of socialism.”

Hayek’s work is also absent of this Millian impulse, and in fact, directly contradicts it on many occasions by defending the idea of tradition as being the result of an evolutionary process of trial and error that should not just be casually tossed aside by those who “cannot conceive of anything serving a human purpose that has not been consciously designed” and in fact calls such people “almost of necessity enemies of freedom.”

Unlike many illiberals, Kaschuta recognizes that “the market works, and it has been nothing short of miraculous.” However, she proceeds to blame the market for “the despoiling of the planet, the destruction of local communities, and boom and bust cycles of ever-increasing intensity.” Whatever criticisms one might have about a free-market system, these are not very good ones.

There is no shortage of data showing that liberal societies, with their emphasis on property rights, lead to better environmental outcomes. And one need only look at the history of the Soviet Union, which nearly completely eliminated the Aral Sea, and slaughtered tens of thousands of whales for no purpose at all, to see how well a non-market-based economic system cares for the environment.

Similarly, blaming the free market system for the decline of community also misses the mark. There are many reasons why community and civil society have decayed, but as the work of sociologists Frank Tannenbaum and Robert Nisbet demonstrate, one of the primary reasons is the centralizing power of the state that seeks to undermine any rivals for social power. This can hardly be blamed on modus vivendi–style liberalism.

Finally, Kaschuta’s claim that the market naturally leads to boom and bust economic cycles ignores the entirety of Austrian Business Cycle theory that argues that rather than being the natural product of market forces, such business cycles are the result of malinvestment created by central bank monetary policy.

Kaschuta raises many salient points when she complains about modern man being “freed” from all restraint, but she misses the mark in placing all of the blame for this unmooring on the shoulders of liberalism. History is full of similar periods in societies across the globe where there was a collective loss of self-restraint. These epochs are not indicative of the “chains” of liberalism, but the shackles of human nature that no earthly ideology can hope to ever cast off. Human nature is what it is.

Liberalism will not solve human nature, but in the tradition of Mises and Hayek it can help to establish a social system in which humans can live peacefully with material prosperity. That is such a rare accomplishment in human history that its critics should exercise more caution before dispatching it to the dustbin of history.