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Free Excerpt – A Return to Common Sense: Reawakening Liberty in the Inhabitants of America

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Kindle edition now available here!

Paperback here!

Hello friends,

Americans are waking up to the reality that our once free republic is in serious trouble. They are searching for answers to what seem like unsolvable problems: economic depression, unending war, political corruption, and vanishing liberties. What if there were just one answer – freedom? The American republic was founded upon that principle, yet few suggest it is the solution to any of our problems,  much less all of them. But if freedom is the answer, we first must know what it is. Sadly, most Americans do not. That is why I wrote this book.

I hope you enjoy the Introduction and Chapter One: What is Freedom?, which I am making available for free below. The subsequent chapters discuss how freedom can solve the many challenges we face.

To read the rest of this book, you can get the Kindle Edition here.

I look forward to fighting with you to restore our liberty.  – Tom Mullen

Reviews

“Thomas Mullen is a knowledgeable and passionate libertarian and A Return to Common Sense is a valuable addition to the libertarian literature. Those new to the freedom movement will benefit from Tom’s introduction to both the practical and moral arguments for freedom. Long-time activists will benefit from Tom’s explanation of why strict adherence to principle is vital to the future success of the liberty movement.”

– Representative Ron Paul (TX-14)

Congressman and author of The Revolution: A Manifesto and End the Fed.

“A well written primer on economics, liberty, and government that even avid Austrians will enjoy. If you have been blinded by government and Wall Street propaganda, A Return to Common Sense will help open your eyes. I not only recommend that you add this book to your freedom library, but that you buy a few copies for your friends.”

– Peter Schiff, President of Euro Pacific Capital, Inc and author of Crash Proof: How to Profit from the Coming Economic Collapse.

Tom Mullen has written a thorough and useful book. Those for whom a discussion of liberty is a new experience will discover in A Return to Common Sense a clear, easy to understand guide to the nature of freedom, and why it is essential to our fondest hopes for a civil society of opportunity, peace, and prosperity. For those who already share these values, it’s a welcome resource for perfecting our own knowledge and advancing our cause.

– Charles Goyette, author of THE DOLLAR MELTDOWN: Surviving the Impending Currency Crisis with Gold, Oil, and Other Unconventional Investments and RED AND BLUE AND BROKE ALL OVER: Restoring America’s Free Economy

Chapter 1

What is Freedom?

“And what is this liberty, whose very name makes the heart beat faster and shakes the world?”

 – Frederic Bastiat1 (1850)

If there is one thing uniquely associated with America, it is freedom.  From the moment Cornwallis surrendered to Washington at Yorktown, America has been a symbol of liberty to the entire world.  Since the end of World War II, when the United States assumed a worldwide leadership role, it has been the leader of the “free world.”  At sporting events, standing crowds begin their ovation when the vocalist singing the national anthem gets to the words, “O’er the land of the free.”  Even in everyday conversations, scarcely a day goes by that one does not hear someone say, “Do what you like, it’s a free country.”

Although we all agree that America is the “land of the free,” there are questions about freedom that might be more difficult to answer.  What is freedom?  How is it defined?  What makes America the land of the free?  How would we know if we were to lose our freedom?  What is it that our soldiers die for and our politicians swear to defend?

We have been told a lot of things about what freedom is not.  From the end of World War II until 1991, most Americans understood that freedom was not communism.  For almost three generations, Americans lived in the “free world” during its cold war with the communist Eastern Bloc.  Without further thought or instruction, many children of the 20th century think of freedom merely as the antithesis of communism.  In some ways, this is not completely untrue, although it hardly provides a complete answer to our question.

Certainly, the mere absence of communism doesn’t necessarily guarantee freedom.  The 18th century British monarchy wasn’t communist, but the American colonists nevertheless considered it tyrannical enough to rebel against.  Likewise, the Royal House of Saud may be an ally of the U.S. government, but most Americans would not regard Saudi Arabia as a “free country.”

In addition to monarchies, there are plenty of dictatorships around the world that don’t enforce a communist system but are nevertheless oppressive.  While they also may be allies of the U.S. government, they certainly aren’t free countries, either.  So, a society is not free merely because it is not communist.

On the other hand, monarchy doesn’t seem to necessarily preclude freedom, either. Great Britain has been a relatively free country throughout much of its history, even when the monarchy was much more than a figurehead.  The American Revolution notwithstanding, Great Britain was at that time one of the freest societies in the world.  Therefore, rather than conclude that no freedom is possible under a monarchy, one might instead conclude that monarchies neither guarantee nor necessarily exclude freedom. Freedom or tyranny seems possible under almost any system of government.

Perhaps we can define freedom more easily by looking at its antithesis.  Merriam-Webster Dictionary lists slavery among antonyms for freedom.  Surely, we have found a start here.  Most people would agree that slavery is the complete absence of freedom.  Who can we imagine that is less free than the slave?  This is helpful in beginning to try to frame an answer, but freedom cannot be merely the absence of slavery.  Surely our founding fathers bled to give us a higher standard than this!

If we are told anything about what freedom is, it is that freedom is democracy.  If you ask most Americans, this is the answer you will get.  This is reinforced ad nauseum by politicians, media, and teachers in our public schools.  When Iraq held its first elections after the overthrow of Saddam Hussein, politicians and journalists universally celebrated the Iraqis’ “first taste of freedom.”

Certainly, democracy is a vast improvement over the autocratic rule of a dictator. But does democracy automatically mean freedom?  If democracy is rule by the majority, what about the minority?  What if 51 % of the people voted to oppress the other 49%?  Would that society truly be free?

Most Americans would be quite surprised to learn what our founding fathers thought about democracy.  Any objective analysis would conclude that their feelings lay somewhere between suspicion and contempt.

James Madison said, “Democracy is the most vile form of government … democracies have ever been spectacles of turbulence and contention: have ever been found incompatible with personal security or the rights of property: and have in general been as short in their lives as they have been violent in their deaths,”2

In a letter to James Monroe, he also said,

“There is no maxim, in my opinion, which is more liable to be misapplied, and which, therefore, more needs elucidation, than the current one, that the interest of the majority is the political standard of right and wrong.”3

While often extolling the virtue of majority rule, Thomas Jefferson nevertheless wrote,

“…that the majority, oppressing an individual, is guilty of a crime, abuses its strength, and by acting on the law of the strongest breaks up the foundations of society.”4

Can this be true?  The founding fathers were ambivalent about democracy?  For many people, this is tantamount to sacrilege.  More shocking still is what the Declaration of Independence and the U.S. Constitution say about democracy: nothing.  Nowhere in our founding documents will you find the word “democracy” or the assertion, implicit or explicit, that our government is a democracy.  How can this be?

Despite what we are taught virtually from birth, the United States of America has never been a democracy.  As only contrarians point out these days, it is a constitutional republic.  We choose our leaders using the democratic process of majority vote, but that is the extent to which the United States involves itself with democracy.

Like monarchy, democracy neither guarantees nor necessarily prohibits freedom.  Our founders actually feared that democracy poses a danger to freedom.  Apart from the pure heresy of the idea, it leaves us with a problem.  We are no closer to defining freedom.  If even democracy is not freedom, perhaps freedom doesn’t really exist!  If we are not to find freedom in democracy, where else can we look?

We certainly won’t learn what freedom is from our politicians.  While terrorism, healthcare, unemployment, gay marriage, and a host of other “major issues” dominate public debate, freedom is just too quaint, too academic, or too forgotten to get any airplay.  Yet, as we shall see as we explore the different subjects of this book, freedom is the fundamental issue.  In fact, despite what we perceive as a myriad of different problems facing the United States of America today, freedom is actually the only issue.  That may be hard to accept, given the decades of shoddy history, obfuscation, and plain old bad ideas we’ve been bombarded with.  Nevertheless, our greatest challenges and their solutions revolve around freedom.  If freedom is really that important, we’d better be absolutely sure we know what it is.

In order to answer the question posed by Bastiat at the beginning of this chapter, we will have to go back to the beginning.  Our founding fathers faced no such quandary about the definition of freedom. They knew exactly what it was.  They were children of the Enlightenment, and derived their ideas about freedom directly from its philosophers, especially John Locke.  While these philosophers were powerful thinkers and their ideas were (no pun intended) revolutionary at the time, the principles of liberty are relatively simple.  They are, as the namesake of this book concluded, common sense.  It was an understanding of these revolutionary ideas by average American colonists that inspired the revolution that gave birth to a nation.

The idea that opens the door to the true meaning of freedom is individual rights.  Despite the emphasis today on the “general welfare” and the “common good,” the American tradition of liberty has nothing to do with either.  Instead, the founders believed each individual was born with natural, inalienable rights.  The Declaration of Independence states,

“We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,” 5

This passage is quoted widely in popular culture.  Invariably, the words emphasized are “that all men are created equal.”  Certainly, these are fine words and worthy of veneration.  However, the rest of this passage is equally important.  Every human being, because of his equality with all other human beings, has rights no earthly power can take away.  These rights are “unalienable,” so that governments, even democratically elected governments, have no power to revoke them.  To the founding fathers this was self-evident.  It was true based purely upon man’s existence itself.

This idea is drawn directly from the philosophy of John Locke, who wrote,

“A state also of equality, wherein all the power and jurisdiction is reciprocal, no one having more than another; there being nothing more evident, than that creatures of the same species and rank, promiscuously born to all the same advantages of nature, and the use of the same faculties, should also be equal one amongst another without subordination or subjection,”6

While these rights are endowed by a Creator, the founders did not specify who the Creator was.  Too often, those arguing for the ideals of our republic make the fatal mistake of basing the natural rights upon belief not only in God, but specifically upon the Christian God.  While the founders were by no means opposed to Christianity, belief in it or even in God is not a prerequisite for the existence of the natural rights.  The beauty of this idea is that it transcends religion and thus welcomes members of all religions, and those with no religious beliefs at all.  Therefore, the first building block of freedom, individual, inalienable rights, can be claimed by Christians, Muslims, Jews, Buddhists, Hindus, atheists, by every person on earth.

So what are these inalienable rights, which cannot be taken away?  The Declaration goes on to say, “That among these are Life, Liberty, and the Pursuit of Happiness.”7

At first glance, this statement might be a bit deceiving, maybe even a little disappointing.  Life, Liberty, and the Pursuit of Happiness?  Is that all?  Surely we have more rights than these!  Of course, the Declaration says “among these,” so it does not limit the natural rights to these three.  But these three are important.  It is worthwhile to determine the meaning of each.

The right to life is pretty easy to understand.  Most civilized societies have laws against murder.  Each individual has a right not to be killed by another human being, except in self-defense.  So far, so good.  What about the other two?  We are in the midst of trying to define liberty, or freedom, so let us put that aside for the moment.  The third right listed is “the pursuit of happiness.”  What does that mean?  Does it mean nothing?  Or does it mean everything?  What if it makes me happy to steal cars or blow up buildings?  Surely, I don’t have a right to pursue happiness like that!

No. There is a natural limit on liberty and the pursuit of happiness. Again, we can find the answer in Locke,

“To understand political power right, and derive it from its original, we must consider, what state all men are naturally in, and that is, a state of perfect freedom to order their actions, and dispose of their possessions and persons, as they think fit, within the bounds of the law of nature, without asking leave, or depending upon the will of any other man.” 8

While people are free to do what they want, they must do so “within the bounds of the law of nature.”  What is the law of nature?  Locke goes on to tell us,

“The state of nature has a law of nature to govern it, which obliges every one: and Reason, which is that law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions…” 9

Finally, we have some indication of what freedom is, rather than what it is not.  Liberty is not the unlimited ability to do whatever you want, nor is it confined to the arbitrary limits placed upon people by governments.  Contrary to the spurious argument that unfettered liberty would result in chaos, we see that the law of nature, Reason, very clearly and unambiguously prohibits some actions, even for people in a state of absolute liberty.  They are:

1.   Initiating the use of force or violence

2.   Infringing upon another person’s liberty

3.   Harming them in their possessions.

This last limit upon the actions of free individuals is important.  Locke spends an entire chapter of his Second Treatise talking about it.  It is related to property, which is arguably the most important right, while at the same time the least understood.  Property is important enough that we will spend the next chapter examining the subject.  To do this we will have to come to a clear definition of property, including how it is acquired, how it is exchanged, and what right the owner has to it.

More importantly, we have arrived at a definition of liberty.  It is the right of any person to do as they please, as long as they do not violate the equal rights of anyone else.  The latter half of this definition is generally referred to as the “non-aggression principle.”  Political activists associate this principle with libertarians, while intellectuals associate it with Ayn Rand’s philosophy of Objectivism.  Certainly both movements recognize and venerate it, but it is important to realize that neither is its source.  In fact, the non-aggression principle has been articulated with very little variation by all writers in the liberal tradition, including Locke, Jefferson, Paine, Bastiat, Mill, and later Rand and other 20th century writers and thinkers.

By applying this principle, the most complicated societal issues become astoundingly simple.  The ambiguous becomes unambiguous.  The answers become clear.  Virtually every problem facing America today can be solved by applying the principle of freedom.

There are a few points we should review for emphasis.  First, the rights mentioned in the Declaration of Independence and drawn out of Locke’s philosophy are inalienable.  They cannot be taken away by any power on earth, including a majority vote.  The reason the founders were suspicious of democracy was because of their fear that the majority would oppress the individual by voting away the individual’s rights, especially property rights.  This was the reason for the separation of powers and the limits on government authority.  Even a majority vote can be a threat to freedom.

The difference between a right and a privilege is a vital concept to understand.  A right is something you are born with, that you possess merely because you exist.  A privilege is something that is granted by another person, group, or a government.  Our country was founded upon the principle that all people have inalienable rights that cannot be taken away, not privileges granted by their government.  As John Adams so eloquently put it,

“I say RIGHTS, for such they have, undoubtedly, antecedent to all earthly government, — Rights, that cannot be repealed or restrained by human laws — Rights, derived from the great Legislator of the universe.”10

There is no need to be “thankful for the rights we have in America.”  All people have those rights and gratitude is neither necessary nor appropriate.  Rather, people are justified in demanding their rights, and any violation of them should be recognized as an act of aggression.

Second, in any conflict between individual liberty and the will of the majority, individual liberty prevails without compromise.  The majority has no right to violate the rights of the individual.   This is to some extent merely making the first point in reverse, but it is important enough to say in more than one way.  Society doesn’t have rights; individuals do.  Society is nothing more than a collection of individuals, so protecting each individual in society protects society.

Despite these seemingly undeniable truths, individual liberty is today under constant attack because of its perceived conflict with the common good or “the needs of society.”  While living together and agreeing not to initiate aggression against each other seems astoundingly simple, our politicians would have us believe there is something incredibly complicated about it.  They create a world in which civil society is a maze of moral dilemmas that only their astute guidance can lead us safely through.  Once liberty is properly understood and applied, all of these supposed dilemmas disappear.

End Notes

Introduction: The American Crisis

1 Paine, Thomas The American Crisis “The Crisis No. 1” December 19, 1776 from Paine Collected Writings edited by Eric Foner Literary Classics of the United States, Inc. New York, NY 1955 pg. 91

Chapter 1: What is Freedom?

1 Bastiat, Frederic The Law 1850 from The Bastiat Collection 2 Volumes Vol. 1 Ludwig Von Mises Institute Auburn, AL 2007 pg. 79

2 Madison,James Federalist #10    https://www.foundingfathers.info/federalistpapers/fedi.htm https://www.foundingfathers.info/federalistpapers/fed10.htm

3 Madison, James Letter to James Monroe October 5th, 1786 James Madison Center, The https://www.jmu.edu/madison/center/home.htm Phillip Bigler, Director, James Madison University Harrisonburg, VA https://www.jmu.edu/madison/center/main_pages/madison_archives/quotes/supremacy.htm

4 Jefferson, Thomas To Dupont de Nemours from Jefferson Writings edited by Merrill D. Peterson New York, NY: Literary Classics of the United States, 1984 pg. 1387

5 Declaration of Independence, United States 1776 National Archives and Records (website) https://www.archives.gov/exhibits/charters/declaration_transcript.html

6 John Locke Second Treatise on Civil Government from Two Treatises of Government C. and J. Rivington, 1824 (Harvard University Library Copy) pg. 132

7 Declaration of Independence, United States 1776 National Archives…

8 Locke Second Treatise pgs. 131-32

9 Locke Second Treatise pg. 133

10 Adams, John A Dissertation on the Canon and Feudal Law 1765 Ashland Center for Public Affairs (website) Ashland University  https://www.ashbrook.org/library/18/adams/canonlaw.html

Get the Kindle Edition here! Paperback here!

 

What is Greed?

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Whether you are liberal, conservative, libertarian, or none of the above, it is hard not to feel some sympathy for the “Occupiers.” Even if do not agree with them on every issue, there is something very American about a grassroots movement to “fight the man” and protest the existing order. After all, that is how the united States of America were born. As with the Tea Party, it is refreshing to see a group of Americans objecting to something about the sad state of our republic, rather than indifferently accepting each new depridation like sheep awaiting the slaughter.

It is in this spirit that I take issue with one of the central themes of the OWS movement: the fight against “greed.” Here is one area where I believe that the Occupiers are chasing a phantom. Greed is the government’s favorite hobgoblin. Any politician with a bad record, skeleton’s in his closet, or some other threat to his phoney baloney job can invoke this loosely defined vice and count on some level of support in his time of need (for votes). But what is greed and how can one fight it?

That is two questions and one cannot answer the second before resolving the first. I believe that if you asked any 10 people at random for their definition of greed, you would get 10 different answers. The first answer is usually “a desire to have more than one needs.” However, this doesn’t hold up very well. It is obvious that all people desire more than they need. Without accumulating more wealth than what is minimally needed for survival, no human being can read or write a book, create a work of art, or perform an act of charity. In fact, none of what we commonly call “culture” would be possible if human beings did not accumulate the excess wealth that affords them the leisure time to create art, literature, charitable organizations, or the other blessings of society.

To this objection, proponents of the “more than one needs” definition will immediately clarify. “No, I meant desiring far more than one needs.” This clarification is just as problematic. How much is too much? Who sets the limit? At what point has one changed from being a hard worker to being “greedy?” Does that limit change from person to person? Is there a greed-o-meter out there that can set a dollar amount?

If one accepts this definition of greed, the solution to the problem is even murkier than the definition itself. Exactly what is to be done about the fact that “the 1% cares only about profits and not about the  rest of society?” Should businesses take specific actions to cut their profits? What are those actions? The great majority of all new businesses fail within their first year, even when their sole motivation is profit. How is an entrepreneur to know for sure that his business will succeed at all, much less make “excessive” profits? What action can he take to counteract this? Should he cease to innovate, improve efficiencies, lower costs for consumers, improve the quality and features  of his products, or employ people? These are the things that entrepreneurs do to make profits. Specifically which one is “bad” for the 99%?

To be fair, many of the comments on the OWS Demands page are more specific. As I’ve said before, they are definitely in the ball park when they finger the financial sector. However, comments like this one indicate that they haven’t yet found their seats:

“The moneyed elite of our society has changed from being apart of the team that built an economy that raised the lives of all men with ample profits for themselves to a Gambler, who only wants to keep score through the accumulation of money, ever screaming for more profits for themselves at the expense of the people they pretend to serve.”

This is a popular theme and not just among OWS supporters. The accusation that economic players in the financial sector took excessive risks that harmed people other than themselves is almost universally accepted, even by conservatives. Remember George W. Bush’s famous pronouncement, “Wall Street got drunk.”

However, the statement that the “gamblers” make “profits for themselves at the expense of the people they pretend to serve” just doesn’t compute. Wall Street did take excessive risks during the boom that predeceded the bust. They did indeed take those risks in the hope of making greater profits. However, those profits would not have been made at the expense of the people they serve. The people they serve would have made those profits, too, on their own money. They voluntarily gave their money to the financial sector in the hopes that the “gamblers” would win them a return on their investment. Had all gone well, the 99% would have realized a huge return. It is fashionable to claim that financiers make money for producing nothing, but this isn’t true. They make money from their ability to make sound investments and the willingness of other people to pay them to do if for them.

So what can be done about this problem? How do politicians or their constituents, who know nothing about investing (which is the whole reason that they give their money to financiers in the first place), make rules for how much risk investors are allowed to take? Do those rules apply to their own investments? Without some risk, there are no new businesses, no new jobs, no economic growth. How much risk is too much and who decides? The investors themselves or people who know nothing about investing? If investors are not allowed to take whatever risks they deem prudent and the result is that the economy in America dies, will the 99% take responsibility for that? We know that the politicians won’t.

All of these seemingly insoluble dilemmas spring from the initial premise about greed. As long as greed is defined in terms of how much wealth one desires to accumulate, the conclusions that one draws from that premise will always be absurd. The amount of wealth one accumulates or desires to accumulate is immaterial. Instead, it is the means by which one wishes to acquire it that is vital.

If you change your definition of greed from “desiring more than one needs” to “desiring more than one has earned,” then all of the contradictions and ambiguities disappear. Of course, we are immediately begging the question of how to define “earned,” but that is a simple matter. One has earned wealth if one has acquired it without initiating the use of force against anyone else. Under this definition, money given to someone as a charitable contribution qualifies as earned just as profits made from selling products do. In this scenario, the amount of wealth one is able to accumulate has a natural limit – the amount that others are willing to pay for one’s goods or services. This eliminates those troublesome questions about how much is too much in terms of profit.

To be greedy, then, is not the desire to accumulate more wealth than one needs, but the desire to accumulate more than others are willing to pay you for your services. For in order to do that, you must forcibly take the money that they would not willingly give. There is only one institution in all of society that can facilitate this legally: government.

Thus, if Person A accumulates $1 million by selling 100,000 units of his product at $10 per unit, he is not being greedy. He has made an equitable exchange with his fellow human beings: $1 million in products for $1 million in money. In this scenario, he and the 99% are square. Each has benefitted equally from the exchange. We know that he has earned his $1 million because the consumers set the price of his products with their voluntary decision to buy.

Now consider Person B, who wishes to accumulate that same $1 million through government employment, subsidies or privileges. No one voluntarily buys his product. The fact that the government has to either subsidize Person B or protect him from competition means that he is trying to sell something that people would not otherwise buy at his asking price. At best, Person B has sold something at a higher price than people are willing to pay. At worst he has sold something that his fellow humans don’t want at all, but are forced to purchase by the government.

Either way, Person B is greedy – he wishes to accumulate wealth beyond what people are willing to pay him voluntarily. In other words, he is willing to commit armed theft against his neighbors. As you can see, Person B may be far more greedy in his desire for even $50,000 than Person A is in his desire for $100 million, if Person B plans to obtain it by force and Person A means to obtain it through voluntary exchange.

OWS is right to want to stamp out greed, but they aren’t defining it correctly. Since Woodrow Wilson, progressives have been making the same fundamental error in failing to distinguish between legitimately acquired wealth and wealth acquired through government force. It is the latter that OWS should look to stamp out, rather than indiscriminately condemning anyone who becomes wealthy. The most effective way to fight greed by its true definition is to take the Occupation to Washington, D.C., where the power that the greedy utilize resides.

Imagine a world in which every individual has an equal chance to be a millionaire, but only if he offers his fellow individuals $1 million in benefits, with the 99% deciding for themselves how much they are willing to pay. That is a world without greed. That is what we used to call “freedom.”

OWS and the Tea Party: In the Ball Park But Haven’t Found Their Seats

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As the 2012 elections approach, there is now a left wing protest movement to mirror the right wing Tea Party. Occupy Wall Street (OWS) and its many offshoots claims to represent “the 99%” of Americans who are not among the richest 1%. Like the Tea Party, OWS sees economic catastrophe ahead if America’s economic system is not fundamentally changed. Unlike the Tea Party, which places the blame for America’s economic woes on the doorstep of politicians, OWS points the finger squarely at Wall Street – and anyone else who makes enough money to qualify for a “1%” membership card.

It is actually refreshing to see Americans from both sides of the political spectrum interested enough to actually object to something. Whether marching around and carrying signs actually accomplishes anything is debatable. However, the Tea Party has already shown that political careers can be made or ended when enough people get both fed up and organized. While OWS is not as politically organized as the Tea Party was at this point in 2009, it has already made it over the toughest hurdle – getting a critical mass of people off the couch and out into the streets. As labor unions and other left wing special interests get more involved, it is likely that a bona fide political movement will emerge from the present confusion. Like the Tea Party, OWS might even change a few seats on their side of the aisle. But what then?

If the results of the Tea Party Congress are any indication, the answer to that question is “nothing.” Yes, the new Congress made some symbolic statements, like requiring the members to read the Constitution aloud during the opening session. But when it came to actually advancing their supposed agenda in a substantive way – cutting the size of the federal government and reigning in deficits – not much happened. A proposal emerged to cut $100 billion out of the $1.6 trillion deficit, which would have been meaningless even if it passed. Beyond that, it’s been business as usual inside  the Capitol, with Congressmen from both sides of the aisle continuing to spend money the federal government doesn’t have and kicking the can a  little further down the road.

Left wing Americans should already know the electoral process is unlikely to produce substantive change. As the third year of Obama’s presidency draws to a close, there is almost nothing of substance either his supporters or his critics can point to that differentiates his presidency from that of George W. Bush. Both championed and got passed an expansion of government involvement in the health care system that costs taxpayers about $100 billion per year directly and likely causes distoritions in the health care market that are far more costly than that. Both started a few new wars in the Middle East. Both expanded the federal government’s power to spy on its own citizens. Both passed “sweeping regulatory reforms” that further crippled America’s already weak economy. Both expanded executive power unconstitutionally. Both set new precedents in attacking the Bill of Rights.

But the similarity between the two that should resonate most  with OWS supporters is this: both filled their cabinets with Wall Street and corporate insiders and never made a move those special interests didn’t like. Sure, Obama made some populist, anti-business statements early in his presidency, but when it came to “Change” in the healthcare system, his program turned out to be a half trillion pear year handout to the health insurance industry. That wasn’t exactly what the true believers had in mind, but it was business as usual for corporate-owned Washington.

In short, two hugely trumpeted “revolutions” in American politics – a leftwing  one in 2008 and a right-wing one in 2010 – have failed to move the needle one degree in Washinton, D.C. A lot of articles were written and a lot of television talk shows were provided with material about both, but absolutely nothing has changed. Sooner or later, one has to answer the question: Why not?

The answer is even the genuine grassroots members from both the left and the right don’t understand what is ailing America. They know something is wrong, but decades of government propaganda bolstered by shoddy education have left most Americans unequipped to figureout what it is. In fact, both the Tea Party and OWS share the same fundamental misconceptions about The Problem.

Both the Tea Party and OWS believe Republican presidents, especially Ronald Reagan, had somehow created a laissez faire capitalist economy during their presidencies. The Tea Partiers believe America must get back to Reaganomics, while OWS believes it was the root cause of today’s problems. Both of them are wrong. Neither Ronald Reagan nor George W. Bush signed one bill that substantively made the American economy more laissez faire. In fact, Bush actually signed Sarbanes-Oxley, which he himself called “the most sweeping regulatory reform since the New Deal.” Even what the media called “deregulation” during the Reagan years was mostly regulatory tweaks that were passed under Carter. Tom Woods covers this in detail in Rollback, so I won’t attempt to reconstruct the whole argument here. In short, “deregulation” never happened. It was just one huge, Jedi mind trick, similar to “hope and change.”

That brings us to misconception number two: regulation itself. Both movements misunderstand the relationship between our present corporate economy and government regulation. The Tea Party believes getting rid of regulations as Reagan supposedly did would “get the government out of the way” of America’s corporations, resulting in huge gains in productivity and employment. OWS believes more regulations will reign in “corporate greed” and protect the little guy from those same rapacious corporations. Again, both of them are wrong.

A truly unregulated free market would not result in a few, large corporations controlling every economic sector. Nor would it result in most of society’s wealth being concentrated within a small percentage of the population. While no one alive has ever lived under such a system in terms of the entire economy, we have seen it in a particular sector within the last two decades. As Bill Bonner pointed out, the high tech industry existed for a time as an unregulated free market. Did this result in entrenched corporations getting bigger and concentrating even more wealth in the hands of a few? Absolutely not. As Bonner reminds us, “They created an entirely new industry…with new companies nobody had ever heard of. And then, they destroyed some of the biggest businesses in America.”

Government regulation creates barriers to entry for new firms and dampens innovation. In other words, it insulates entrenched corporations from competition, causing the very consolidation and concentration of wealth OWS objects to. That’s why established corporations never object to new regulations. Why should they? They end up writing the regulations themselves with one thing in mind – protect their position from the competition that would occur in a free market. That’s what makes left wing support for increased government regulation so tragically ironic. It’s like they are rushing to the scene of a fire with a sistern full of gasoline.

The Tea Party purports to favor less government regulation, but they have no idea what the results would be. They, too, do not understand the difference between our present corporatist system and a free market. Were the economy truly deregulated, most of the corporate giants they hold up as symbolic of the free market would be gone. Only those which could deliver better products at lower prices in the face of unrelenting competition would survive – and only for as long as they could continue to do so. Upward mobility would return. Large fortunes would again be made by “college drop-outs, computer nerds, products of teenage mothers and broken marriages” (Bonner again), just as the misnamed “robber barons” largely came from the ranks of the poor. Conservatives didn’t like that in the 19th century – and they might not like it now, either. But that’s what the free market does. It rewards innovation, productivity, and achievement, regardless of the social pedigree of the innovator.

Neither OWS nor the Tea Party recognizes how economically destructive the gargantuan U.S. military establishment is. There were some left wing protests against the Iraq War during the Bush years, but that is a non-issue for OWS. Now that there is a Democrat running the empire, the left seems to have made its peace with war. The left never objected to the continuation of the decades-long occupations of Europe, Japan, Korea, or the 130 or so other countries the U.S. government currently has troops in. In purely economic terms, those programs dwarf the active wars.

Of course, support for this trillion-dollar-a-year abomination is a key plank of the Tea Party movement, which is against taking money from one American and using it to buy healthcare for another American, but has no problem taking money from one American and using to (supposedly) buy “freedom” for people in other countries. Not only is this direct transfer of wealth draining America of scarce resources, but it has completely skewed what’s left of American manufacturing towards producing products that don’t increase wealth. Wealth is only increased when products are produced that people voluntarily buy. No one voluntarily buys weapons or the services of military personnel. And those resources in turn don’t produce anything at all.

Both the left and the right view imperialism as somehow part and parcel of laissez faire capitalism. Nothing could be further from the truth. The foundation of capitalism is voluntary exchange. There is nothing a military force can do under the guise of “protecting America’s vital interests” or “opening up markets for American companies” that has anything to do with capitalism or voluntary exchange. Even if an army really did influence people in other countries to trade with American companies, that would not be capitalism any more than Fannie Mae or Freddie Mac influencing people to take out loans was capitalism. When it’s not voluntary, it’s not a free market. Whatever its true purpose is (and there are a lot of theories), the U.S. government’s massive military establishment is just another large, bankrupt government program.

However, the most harmful misconception OWS and the Tea Party share is not really a misconception at all. It is the failure to recognize the most destructive element in the American economy – the Federal Reserve. The failure of either movement to make the Federal Reserve a priority or even acknowledge its existence explains many of the other misconceptions. Both the artificial booms each attribute to their presidents of choice – Clinton for liberals, Reagan for conservatives- and the inevitable busts each blame on  presidents of the other party- Carter and Obama for conservatives, Bush 1 and Bush 2 for liberals – can all be traced back to the predicable results of Federal Reserve monetary policy. Even if all of the other economic interventions were eliminated and this one intervention were left in place, most of the economic problem would still exist.

The Tea Party claims to oppose Obama’s “socialism,” but fails to see the Federal Reserve as a fundamentally socialist institution. Its stated purpose is to transfer wealth from one individual or group to another at the direction of central economic planners. It doesn’t get much more socialist than that. A few conservatives might object to the way a particular Fed chairman conducts the business of the Fed, but almost none object to the Fed itself. Yet compared to the transfer of wealth that occurs when the Fed inflates the currency, all of the U.S. government’s welfare programs combined pale in comparison. Since the Fed transfers wealth to Wall Street and corporate America, one might understand their reluctance to oppose that aspect of it. But what about a small group of government hacks attempting to direct the entire economy? If that’s not “socialism,” then what is?

OWS is similarly disinterested in the Federal Reserve, even though it exists to transfer wealth from the 99% to the 1%. For both groups, ignorance is probably the majority of the problem. The Fed has managed to stay out of the spotlight for most of the past century, taking the credit for supposed recoveries and avoiding all blame for the business cycle itself. Yet, even if it did what it purported to do, it should still be Public Enemy No. 1 to both OWS and the Tea Party. Until most Americans understand how destructive this institution is, no amount of “reform” is going to make our economic problems go away.

So, the next election will be influenced by two grassroots movements committed to solving America’s problems. One says the problem is government. They are right. The other says it is corporations and the financial elite. They are also right. As a friend of mine likes to say, both groups “are in the ball park, but they haven’t found their seat.” One can only hope for a moment of clarity on both sides. If they could only see things as they really are, they’d be marching side by side.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

What is a Job?

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The usual chatter has begun following President Obama’s Sept. 8 call for a $417 billion government spending package designed to stimulate economic growth, create jobs, and improve the nation’s crumbling infrastructure. As always, the commentary, both pro and con, focuses on speculation about the potential results of the program.

Will this latest stimulus money actually reach “shovel-ready projects,” or will it again disappear down the black hole of state subsidies for Medicaid and education? How many jobs will the program actually create and what happens to those jobs when the program is over?
There is never any clear winner in debates like this. While the future is still unknown, Republicans will predict failure while Democrats will predict success. Once the program is over, Republicans will pronounce failure while Democrats will declare victory. The retrospective debate about the results of the program will go on until the media moves on to something else, only to be resurrected again at election time when Republicans will characterize the program as another “bridge to nowhere” while the Democrats will claim that it saved the economy.

There is rarely a definitive answer to questions about the results of government action, even after the fact. This may be one reason why most government programs never really end. The answers are much less ambiguous and elusive when the discussion is shifted from results to rights. To do that, we must answer a previous question.

What is a job?

One might assume everyone knows the answer to this apparently simple question, but I doubt it. In fact, judging by what politicians, media, and even friends and neighbors have to say about jobs and unemployment, I’m convinced almost no one in America today understands what a job really is.
As I’ve said before, a job is a transaction between a buyer and a seller. The employer is the buyer and the employee the seller, selling his services to the employer for a mutually agreed upon price. This is a voluntary transaction for both parties, just like the buying and selling of lawn mowers or breakfast cereal. The buyer offers to purchase services at the price he can afford. The seller decides whether to accept those terms or not. Both parties are free to decide not to go through with the sale at any time. Unless a specific term of employment has been agreed to, both parties are also free to cease doing business at any time. The employee can quit the job (refuse to continue selling the service) and the employer can terminate employment (refuse to continue purchasing the service).

There is only one way in which a purchaser of services can continue to employ people on an ongoing basis. The services provided by the sellers must produce products that make a profit. If the firm loses money, then the employer must increase his sales or lower his operating costs. The latter solution most often means purchasing fewer services (layoffs).

The voluntary association between buyer and seller of services (the employment contract) depends upon another voluntary association between the firm and its customers. The firm’s customers must choose to pay more for the firms products than the cost of producing them, including labor, material, rent, administration, and all other costs of production. It is that choice by customers that creates a market value for the products, for the market value is merely the amount of money the highest bidder will voluntarily pay. If no one was willing to buy the firm’s products at any price, then those products would have a market value of zero.

When the opportunity exists to sell products at a higher price than the cost of producing them, it typically attracts more than one firm, and those firms compete with each other for the customers willing to buy their products. Thus, employment opportunities become abundant in that particular industry, as more and more firms enter the market to take advantage of the opportunity.

Before the first product of any of these firms is produced, the owners must purchase the labor, materials, production facilities, equipment, and other capital goods necessary to make those first and all subsequent products. The owners purchase these capital goods and labor with savings – which are the result of consuming less than they produced over a period of time in the past. The only reason they choose to invest these savings into the venture is the opportunity for profits. Without that opportunity, they would consume their savings in the present or hold them for security against future misfortune instead of risking losing them by starting the new firm.

As long as there are customers willing to buy the products the firm produces, the model is self-sustaining and productive. From a societal view, both the owners and employees of the firm and the customers are adding more goods and services to society. Remember, the customers are only able to buy the firm’s products because of the products they’ve produced and sold to their customers, including employers. Just like the firm, they must produce products other people are willing to buy voluntarily. This is what gives them their purchasing power.

There is one word that sums up the entire process of economic growth and job creation: choice. The market price of products, the wage levels that can be sustained in the production of those products, the number of people that can be employed, and the quantity of products that can be produced all depend upon the ability for economic agents to make rational choices in their own self-interest. Without freedom of choice, there can be no market, no division of labor, no prices, and ultimately no jobs. It is the degree to which all economic agents are free to make the best choices they can that determines how productive, efficient, and prosperous an economy will be.

All of this goes out the window the minute one begins talking about the government “creating jobs.” By definition, nothing the government does allows any individual freedom of choice. This is where most people get confused, because they imagine the government to be a wealthy benefactor with money of its own. This misconception is reinforced when President Obama (and neither he nor the Democrats are by any means alone on this) refer to government spending programs as “investment.” It all sounds very prudent and morally sound until one considers what is really going on.

Whenever the government “invests” in a particular industry, whether it is producing “green” cars, bridges, buildings or roads, it is overriding the choices made by customers in the past. What customers and what choices? The choice by taxpayers not to purchase that car, bridge, building or road. As we’ve seen, when there are people willing to buy products at a price higher than the cost of producing them, there are entrepreneurs ready to take advantage of that opportunity and the products get produced. They do not choose to do this in order to help society, but to help themselves. Nevertheless, they do help society by producing the needed or wanted products and employing the people necessary for that production.


Not only are taxpayers forced to purchase products they have previously chosen not to buy, but the entire nature of the employment contract is fundamentally changed. No longer does an employer purchase services from an employee for the sole purpose of realizing a return on his capital investment. Now, the taxpayer is forced to purchase the services of the employee, with no hope of a return. The best he can hope for is somewhere a bridge, building or road he had previously chosen not to purchase gets built. Meanwhile, the employer is able to make profits that would otherwise be unavailable to him, because the government has forced taxpayers to pay at least part of his operating costs.

While society does get a new car, bridge, building or road, the value of those products is lower than the cost of producing them. This is why government-created jobs end as soon as the government stimulus money is removed. If the products produced and the jobs related to producing them were economically viable, entrepreneurs would already be creating them. Therefore, government-created jobs actually make society poorer, because they result in products worth less than the cost of producing them. Ironically, politicians will often boast that they created more jobs than their opponents, which actually means they created more poverty than their opponents.

By definition, all government spending comes from savings, because it is wealth produced by economic agents but not consumed. Therefore, government-created jobs actually destroy capital, as no self-sustaining production or profits result from that capital investment. Not only is that capital wasted and destroyed on the unproductive temporary jobs, but it is no longer available to create other jobs producing products people would voluntarily buy. In terms of the economic harm caused by government stimulus, this is only the tip of the iceberg. For more, read Peter Schiff’s testimony to Congress on this subject as well as one of his primary sources, Bastiat’s That Which is Seen and That Which is Not Seen.

Once you understand what a job really is, a lot of what you hear about jobs from politicians and the media sounds completely outlandish. You may hear it stated that everyone has a right to a job, but that can’t be true. How can anyone have a right to force other people to buy their products? If such a right existed, then no company would ever go bankrupt. Whenever it began losing money, it would simply appeal to the government to protect its right to force people to buy from it.

More often you will hear that everyone has a right to “a living wage,” but this makes no more sense. The price of any product in a free society is the result of mutual agreement between the buyer and the seller. Either party has the right not to make an exchange if they are not satisfied with the price. Government interventions like minimum wages interfere with this right. In fact, it is the seller of services (employee) whose rights are more infringed by minimum wages laws, which prevent him from selling his services below a certain price even if he wishes to. That anyone believes the government has a legitimate authority to set an arbitrary price level and then forcibly prohibit people from selling their services at a lower price speaks volumes about how little we value freedom in the land of the free.

No, the supposed right to a job or the right to forcibly fix the price of a job are not real rights. They both involve initiating the use of force against other people and no one has a right to do that. In fact, the true rights at issue with this program are the rights of the unwilling buyers of these services, the taxpayers. They have a right not to be forced to buy goods or services against their will. Yet violating this right is the only way any government can ever create a single job. That the only debate between either major party is over how the government can create jobs, rather than whether the government should attempt to create jobs, reinforces that liberty is not even a consideration in the formulation of federal government policy.

Yet, it is its own colossal trampling of liberty in a thousand other ways that has created the economic malaise the government is attempting to respond to right now. If we ever want to see those unemployed people get back to work, we have to understand what a job is and how and why jobs are created. Then, the government’s part in the solution becomes clear: start securing our rights instead of violating them and stop wasting our money in the misguided attempt to create jobs.

Why a Debt Default Would Be Wonderful

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While it is likely the two parties in Congress will reach a deal before the August 2 deadline, I can’t help reflecting on how wonderful it would be if they didn’t. While Congressman Ron Paul has correctly pointed out the government has already defaulted at least three different times in its history, and continues to default every time it prints new money, it is not quite the same as an “on-the-books” failure to make a timely payment. That is exactly what America needs.

Politicians, mainstream economists, and the media tell us a U.S. government debt default would be catastrophic. Treasury bonds would be downgraded, interest rates would soar, and the massive government spending that has supposedly fueled the present (jobless) recovery would be severely curtailed, plunging the U.S. and possibly the world back into a deep recession.

Perhaps that is true. Nevertheless, a debt default by the federal government would still be a blessing, for several reasons.

First, one must remember that all government spending represents a redistribution of wealth (what we regular folks call “stealing”). The government forcibly confiscates money from those who have earned it and spends it for the benefit of someone else. The most insidious way the government does this is by borrowing. When it borrows, it is confiscating money from people in the future – some of whom are not yet even born – to hand out to special interest supporters today. To the extent it would prevent or decrease this, a default would result in a more just society.

However, even if one doesn’t care about justice or property rights, a default would help correct the malinvestment that has caused this crisis in the first place. As I’ve said before, the entire U.S. economy is really one, huge bubble of misallocated resources, caused by a century of government intervention. The government’s backing of mortgages, together with monetary inflation by the Federal Reserve, were the primary causes of the housing bubble. This same dynamic exists in almost every sector of the economy.

The government also backs student loans for college. Just like it did to the housing industry, this government guarantee has inflated prices in higher education far beyond what could be supported by real demand. That in turn has led to the creation of millions of jobs in the education sector that only exist because the government subsidizes them. When the government funds are no longer there, the price of education will plummet, just as housing prices did, and all of those people will be out of work.

Healthcare is another sector with all of the same intervention-related problems. Government subsidies create artificial demand, inflating the price and misallocating resources to the healthcare sector. The healthcare industry is not forced to innovate in terms of delivering its services in more efficient ways because customers are forced to buy its products,

If you doubt this, just withhold the Medicare portion of your payroll taxes and see what happens.

This also creates jobs in the healthcare sector which are not supported by natural market forces. When the government can no longer subsidize them, those jobs will go away, just as they did in housing and education.

Banking, research, agriculture, energy, automobile manufacturing – there is not one sector where government is not overriding the voluntary transactions market participants would otherwise engage in. Wherever the government is spending taxpayer money, it is overriding a previous choice by taxpayers not to purchase that product. As F.A. Hayek observed in The Road to Serfdom, the government has never and can never make better choices than millions of market participants acting in their own self-interest. They simply lack the information necessary to do so.

Therefore, wherever the government is spending money to try to boost some aggregate statistic, it is making a problem bigger. If government spending is creating jobs, they are not real jobs. A real job is a voluntary contract between a buyer of services (an employer) and a seller of services (an employee). If that job is created because of government spending, a third party is introduced into the transaction who is not acting voluntarily.

Government-created jobs force taxpayers to purchase services from employees because it is not profitable for the employers in that sector to purchase them. Forcing taxpayers to purchase them doesn’t make those jobs any more profitable. It just depletes the capital available to create profitable jobs elsewhere.

The prospect of tens of millions more people unemployed may seem frightening, but that day is coming regardless of what politicians do. Economic laws are like the laws of nature. They will assert themselves in the end. Any job that requires the government to borrow more money to subsidize it is also a job that depends upon the lenders continuing to lend. As we have seen in recent Treasury bond auctions, those days are coming to an end. Raising the statutory debt ceiling only allows more phony jobs to be created, setting up more employees for the painful correction.

The most important reason a debt default will be beneficial is a philosophic one. It will force a complete paradigm shift in the way Americans think about the role of government. For a century, there has been no area of life that some special interest has not appealed to government to manage or subsidize. From the way we conduct commerce to the way we make personal decisions on food or healthcare to the way we coexist with our neighbors in other countries, nothing has been off-limits.

Complacency about our liberty has been one reason. The other has been the perception of infinite financial resources. The great wealth the United States generated in freer days provided a tax base and borrowing collateral that has always been perceived as unlimited. A debt default would shatter that foolish perception.

The default would be a bucket of cold water in the faces of a drowsy and compliant populace. It would wake people up to the reality Thomas Paine was aware of over 200 years ago, when he wrote that government “is at best, a necessary evil.” People would realize the government doesn’t “have our back,” other than to stick a gun in it to loot our liberty and wealth. We would no longer hear that horrid refrain from media pundits after some new government incursion or heist: “Well, the government had to do something.”

Instead, we would hear the resigned chorus, “Well, the government couldn’t do anything.” And perhaps, in some glorious, enlightened future, we’ll hear “The government shouldn’t do anything.”

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Eliminate Non-Essential Government Now

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In Friday’s last hour, a federal government “shutdown” was averted by a last-minute deal struck by House Democrats and Republicans to approve a federal budget for the remainder of the fiscal year. According to the Los Angeles Times, the Republicans achieved $39 billion in spending cuts out of a federal budget that will run an approximately $1,600 billion deficit this year alone. The Democrats were able to prevent defunding of Planned Parenthood and minor curbs on the power of the Environmental Protection Agency (EPA). As a result of the compromise, the 800,000 “non-essential” government employees that would have been laid off will be back at work on Monday, providing their non-essential services without interruption.

Politicians and media pundits ranged from frightened to hysterical at the prospect of this so-called shutdown lasting even a day, as if some epic blight would have consumed the land, marked by cars turned over and burning, wells dried up, and livestock lying dead at the side of the road.

Of course, no reduction in government spending can be discussed without the usual round of Keynesian economic gibberish. So, we also had to hear about how the economy would be devastated due to those 800,000 lost jobs, resulting in the loss of their own spending and the elimination of all of the money those employees help the government spend into the economy. Among the burning cars and dead livestock we would find shanty towns full of former Wall Street billionaires, wiped out by the sudden and devastating drop in demand for their products.

While even less exaggerated claims about the harm that would be caused if the shutdown had occurred are meritless, there is a much more important question to be asked that virtually every media outlet has been silent on. This is not surprising. Like all other political and economic debate in America today, the discussion is completely focused on results. To ask the most important question, we have to shift the discussion from results to rights. On that basis, the distinction made here in terms of essential vs. non-essential services provides a unique opportunity.

The shutdown would not affect the military, any core law enforcement functions, or any other federal government activity deemed “defense of life and property.” This assumes that our present bombing of Libyans is “defense of life and property,” although whose lives or properties are being defended while Libyan lives and property are being destroyed is an inquiry for another day.

The shutdown would not affect entitlement spending, which together with military spending makes up almost three quarters of the present $3.7 trillion budget. Social Security checks would still go out, Medicare and Medicaid claims would still be paid, and HUD landlords would still get their rent checks.

While the most important questions of rights actually revolve around this “welfare-warfare state,” it is not at issue in the so-called shutdown. Only those services deemed by the government itself as “non-essential” would cease. That begs the question:

Can even a democratically-elected government force its citizens to pay for services that everyone acknowledges are not needed?

One must remember that every dollar that the government spends, whether it is bombing some far-off nation, paying medical claims, or investigating the mating rituals of the Namibian Tiger Beetle, has been collected from taxpayers under the threat of violence if they do not pay. If you doubt this, just ask Wesley Snipes. There is a process that you can go through to get approved to visit him where he currently resides. All manner of propaganda is employed to distract the victims of taxation from this basic reality. However, any government, whether elected by the people or autocratically maintained by a military dictator, is invested with the power to force people to pay taxes.

It is this reality that inspires the occasional clear-thinking individual to suggest that there be some limit to what  individuals can be forced to pay for, regardless of how their government is constituted. In other words, one must define what government spending is necessary and what is not. Proponents of different political philosophies define “necessary” in terms of government activity in different ways.

For founding fathers in Thomas Jefferson’s camp, individuals could only be forced to pay for the protection of their own life and property, which translates to national defense for the federal government. Their opponents, led by Alexander Hamilton, argued that individuals can and should be taxed for other activities that contributed to “national greatness,” including the building of infrastructure, the maintenance of a large military establishment, and the protection and subsidization of government-connected corporations.

Modern liberals or progressives go a step further, saying that in addition to Hamilton’s program, the government has the legitimate authority to tax individuals for the purposes of providing needed benefits to others, such as retirement benefits, medical care, housing, food, and clothing. Some conservatives argue that this is merely legitimized theft, as the government here is not providing services equally accessible to the whole tax base, but rather transferring wealth from some individuals to others.

In any case, none of those debates were in play in regards to the recently-avoided shutdown. Assuming that the arguments made by both conservatives and liberals are valid, and that all of the above services are necessary for a peaceful and just society, neither conservatives nor liberals would give up anything in a government shutdown. The only services that would be interrupted would be those that both conservatives and liberals agree are non-essential, i.e., UNECESSARY services.

Under what theory of government can individuals be forced to pay for unnecessary government services? They are not needed for individual or national security. They are not needed to ensure “social justice.”  By the government’s own admission, they are not needed at all. If individuals can be taxed to underwrite even these services, is there anything at all that they cannot be forced to pay for?

There is a further philosophical question to be answered here in terms of the huge federal deficits that these unneeded services contribute to, which have resulted over the years in a $14 trillion national debt. It is not only present taxpayers’ rights that are in question, but the rights of people who are not even born yet. Even if you believe that the United States government is one “of the people, by the people, and for the people,” do “the people” have the right to force future American citizens to pay for unnecessary services provided to taxpayers today? Won’t those future taxpayers be people? Don’t they have any rights at all?

Looking at the founders again, Thomas Jefferson argued that future generations could not be legitimately forced to pay for any services provided to present taxpayers, not even “essential” services like national defense. His opponent Hamilton made no such philosophical distinction. In fact, he argued that the national debt would be a national blessing, as it would tie the corporate creditors to the government. His only qualification was that the debt not be “excessive.” Hamilton, the original American conservative, believed as conservatives do today that the greatness of the empire (the collective) outweighed the rights of the individual, even those individuals not yet born and therefore unable to give their “consent” via participation in the election process. Who was right, Jefferson or Hamilton?

Sooner or later, anyone truly interested in liberty has to come to the grips with the fact that any taxation, even taxation to provide defense of life and property, violates that natural law that no one should be forced to do anything or deprived of his property to pay for anything, as long as he is not harming others. Once this natural boundary is crossed, the limit of what one person or group can force another to do or pay for must be set artificially by men. Certainly, the most liberal limit on what citizens can be forced to pay for by their government is what the government itself deems as necessary. If government spending cannot be limited even to its own expansive definition of “essential services,” then what right is left to anyone to keep any of their own money? Why not just turn it all over to the government to spend as the government sees fit?

Obviously, if you believe that individuals have any rights at all, you must call for an immediate and permanent government shutdown of all “non-essential services.” This should be the bare minimum limit on government spending even if the government wasn’t running a deficit that represents theft from future generations.

But what of results? Fortunately, the idea that there is a choice to be made between individual rights and the “needs of society” is just another myth propagated by those who wish to extort your money for their own ends. There is no compromise or “balance” needed between individual rights and the benefits of these non-essential government services, because there are no benefits. The quality of life for Americans would be immediately and dramatically improved if they were eliminated.

Primarily, the present roster of 2.1 million federal employees, even in terms of percentage of population, is orders of magnitude larger than the “swarms of officers to harass the people and eat out their substance” sent by King George in the 18th century. Reducing this modern swarm of federal employees by roughly 40% would significantly reduce the amount of government meddling in Americans’ lives and overriding of their otherwise sound decisions about what to spend their  money on, how to conduct their business, what to eat, what medical services to purchase, etc.

Assuming that this subset of federal government employees earns the overall average of approximately $100,000 in salary and benefits, this also would be an immediate reduction of $80 billion in government spending, twice the amount cut in the compromise between Republicans and Democrats to pass this year’s budget. That doesn’t count all of the spending associated with these people doing their jobs, which could be as much as $500 billion.

The somewhat popular services provided such as national parks would not cease to exist without the government providing them. In fact, there could be a two-fold benefit in eliminating these particular government services. First, the land and assets associated with them could be sold at public auction, enabling the government to make a huge payment on the existing national debt. Second, these services could be taken over by more competent private enterprises which would risk their own money to provide them. As they would be competing for customers with other amusements such as Disney World or Carribean cruises, they would provide these services with higher quality and at a lower overall cost than the government does. In addition, that cost would be paid voluntarily by those who actually use the services, rather than involuntarily by everyone.

Finally, there would be no loss of demand in the economy due to the wages of those 800,000 employees no longer being spent into the economy. Remember, those wages all represented demand that was forcefully taken away from taxpayers and paid out to those employees.  Should those government jobs be eliminated, the money would merely be spent by its rightful owners on whatever they chose to spend it on, rather than spent by other people. Wealth created by productive activity is not increased when forcefully extorted from its rightful owners, and therefore does not decrease when returned to them.

In conclusion, Americans should not be apprehensive about the prospect of a “government shutdown” as defined in the recent budget crisis. They should demand it. Neither conservatives nor liberals would be compromising any of their values. Under even the most “extreme” interpretations of conservative or liberal philosophy, there is no legitimate authority for the government to tax individuals to pay for these services. Eliminating them would provide an immediate fiscal, economic, and social benefit to American society, and Americans would regain a tiny smattering of that liberty we all claim to cherish. New national elections are coming next year. Solving our biggest problems, like entitlement and military spending, will not be on the table. So, let’s set a more achievable goal and at least make this demand: No Non-Essential Government.

The Three Types of Government Spending

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U.S._federal_government_spending,_2010-2014Any objection whatsoever to some new, tax-funded government program elicits a consistent response from liberals or progressives. “You just don’t want to pay your fair share,” or “I guess we won’t see you driving on any of those government roads or calling the government police or fire departments.” The underlying assumption is that taxation is an all or nothing proposition. Either there is nothing that the government can collect taxes for or there is nothing that the government cannot collect taxes for. There are no principles upon which to base an answer to the question, “Is this a legitimate function of government?”

While there are probably thousands of different services that governments spend money on, they can generally be divided into three broad categories: security, public services, and wealth redistribution. Libertarians[1] argue that the only legitimate government spending is on security. Conservatives generally approve of security and some public services with their rhetoric while engaging in all three types of spending when in public office. Liberals generally endorse all three types of spending with both their rhetoric and their actions while in public office.

“Security” includes all government functions which attempt to defend citizens from aggression against their rights by other human beings. These would include the military, various police forces, and the civil and criminal courts. These are the functions of government whose purpose is to secure the individual rights of life, liberty, property, etc.

It is important to remember that even if these are legitimate functions of government, it does not mean that they cannot be abused. For example, a small suburban village in a low-crime area may not need more than the county sheriff for a police force, but may instead bear a tax burden of village, town, county, state, and even federal police forces. However, these debates revolve around how efficiently the services are being provided, not whether they should be provided by the government at all.

“Public services” generally refers to services provided to all members of society. What makes a service a “public service” is that it can be reasonably assumed that every member of the society has an equal opportunity to utilize it. Examples include roads, bridges, public libraries, garbage collection services, and fire departments. Libertarians argue that these are goods and services that the private sector can provide. Their objection to providing them with tax dollars is that those who do not consent to purchase them are still forced to pay. While this is also true of security services, libertarians acquiesce to those on the assumption that it would be impossible to exercise property rights without a government in place to defend them.

Certainly, a bridge between a new suburb and the city may improve commerce for the entire city. However, it is not necessary to protect anyone’s rights. Therefore, libertarians argue that those who want to build the bridge should provide the capital for it themselves and are perfectly within their rights to charge a fee to those who wish to use the bridge. Conservatives have traditionally argued that these services can be funded by the government and provided by private corporations under government contracts. Liberals generally support public services as well, although they sometimes object to them being provided by private firms.

Like security services, public services are prone to abuse and corruption, even if one accepts that they are legitimate functions of government. Public funds are often wasted on services that are not needed or services that are poorly rendered because they are provided by politically-connected government employees or private firms, rather than by the most qualified. Consider the “bridges to nowhere,” the roadwork construction projects that never end, or the multitude of scandals where it was discovered that $500 was spent on a single nail or some other gross abuse of public funds occurred.

The third category of government spending is wealth redistribution. Wealth redistribution collects taxes from one group of people in order to provide services to another group. What makes this type of government spending different from public services is the fact that the goods or services provided do not benefit all members of society equally. For example, health benefits under Medicaid are paid for by all taxpayers but are only available to people whose income is under a defined eligibility level. Thus, those funds are literally taken from one group and redistributed to another. Both libertarians and conservatives argue that this is nothing more than legalized theft, although conservatives have often led or acquiesced to expansion of this type of spending once in office. President Bush’s expansion of Medicare is one of the most recent examples. Liberals and progressives generally support this type of spending, arguing that it is each person’s moral responsibility to “contribute.”

In order to have an informed debate about a new government program, one must identify which category the proposed program belongs in. Too often the distinctions between these categories are blurred by both critics and proponents. Most often, a program that would properly be categorized as wealth redistribution is represented as a public service in an effort to persuade those that must pay for it that it is their civic duty to do so.

Read the rest at Euro Pacific Capital…

 

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

The Three P’s: Things Government Cannot and Should Not Do

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declarationIn this late stage of America’s devolution from constitutional republic to social democracy, one is hard pressed to find meaningful debate about the role of government. Despite a 24/7 news cycle and endless political commentary on talk radio, most Americans have not once in their lives heard the question, “What is the purpose of government?” Certainly, we hear that “the government should do this” or “the government should not do that” in regard to particular issues, but nowhere will you hear a meaningful discussion about the overall mission of government. Indeed, answering this question might not be all that beneficial to our chattering classes, because once it is answered, there is little need for hours and hours of more talk. Clarifying the role of government makes the answers to most political questions rather simple and unambiguous. It is hard not to suspect that many of our politicians avoid this subject intentionally.

If America is truly the “land of the free,” then there can be only one answer to this question. The purpose of government is to defend its constituents against aggression. Period. Since “liberty” and “the non-aggression principle” are one and the same, it is impossible for government to have any other purpose, or any additional role.

As government is by definition the societal use of force, any action of government other than defense against aggression must itself be aggression.  To induce human action through aggression is coercion. When coercion is practiced by government, it is called tyranny.

Freedom is the ability to exercise one’s will in the absence of coercion.  Therefore, freedom is impossible once government is allowed to perform any function other than defense.  If freedom is exercising one’s will in the absence of coercion, one cannot be free while being coerced. Two plus two cannot equal five.

That leaves a multitude of actions that government must be prohibited from engaging in. They generally fall into three categories, which I like to call “the Three P’s.” The Three P’s are to prevent, to promote, and to provide.  There is no way for government to engage in any of these three activities without destroying the liberty that it supposedly exists to defend.  Yet, this is 99 percent of what government in modern America does.

Most Americans look to government to prevent crime.  Once a particularly heinous crime is reported in the media, there are universal outcries about the failure of government to prevent it.  Almost no one stops to think about what it really means for government to “prevent crime.”  By definition, to prevent something is to act before it happens.  Since all government action represents the use of force, government can only prevent crime by initiating force against people who have committed no crime.  Force must always be initiated by someone.  The initiating party is the aggressor.  There is no other possibility.

This is not merely a theoretical or academic argument.  Think for a moment about the results of government’s various “crime prevention” efforts.  Gun control disarms the victims of crimes while empowering violent criminals who don’t care about gun control laws.  Economic regulations which attempt to prevent fraud insulate protected corporations from competition, emboldening them to commit more fraud.  Worst of all, the War on Terror, the ultimate government crime prevention program, has harassed millions of American citizens while allowing terrorists to walk onto planes with explosives in their shoes, underwear (and who knows where else), and has laid waste to an entire nation in order to determine that the “weapons of mass destruction” it supposedly possessed did not in fact exist.

In addition to preventing crime (including terrorism), that war also claims to undertake another of the Three P’s: to “promote.”  Once it became clear that there were no weapons of mass destruction in Iraq, a new rationalization was needed for our brutal invasion of that country.  That new reason turned out to be our missionary desire to “promote democracy.”  Without getting into the erroneous perception that “democracy” and “freedom” are synonymous, it should be quite clear after seven years of uninterrupted martial law in Iraq that our government has failed to achieve either democracy or freedom.  Only government can be capable of missing the irony of ordering people at gunpoint to be free.  While it might play for some good laughs in a Peter Sellers or Monty Python movie, it is really quite horrifying when one considers that our government takes this position in all seriousness.

It is not only in foreign policy that government reaps disastrous results when trying to “promote.”  Consider its attempts to promote “clean energy.”  One need look no farther than the ethanol fiasco or “Climategate” to see the results government gets in promoting respect for the environment.

The same underlying reason accounts for the similarity of results when government tries to “promote” or to “prevent.”  In both cases, force is initiated against individuals who have committed no aggression themselves.  In order for government to “promote” anything, it must act.  When government acts in the absence of aggression, it commits aggression.  By committing aggression against and therefore overriding the decisions of millions of individuals, government causes innumerable unintended consequences.  All of them can be traced to the initiation of force.

The third of the Three P’s is by far the most destructive when undertaken by government: to provide.  The illusion that government can “provide” anything springs from a loss of recognition of what government is.  Government is the use of force, not by an individual, but by all of society.  As it is a destructive force, rather than a creative one, it can produce nothing.  Therefore, it can only provide something to one citizen that it has forcefully seized from another.  This holds true whether it is attempting to provide healthcare, education, housing, or any other form of property.

The fact that human beings spend the majority of their time on earth laboring to fulfill their wants or needs makes this the most costly of the Three P’s.  While warfare represents violent aggression against millions of people, government’s usurpation of human labor initiates violence against everyone.  While the cost of warfare in human lives cannot be expressed in dollars and cents, there is at least a limit to the amount of lives it can affect and the length of time it will go on (despite government’s best efforts to make it universal and indefinite).  However, once government has claimed a right to the labor of its constituents, no one is spared and the subjugation never ends.

While the active wars in Iraq and Afghanistan amount to less than $200 billion per year (as if those amounts were not staggering themselves), the U.S. government spends trillions of dollars each year attempting to provide its citizens with healthcare, retirement benefits, education, housing, and other necessities.  Government’s results in all of these areas are the same: disastrous.  The healthcare, education, and housing provided by government are more expensive, of lower quality, and in shorter supply than would be the case if government did not attempt to provide them.  Aggression cannot create prosperity any more than it can create freedom.

Thomas Paine wrote that “government is at best a necessary evil.”  He understood clearly what government is: an institution of violence.  As individuals, we understand that the need may arise to commit violence against another human being, but only justifiably for one reason: to defend our lives against aggression.  Should we be faced with that unfortunate choice, we may be justified in resorting to violence but afterwards regret that the need to do so arose. Most importantly, no sane person claims a right to initiate violence under any other circumstances.  As we do not possess this power as individuals, we cannot delegate this power to government.  Any legitimate power possessed by government must derive from the individuals who constitute it.

To put it most succinctly, government must always be limited to a negative power.  It is the societal extension of the individual right of self defense.  As individuals cannot use force to prevent, promote, or provide, government cannot either.  Individuals have no right to force one another to do anything, even if they believe that it is in the victims’ best interests.  So, whenever the question arises of whether government should involve itself in some new aspect of its citizens’ lives, remember the Three P’s.  If the new program represents any of them, it is time for each individual to exercise his most basic right in respect to his government: the Fourth P, to prohibit.

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

The True State of the Union: We Have No Rights Whatsoever

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2010_State_of_the_UnionIt has been almost a week since President Obama gave his first State of the Union address, and it has been analyzed from the left, right, center, front, and back. Of course, the speech is really about the performance of the federal government, particularly its wonderful accomplishments under the leadership of the sitting president. This is not peculiar to the Obama presidency. As far back as Jefferson, presidents have used the Constitutionally-mandated stump speech to do a little self-promotion, although what they promote has certainly changed quite dramatically.

However, if the speech is supposed to reflect the accomplishments of the federal government, then we should expect that it will contain specifics about how that government has fulfilled its purpose, which is, as we all know, to secure our rights. At least that’s what our founding document tells us. Therefore, if a president is going to do a little bragging about what a great job he has done, it would be logical to assume that we would hear particulars about the way in which he has secured our rights. Logic, however, has little to do with the machinations of leviathan.

In fairness, President Obama did begin his speech with a few remarks about the actual state of our country – a state of economic devastation and unending war. The fact that both of these afflictions have been caused wholly by our federal government is something that seems to have gone right by him, although he is not unique in that respect, either. Having reminded us about how bad things are, he dutifully lays as much blame as possible on the president that preceded him (another time-honored tradition when succeeding a president of the opposing party). He then moves right into trumpeting his accomplishments.

The president explains how he hit the ground running after taking over during the financial crisis, which began during the last year of the Bush administration. He takes pride in the fact that he supported the bank bailouts over the wishes of the American people, because when he ran for president, he “promised he wouldn’t just do what was popular,” he would do “what was necessary.” I don’t remember that particular campaign promise, although I do remember him promising to “preserve, protect, and defend the Constitution of the United States” or something to that effect. I suppose you can’t expect him to keep them all.

President Obama justifies his first initiative as president as follows:

“And if we had allowed the meltdown of the financial system, unemployment might be double what it is today. More businesses would certainly have closed. More homes would have surely been lost.”

Perhaps the president is correct on this. Perhaps he is not. However, there is one consideration that seems wholly missing from his thought process. Do the people whose money was taken to “stabilize the financial system” have any rights? By what authority was their money confiscated, even if it were for “the good of all?” Majority vote?

The president next goes on to extol the virtues of the first policy that was wholly his own. He says that his administration “extended or increased unemployment benefits for more than 18 million Americans; made health insurance 65 percent cheaper for families who get their coverage through COBRA; and passed 25 different tax cuts… As a result, millions of Americans had more to spend on gas and food and other necessities, all of which helped businesses keep more workers. And we haven’t raised income taxes by a single dime on a single person. Not a single dime.”

This seems to be a mixed message. The part about extending unemployment benefits and making health insurance cheaper seems like more wealth redistribution. However, he also mentions tax cuts that saved jobs and let people keep more of their own money. One might have been led to believe that he actually secured the right to property here, at least for some of his constituents. Then came the punch line.

“The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right -– the Recovery Act, also known as the stimulus bill. Economists on the left and the right say this bill has helped save jobs and avert disaster. But you don’t have to take their word for it. Talk to the small business in Phoenix that will triple its workforce because of the Recovery Act. Talk to the window manufacturer in Philadelphia who said he used to be skeptical about the Recovery Act, until he had to add two more work shifts just because of the business it created. Talk to the single teacher raising two kids who was told by her principal in the last week of school that because of the Recovery Act, she wouldn’t be laid off after all.”

It is ironic that one of the examples that the president cites is a window manufacturer. Those few lucid economists who are not among those “on the left and the right” who agree wholeheartedly with the stimulus bill certainly would have been unable to avoid recalling Frederic Bastiat’s “broken window fallacy.” It is the absurd reasoning that Bastiat exposes in his famous essay, “What is Seen and What is Not Seen,” that underlies the entire “stimulus” strategy. Occasionally, this has been pointed out in public debates over these programs. However, there is one question that has not even been asked by President Obama’s most vitriolic Republican opponents. Do the people who were forced to fund the Recovery Act have rights?

President Obama implies that his wonderful largesse was accomplished without taxing anyone, but this is absurd. It may be true that he has not had a tax increase passed in the Congress, but the funding for the Recovery Act can only come from one place. For the portion that was borrowed by the U.S. government from other nations, that money will eventually have to be paid back. The government only has one official source of revenue – taxation. The fact that those who will pay the taxes to underwrite the Recovery Act may not be born yet (although I don’t personally believe that Washington has that much time left) doesn’t change the fact that they will be forced to pay it back.

There is also an “unofficial” source of revenue for the government, and that is inflation. For the portion of the Recovery Act debt that the Federal Reserve merely monetizes, it is no less taxation than is an appropriation from the Treasury. It is merely a more insidious form of taxation, one that does not look its victim in the eye, but rather steals from him silently through depreciation of a currency that he is forced to use by the government. Whether by official or unofficial means, there are individuals whose money will be confiscated by the government so that others may keep their jobs. Again, I ask, do those individuals have rights?

It should not go without mention exactly who these people are whose jobs have been saved by the Recovery Act. According to the president, “there are about two million Americans working right now who would otherwise be unemployed. Two hundred thousand work in construction and clean energy; 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, first responders. And we’re on track to add another one and a half million jobs to this total by the end of the year.”

Is there anyone among these two million that are not government employees? Perhaps the construction workers, although I’d bet they are working solely on government contracts. In any case, they are all on the receiving end of the taxation, necessitating that others must be taken from in order for them to receive.

The whole concept of the government “saving or creating jobs” is one whose injustice seems to elude everyone. That is probably because a century of “progressive” ideas has completely befuddled us about what a job really is. A job is a contract between a buyer and a seller. The employee is the seller, who sells his services to an employer for a mutually agreed upon price – his wages. This contract is one that both parties enter into voluntarily. The employer purchases the services because he is willing and able to do so. The employee sells for precisely the same reasons. Each has a right not to enter into the agreement, or to terminate it anytime he wishes.

However, when the government “saves or creates jobs,” it completely overrides the voluntary nature of this arrangement. If an employer is no longer willing or able to continue to purchase the services of an employee, the government has only one means at its disposal to change that outcome: brute force. It uses this force to confiscate the property of other people and thereby force them to purchase the services of the employee, since the employer is no longer willing or able to do so himself. The government claims it has saved a job, but it certainly has not secured any rights. In fact, it has acted counter to its purpose. It has destroyed the rights that it exists to protect.

It is the same evil at work in the president’s call for “health care reform.” As part of his plans to “improve the system,” the government will not only annihilate the right of property but liberty as well. While taxing some in order to pay the doctor bills of others, the federal government will ensure that no one can even conscientiously object. Every American will be required to purchase insurance from one of the government’s pet corporations, regardless of whether they want to or not. This amounts to a mandatory fee paid to the government merely for the privilege of being alive. Once the right to property is destroyed, the rights to liberty and even to life are destroyed with them.

Without repeating the analysis for every program that the president described, they all rest upon the same logic. There is some mysterious entity called “society” whose needs outweigh the rights of every individual that comprises it. In fact, it is apparent from the president’s speech (and those of most of his predecessors) that the federal government recognizes no rights of any individual whatsoever. Sadly, there are not many among the citizenry who think any differently. So long as representatives have been democratically elected, their power knows no bounds and recognizes no rights.

America was founded upon exactly the opposite idea. The reason that the U.S Constitution guarantees every American “a Republican form of government,” rather than a democratic one, is precisely because its framers believed that individual rights cannot be voted away. We cannot vote ourselves a right to other people’s property, not even to save millions of jobs (although it is really not possible to do so anyway). We cannot vote away another’s liberty, not even to lower health care costs for those who cannot afford it (although this will not work either). This was the central principle upon which our nation was founded – that we are endowed by our creator with unalienable rights. A pure democracy does not recognize these rights.

Progressives promote the idea that “taxation without representation” was the chief injustice that led to the American Revolution. This is convenient to their agenda, because they go on to justify any tax levied by a democratically-elected body on the grounds that those being taxed were represented in that body.

Of course, this begs the question, “Why did the founders specifically instruct Benjamin Franklin not to under any circumstances accept an offer of representation for the colonies in the British parliament?” Perhaps we should be so wise. Secession anyone?

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.