Category Archives: Economics

Gilligan, The Skipper, and the Federal Reserve

Now here’s another tale of our castaways.

Imagine if life on the island were different. Instead of seven stranded castaways, there were only four: Gilligan, the Skipper, Mr. Howell, and Ben Bernanke.

Besides non-existent ratings without Ginger and Mary Ann, some other things would be different. Imagine that there was only one thing to buy on the island, coconuts. Now, of course, this takes a willing suspension of disbelief, because we know that these four people would need more than just coconuts to survive. They would need clothing and shelter and might want other comforts that the island might conceivably provide. They would all provide different services to each other and trade them for the services of their fellow castaways. But in this example, the only thing that they trade for are coconuts.

Mr. Howell owns the coconut orchard, which produces 100 coconuts per year. Mr. Bernanke is in charge of the currency, the Island Reserve Notes (IRNs). In order to purchase the only available product for sale on the island, one must use IRNs. Barter or the use of other commodities to make this purchase is prohibited. Each coconut costs 1 IRN.

Gilligan and the The Skipper each perform different services for each other and the other two which they trade for these paper notes in order to buy coconuts. At a given point in time, Gilligan and The Skipper each have 50 IRNs.

There are a few things that are true. The first is that the IRNs held by Gilligan and the Skipper have no value of their own. Their value is wholly derived from the coconuts that they can buy with the IRNs. Neither do the ISNs have any value off the island. Back in civilization, the currency is not recognized, although if a mainlander were to acquire some IRNs, he would be able to purchase coconuts with them if he ever found himself stranded on the island.

Secondly, Gillligan and the Skipper are equally wealthy, not because they both have the same amount of IRNs, which don’t have any intrinsic value, but because they are both able to buy an equal quantity of the available products. They are each able to buy one half of all coconuts produced in one year in Mr. Howell’s orchard. In other words, each has the same purchasing power in the island economy.

Now, suppose Mr. Bernanke decided to print 5 additional IRNs and give them to the Skipper. The Skipper would immediately be wealthier, as his purchasing power has now increased by 10 percent. He can now buy 55 coconuts instead of 50. But where did this new purchasing power come from? Was it really created out of thin air just by printing additional IRNs?

Mr. Bernanke might say yes. However, there are still only 100 coconuts available to purchase. Since there is no way for Mr. Howell’s orchard to produce more than 100 coconuts during the current year, it would seem that Gilligan can still buy 50 coconuts, the Skipper can likewise buy 50 and his 5 additional IRNs are worthless until there are more coconuts available to purchase. How can the Skipper take advantage of the additional IRNs?

Obviously, there is only one way. Rather than trading 1 IRN for each coconut, the Skipper will now offer Mr. Howell more than $1.00 IRN per coconut. While he may offer different prices at different times, depending upon how hungry he is, let’s say that the average price he offers Mr. Howell over the year is $1.05. This is the new market price, which Gilligan has to pay as well. Mr. Howell certainly isn’t going to sell coconuts to Gilligan at 1 IRN apiece when he can get 1.05 from the Skipper. So, with Gilligan and the Skipper each paying on average 1.05 per coconut, the Skipper is now able to buy 52.4 coconuts, while Gilligan can only buy 47.6.

What we have seen is a transfer of wealth. The Skipper is now 2.4 coconuts wealthier. However, this new purchasing power was not magically created simply by printing the 5 extra IRNs. It was transferred from Gilligan, who can now afford only 47.6 coconuts, even though he has the same amount of IRNs that he had before. No one snuck into Gilligan’s hut and removed any of his money. He still has the exact same amount. But he has been robbed nonetheless. Regardless of how laudable the reasons given for printing the new IRNs and giving them to the Skipper – to stimulate the economy, create new jobs, etc. – it was nevertheless accomplished through theft.

It should also be noted that no additional wealth has been created. The total number of coconuts that Gilligan and the Skipper are able to purchase is still 100. The wealth has simply been redistributed from Gilligan to the Skipper. Imagine if this were to go on for decades. At some point, the Skipper would be fabulously wealthy and Gilligan would be destitute.

Now, the only reason that this theft is possible is the law that forces Gilligan to use the IRNs. If he were able to pick bananas and offer them in trade for the coconuts, he might be able to produce enough in bananas to buy more coconuts than the Skipper. Only the power invested in Mr. Bernanke allows him to transfer wealth and it is the only power he has. He doesn’t produce a single coconut himself. He simply decides how those coconuts are going to be distributed.

One might also argue that the Skipper might invest the extra 5 IRNs in capital goods and thus expand production on the island. It is possible. However, it is less likely that the Skipper is going to make wise decisions on what capital goods to invest in with purchasing power that was stolen from someone else than with money he saved himself. After all, if he decides to invest in a scheme that doesn’t pan out, he can go back to Mr. Bernanke and get more IRNs. In reality, these funds are loaned to the Skipper and he must pay them back with interest. However, he is really getting an involuntary loan from Gilligan and using Gilligan’s purchasing power to acquire capital goods. Each time he does, he becomes wealthier and Gilligan becomes poorer. Adding insult to injury, the Skipper gets to retain ownership of the new capital goods and keep all of the profits from the investment – with the cost of the investment provided by Gilligan!

Eventually, production might expand, but it will have expanded far less than if the Skipper had been forced to accumulate his capital by consuming less coconuts. This would put downward pressure on the price of coconuts, making Gilligan wealthier while the Skipper became wealthier still once he realized a return on his investment.

Of course, no economy is this simple. There is never only one product or service to purchase in any economy. Neither have we accounted for the coconuts that Mr. Howell consumes, nor for the presence of Ginger, Mary Ann, the professor, or Mrs. Howell, who could all conceivably produce other products or services to offer each other in the island economy.

However, even if there were seven castaways – or 300 million – the principle would remain the same. There would be some finite amount of wealth that all of their efforts combined could produce. All other factors being equal, printing new IRNs and distributing them unequally among the inhabitants would produce the same increase in prices and the same redistribution of wealth.

The only honest way to expand production would be for some of the islanders to save some of their earnings and invest them in capital goods. This would have the effect of raising the overall wealth of the island and any disparity in individual wealth would be the result of those individuals producing more for the other islanders to consume, not from redistribution through the production of new paper currency. Moreover, since production could only be expanded by real savings, instead of by a privilege granted by Mr. Bernanke, they would all have an equal opportunity to save themselves and compete with those producing more. All of these factors would tend to make income disparity decrease, instead of increase as it does under the IRN System.

There is only one question that remains. Why does Gilligan allow the IRN System to continue?

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

Earth to Rick Santorum: Libertarians Founded the United States

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Andrew Napolitano recently showed a clip in which Rick Santorum explained his views on libertarianism. His comments are also instructive in understanding his animosity (politically) towards Ron Paul. Santorum said:

“One of the criticisms I make is to what I refer to as more of a Libertarianish right. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. That is not how traditional conservatives view the world. There is no such society that I am aware of, where we’ve had radical individualism and that it succeeds as a culture.”

As David Boaz pointed out in the interview with Napolitano, Santorum seems to oppose a basic American principle- the right to the pursuit of happiness. I agree with him on this, but there is something even more fundamental here than that. It has to do with the conservative philosophy itself. One of the statements that Santorum makes is true. “That is not how traditional conservatives view the world.”

There is a great disconnect between average Americans who refer to themselves as “conservatives” and the small group of politicians and politically-connected businessman who call themselves likewise. The members of the former group believe in the founding principles of the United States, including the inalienable rights to life, liberty, and the pursuit of happiness. They believe that these rights are endowed by their Creator. In other words, they preexist the government. They are not created by the government. It is the government’s one and only job to protect those rights and when the government fails to protect them and instead violates them, it is the duty of the people to alter or abolish the government.

These inalienable rights are also referred to as “natural rights,” meaning that man possesses them even in the state of nature (the state without government). For Jefferson, whose philosophy was inspired by Locke, the reason that men formed governments was to protect these rights better than they could be protected otherwise.

Locke viewed man as capable of both good and evil. For Locke, man’s natural state was a state of reason, which meant that he respected the rights of other men and observed the natural law of non-aggression. “The state of nature has a law of nature to govern it, which obliges every one: and reason, which is that law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions.”

For Locke and his philosophical heir Jefferson, this natural law of non-aggression was the basis of government power. By prohibiting aggression by one person or group against another, the government would preserve the natural rights to life, liberty, and property. Importantly, repelling aggression was also the limit of government power, for when the government exercised power for any other reason it was committing aggression itself and invading the rights it was meant to protect.

That this was Jefferson’s guiding political principle is clear from his many statements to that effect. In his first inaugural, he argued for,

“…a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.”

In a letter to Francis Walker Gilmer in 1816, he wrote, “Our legislators are not sufficiently apprised of the rightful limits of their powers; that their true office is to declare and enforce only our natural rights and duties, and to take none of them from us. No man has a natural right to commit aggression on the equal rights of another; and this is all from which the laws ought to restrain him.”

Even on religious freedom, Jefferson based his position on the non-aggression principle. ““The legitimate powers of government extend to such acts only as are injurious to others. But it does me no injury for my neighbor to say there are twenty gods, or no god. It neither picks my pocket nor breaks my leg.”

The non-aggression principle defines liberty itself as Jefferson understood it. For him, as well as for the likeminded libertarians that led the secession from Great Britain, the word “liberty” as used in the Declaration of Independence had a specific definition. It meant the right to do what one pleases as long as one does not invade the life, liberty, or property of another human being. In other words, each individual was beyond the reach of government power so long as he committed no aggression against anyone else.

These are not conservative ideas. They are libertarian ideas. While Jefferson, Samuel Adams, and the others who espoused this theory may not have called themselves by that name, the basic tenets of their philosophy were the same. Today, the non-aggression axiom remains the fundamental basis for libertarian theory. Ron Paul bases his positions on it, as he said (about the 3:30 mark) when running for president on the Libertarian Party ticket in 1988.

Just as this non-aggression principle serves as the foundation and limit of government power between individuals within society, it is the foundation and limit of government power with respect to other nations. As all nations exist in a state of nature with each other, the natural law of non-aggression is the only one that governs them. As I’ve stated before, the non-aggression principle is the basis for the Declaration of War Power. The purpose of that power is for Congress to debate whether or not the nation in question has actually committed aggression against the United States. If it has, then a state of war exists and military action is justified. If it hasn’t, there is no state of war, no declaration, and no military action is justified. The use of military force in the absence of a state of war (previous aggression by another nation) violates the natural law.

The conservative philosophy rejects all of these ideas. There were conservatives in the 18th century just as there are today and their philosophy hasn’t fundamentally changed, either. The writer that most modern conservatives trace their philosophical ideas to was Edmund Burke. He has this to say about inalienable rights.

“Government is not made in virtue of natural rights, which may and do exist in total independence of it, and exist in much greater clearness and in a much greater degree of abstract perfection; but their abstract perfection is their practical defect. By having a right to everything they want everything. Government is a contrivance of human wisdom to provide for human wants. Men have a right that these wants should be provided for by this wisdom. Among these wants is to be reckoned the want, out of civil society, of a sufficient restraint upon their passions. Society requires not only that the passions of individuals should be subjected, but that even in the mass and body, as well as in the individuals, the inclinations of men should frequently be thwarted, their will controlled, and their passions brought into subjection. This can only be done by a power out of themselves, and not, in the exercise of its function, subject to that will and to those passions which it is its office to bridle and subdue. In this sense the restraints on men, as well as their liberties, are to be reckoned among their rights. But as the liberties and the restrictions vary with times and circumstances and admit to infinite modifications, they cannot be settled upon any abstract rule; and nothing is so foolish as to discuss them upon that principle.”

While modern conservatives like Russell Kirk have pointed to Burke as their philosophical inspiration, one can clearly see that Burke is here merely restating ideas from the true father of modern conservatism, Thomas Hobbes. Hobbes asserted that in the state of nature man had “a right to everything,” even a right to one another’s bodies. Hobbes asserted, as Burke implies here, that man’s passions would always overcome his reason and because of this the state of nature was a state of war of “everyone against everyone.” For Hobbes, as for true conservatives today, man has to give up his natural rights upon entering society and accept those privileges to liberty and property that the government grants him.

For Hobbes, not only did man give up his natural rights upon entering society, but he also had to grant the “sovereign” absolute and undivided power. This was necessary in order to completely dominate man’s natural impulses, which would always lead him to harm his neighbor if they were not checked. This power must literally keep each individual “in awe,” to make him fearful of committing any unlawful act. To secure this absolute power, the sovereign needed control over the economy, which he consolidated through a privileged, wealthy elite. He also needed control over education and even the religious beliefs of the people. No individual could ever be allowed to follow the dictates of his own will, as it would inevitably lead him to harm his neighbor or the commonwealth in general.

On foreign policy, Hobbes also viewed all nations as existing in a state of nature. However, since he viewed the state of nature as equivalent to the state of war, he viewed all nations not under control of the sovereign as de facto enemies. In reading Leviathan, one can almost hear George W. Bush’s famous remark, “You are either with us or with the terrorists.” This is why conservatives support the deployment of troops all over the world. Like Hobbes, they believe that we are in constant danger from any nation that we are not completely dominating with the threat of force.

The reason that conservatism seeks to “conserve” the status quo is because its adherents do not believe that natural rights are inalienable. Upon entering society, man has to give up all of his natural rights, so the only rights that man has in society are those he has been given by government in the past. Thus, if you get rid of the past, you get rid of the rights. While the status quo might not be optimal, the conservative believes that to get rid of the status quo means returning to the awful state of nature, and necessitates reconstructing man’s rights – via government – all over again. Conservatives are always fearful that rights can be lost and never regained – as opposed to libertarians who believe that rights are inalienable.

The conservative tradition in America does not trace back to Thomas Jefferson or the Declaration of Independence. Its tenets are completely incompatible with the basic libertarian philosophy that informed Jefferson and that document. The conservative tradition in America traces back to Alexander Hamilton and the Federalists, who were the conservatives of their day. Hamilton sought to preserve the status quo, which was a central government with absolute power, along with its mercantilist economic system. The only change he sought was that the system be run by Americans rather than the British.

Hamilton was a Hobbesian on every issue, which is why he clashed so stridently with Jefferson. Hamilton also believed that the power of the federal government had to be absolute. Otherwise, the separate states would be in the state of nature with each other and inevitably at war. He often spoke of the “want of power in Congress” leading to the states “being at each other’s throats.” Economically, he wanted a central bank, high protectionist tariffs to enrich domestic manufacturer’s at taxpayer expense, and “internal improvements,” which meant the government using taxpayer money to build what we would today call “infrastructure.” While all of these policies were anti-free market, they served the agenda of securing the loyalty of a wealthy elite to the government. Hamilton went so far as to call the national debt “a national blessing” for the same reason. On foreign policy, Hamilton was an unqualified militarist who sought to lead an army in conquering an American empire, starting with the Western Hemisphere possessions of Spain.

He felt justified in all of these invasions of individual rights and violations of non-aggresion because he believed that what he called “national greatness” (today conservatives call it “American Exceptionalism”) trumped the rights of individuals. For Hamilton, as for conservatives throughout human history, the individual lived to serve the commonwealth, as opposed to the libertarian belief that the commonwealth only existed to serve the individual.

This conservative tradition can be traced throughout American history from the Federalists to the Whigs to the Republican Pary. The Republican Party was born as the party of big government, centralized power, and a mercantilist economy. Ironically, all that history remembers of the Republican Party at its birth in the 1850’s is its opposition to slavery – its one libertarian position – while ignoring its Hobbesian conservatism on all other matters. However, with slavery abolished, the Republican Party retained the rest of its philosophy through the next century and right up to the present day. One can hear it rehashed in any 2012 Republican presidential primary debate.

Today, conservative American voters wonder why the Republican politicians that they elect never seem to make the government smaller or less intrusive. They refer to elected Republicans who consistently grow the size and power of the government as “RINOS” (Republicans In Name Only). They believe these politicians are not “true conservatives,” because while they may belong to the Republican Party, they do not adhere to the principles of an underlying conservative philosophy that they imagine to exist. They are wrong. Newt Gingrich, Rick Santorum, George Bush, and the rest of the establishment Republicans are the true conservatives. The American voters identifying themselves as conservatives are really libertarians – they just don’t know it yet.

Go to any Tea Party rally. This is where you will supposedly find “radical conservatives,” but you won’t find them carrying any signs quoting Alexander Hamilton. You won’t find speakers extolling the virtues of government spending on infrastructure. Instead, you see signs quoting Thomas Jefferson and speakers mocking the many “bridges to nowhere” that have resulted from attempting to put Hamilton’s conservative ideas into practice.

The one inconsistency is the Tea Party’s support of the U.S. government’s military empire. This false note in the otherwise libertarian movement is the result of cultural confusion. These conservatives don’t yet realize that they aren’t really conservatives. They are libertarians, and the warfare state is inconsistent with the rest of their philosophy. They support it because they have been told all of their lives that it is the conservative position, which it is. However, limited government, inalienable rights, free markets, and individual liberty are not.

Contrary to Rick Santorum’s assertion that no society based upon radical individualism has ever succeeded, the libertarian, radically individualist principles upon which the United States was founded were precisely why it succeeded so spectacularly. It was libertarianism that made America different from any society before or since – what made it the “shining city on the hill” as Santorum calls it. It was the collectivist conservative philosophy that helped bring it down – with a lot of help from a third philosophical movement called Progressivism. Neither more conservatism nor more progressivism – nor any combination of the two – can solve the problems that America faces today. If Americans want to see liberty and prosperity restored in the United States, then restoring libertarianism is their only hope.

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

The Right to Be Racist?

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With Ron Paul well positioned to win the Iowa Caucuses, the Republican establishment is in full panic mode. They are well aware that Paul actually means what he says about cutting $1 trillion from the federal budget during his first year in office, including removing U.S. troops from the active wars in the Middle East and from their decades-long deployments in Europe and elsewhere around the world. In other words, for the beneficiaries of big government, both liberal and conservative, the party will be over. Desperate to prevent this, they are looking for something, anything, that they can attack him on.

The trouble with attacking Paul is there is not much to attack. He has no closet full of ex-wives, tawdry affairs, or dirty political deals. More importantly, he has been a consistent conservative throughout his political career. He doesn’t have to explain away a Romneycare or television ads promoting the liberal environmentalist agenda. He doesn’t have to explain why he has changed his position on issues conservatives deem crucial to their ideology and platform. He can’t be attacked for his economic plan because it is precisely what conservatives say they believe in, but never do. While his foreign policy is out of step with the current Republican establishment, it is consistent with that of conservative icons Ronald Reagan and Robert Taft, which Paul takes every opportunity to point out. It is also resonating with the American people, including active military personnel, who donate more to Paul’s campaign than to all of the other Republican candidates combined.

So, in a desperate attempt to find something to attack, Republicans are resorting to the old, liberal trick of implying that he is a racist. They can’t call him a racist outright because the allegation would be ludicrous. Paul and his positions have become too well-known, including his own denunciation of racism as “an ugly form of collectivism.” Instead, the establishment seeks to associate Paul with racism indirectly, citing campaign contributions from white supremacists that Paul didn’t return or the famous newsletters, an issue that was put to rest a decade ago.

However, the one question of substance that the establishment can raise and which Paul should expect to be heavily emphasized should he win the nomination is his stance on the Civil Rights Act of 1964. Here, Paul’s strict adherence to libertarian principles would seem to mean that Paul recognizes a right to be racist, regardless of how distasteful he may find racism personally. If that’s true, then it is going to hurt Paul politically, especially in the general election when the full power of the liberal media is aligned against him. Paul should expect to be questioned on this in every interview. The strategy was effective against Barry Goldwater, who also opposed the Civil Rights Act, and will be effective against Paul if he cannot answer it more effectively.

It is a testament to the character of the American people that any association with racism immediately elicits aversion and disgust. The idea that a human being might somehow be inferior because of a superficial genetic variation like skin pigmentation, which is about as significant as attached ear lobes, is the height of ignorance, leftover from a more barbaric past. The majority of Americans have decided long ago that this is something that they want no part of and ought to be banished from civil society. But what about the minority who do not agree? Does Ron Paul or the libertarian philosophy in general recognize a right to be racist?

The short answer is no. The whole line of reasoning comes out of a misunderstanding of libertarianism and, more fundamentally, rights. Libertarianism does not recognize the existence of “positive rights.” To libertarians, all rights are negative. Thus there is no right to be racist, just as there is no right to be charitable, tolerant, or honest. There is only the right not to have force used against you unless you have previously initiated force against someone else. This is the essence of liberty and libertarianism. It is the only theory of rights that can be reconciled with reason.

Consider the right to life. Regardless of how they feel about the supposed right to healthcare, a living wage, or other controversial “rights,” everyone recognizes the right to life. But what is this right? Is it a right to live under all circumstances? No. When someone dies of natural causes, no one alleges that their right to life has been violated. Similarly, if one dies of a fatal disease or is killed by a flood or eaten by a lion, no one would allege that their right to life was infringed, however tragic their death may have been. The right to life is specifically the right not to be killed by another human being. Even this definition of the right to life has a limit. Your right to life does not protect you from being killed by another human being if he is defending himself against you while you are trying to kill him.

This reasoning applies to all rights. The right to liberty is the right not to have another human being forcefully inhibit your actions if they do not harm another person. The right to property is the right not to have another human being take your justly acquired possessions away from you against your will.

Thus, libertarianism does not defend the right of an employer to discriminate based upon race, it defends his right not have violence initiated against him if he does. Understanding this point requires a recognition of reality – that every law is backed up by the threat of violence if it is not obeyed. While the vast majority of libertarians – in fact, the vast majority of all people – find racial discrimination distateful, libertarians recognize that it does not constitute violence against other people and therefore its practitioners have a right not to have violence used against them. Thus, there can be no just law against racism or racial discrimination. That is not an endorsement of bigotry. It is merely a consistent application of the principle of liberty.

So would a libertarian society include signs on restaurants saying “No Blacks Allowed” or vast inequities in employment opportunities for racial minorities, women, or the disabled? No. Why not? Because a libertarian society would include an unregulated free market, with no privileges or artificial advantages for connected corporations, which means unlimited competition among firms selling similar products and services. As I’ve said before, the racist employer loses in such a market economy. Any employer that consistently chooses to hire less talented employees based upon their race will, by definition, have a less talented workforce than its non-racist competitor. This does not rely upon altruism, boycotts, or any other sacrifice of individual self-interest. The employer that hires the most talented people, regardless of race, sex, or other non-essential characteristics does so because it is in his economic best interests to do so. A more talented workforce increases his profits and allows him to gain market share, eventually putting the racist out of business.

Similarly, the restaurant or movie theater that turns away customers based upon race (or other non-economic factors) puts itself at a fatal disadvantage against the restaurant or movie theater that sells to all consumers willing to buy its products. This doesn’t even account for the societal aversion that would result from anyone putting up a sign saying “Whites Only” or “No Blacks Allowed.” Even discounting the fact that most Americans would boycott such an establishment merely on principle, the racist restaurateur or movie theater owner loses, for purely economic reasons. In other words, even assuming that all economic players act only in their own self-interest and no one makes any decisions based upon moral aversion to racism, the market will still defeat racism, every time.

The only other solution is totalitarianism. If government regulation is really the answer, then the Civil Rights Act of 1964 does not nearly go far enough in fighting racism. Regarding employment, the legislation is arbitrarily selective in the racism that it prohibits. As I’ve said before, the employment contract is merely a buyer-seller arrangement. Employers are buyers of a product (labor) from sellers of that product (employees). Why should this buyer-seller contract be treated any differently from any other buyer-seller arrangement? Why should the government not be regulating every purchase we make, ensuring that we buy approximately 12.5% of our food, gasoline, or toilet paper from black-owned firms, or approximately 50% of those products from women-owned firms? While that might seem ludicrous, it is not substantively different in principle from the idea that the government can prohibit racism when employers purchase labor. Neither is the prospect of punishing black or female consumers for not buying enough products from white-owned or male-owned firms.

If Americans take the time to think these issues through, they will continue to abhor racism but will join Paul and libertarians in their opposition to those sections of the Civil Rights Act of 1964 that deal with private property and personal decisions. Liberty does mean that some people will do things that we don’t like, but it affords us the ability not to associate with those people, to disapprove of their actions, to voice that opposition openly, and to persuade others to condemn it as we do. It gives us the ability to make our own decisions about who we associate with, who we do business with, including who we buy from and who we sell to, and forces us to live with the consequences of those decisions. By prohibiting racism under the threat of violence, the government actually gives racists cover. If given the freedom to hire, buy, and sell based upon race, as they wish to, the market will more quickly put them where they belong – out of business.

So how does Ron Paul handle this deeply divisive philosophical issue without compromising his principles, and do so during the average one-minute soundbyte during an interview? While I would not presume to be able to articulate the principles of liberty better than Ron Paul, who has been doing so for over 30 years, I humbly suggest the following:

“Personally, I agree with the vast majority of Americans that abhor racism and other forms of discrimination against people based upon superficial characteristics that have nothing to do with the content of their character. However, we have to find a way to fight this problem without trampling the rights to liberty and property that are the bedrock of a free society. So, I’ll make you a deal. You give me an unregulated free market where everyone is free to dispose of their person and property as they see fit, as long as they do not invade the person or property of others. If, under those circumstances, someone actually puts up a sign that says “Whites Only” or “No Blacks Allowed,” I’ll be open for business the very next day, right across the street. My sign will say “Everybody Welcome.” We’ll see who’s still in business a month after that.”

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

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 20^th 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 18^th 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 20^th 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

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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.

Tom Mullen on Mike Church Post Show Show 8-1-2011

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Tom Mullen as a guest on Mike Church’s Post Show Show to discuss Government default.

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.”

Can Ron Paul Really Be Right About Everything?

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I was in Jacksonville last Friday for an event called “Ron Paul on the River.” The Republican presidential candidate was supposed to speak there, but had to cancel at the last minute due to a Libya vote in the House scheduled on short notice. While it was disappointing that the congressman would not appear, the keynote speaker that appeared in his place was well worth the trip.

Doug Wead is a self-confessed former member of the Establishment. In addition to being a best-selling author and world-renowned speaker, Wead has worked as a special advisor to President George H.W. Bush and on the campaign of George W. Bush. According to Wikipedia, Time magazine called Wead “an insider in the Bush family orbit.”

A good portion of Wead’s speech in Jacksonville focused on issues on which he had formerly disagreed with Paul. At one point, he made the startling statement, “but now I agree with him on everything.” He encouraged Paul supporters to persevere through the difficulties of supporting an anti-Establishment candidate and to remember that “logic and the truth are on your side.”

It is not fashionable to admit that you agree with someone “on everything.” To say that you do is to invite the accusation of belonging to a personality cult whose members blindly follow their leader no matter what position he takes. Indeed, this criticism is leveled at Paul’s grassroots supporters, who are called “Paulites” by detractors, implying that they have a pseudo-religious devotion to Paul rather than informed positions on the issues.

In modern American political thought, where only the results of political action are considered rather than the rights of the parties involved, it is not considered reasonable to agree with anyone 100% of the time. For someone like Wead, whose living depends upon his credibility as an expert on those things he writes and speaks about, there is a certain amount of risk in making this statement. Yet he did it in Jacksonville without hesitation, emphasizing the words “on everything” to ensure that no one missed the point.

This immediately struck me, because it was the second time in as many weeks that I had heard a statement like this from someone who had something to lose by saying it. Appearing on The O’Reilly Factor, John Stossel answered O’Reilly’s assertion that Ron Paul hadn’t won the New Hampshire debate by saying, “But he’s right about everything and you’re wrong.” O’Reilly retorted, “Everything?” Stossel repeated, “Everything.” When O’Reilly pressed yet again with the same question, Stossel finally backed up to “Just about everything.”

Stossel is a television journalist, so credibility is arguably even more important to his living than it is to Wead’s. That is not all the two have in common. Stossel also admits that he regrets much of the first 20 years of his career when he attacked the free enterprise system and championed increased government regulation over business. Like Wead, Stossel was a member of the Establishment, albeit from the other side of its aisle. Now, despite the risk to his credibility, he says that Ron Paul is right about everything.

So is this some sort of quasi-religious devotion? Are Paul’s followers simply caught up in a mass hysteria over someone who is likeable and has demonstrated his integrity for so long that they abandon their reason to avoid critical examination of his positions? Isn’t it impossible for an intelligent person to agree with someone on everything?

The answer to all three of these questions is “no.” In fact, contrary to what conventional wisdom tells us, it is actually illogical to agree with Paul on some things and not others.[1] As I’ve said before, Paul is simply applying the central libertarian axiom to each issue. As long as he applies the axiom properly and does not make an error of logic, he is going to come out with a position that is consistent with libertarianism 100% of the time.

For those in the grip of this “conventional wisdom” that has led us to the brink of societal collapse, Paul’s answers are anything but consistent. On economic policy, he seems like a hardcore conservative, surpassing all other Republicans in his zeal to eliminate regulation and taxes. On foreign policy and social issues, he seems to be some sort of lefty hippie, arguing to legalize all drugs, allow homosexuals to marry if they wish to (he wants government out of marriage even at the state level), and to immediately order home every soldier stationed on a foreign base.

Those just learning about libertarianism might conclude that it is some sort of “compromise” between conservatism and progressivism/liberalism. This is untrue. Libertarianism evaluates political issues from a completely different perspective than either mainstream political philosophy. Sometimes, conservatives happen to agree with libertarians, but for different reasons. Sometimes, the same is true for progressives/liberals. Libertarians care not for who agrees/disagrees. They follow one simple principle and let the chips fall where they may.

Walter Block sums this up best in terms of understanding how libertarians like Paul formulate their positions.

“This is because libertarianism is solely a political philosophy. It asks one and only one question: Under what conditions is the use of violence justified? And it gives one and only one answer: violence can be used only in response, or reaction to, a prior violation of private property rights.”

In order to understand Ron Paul’s platform, there are two conclusions one must reach. The first is that libertarians are correct that violence is only justified in response or reaction to a prior violation of private property rights. Block does not limit the definition of “private property” to land ownership or even physical property in general. Instead, property includes all of one’s life, liberty, and justly acquired possessions. So, any murder, assault, theft, fraud, or coercion would be violation of a private property right. Based upon that understanding, ask anyone if they agree that violence should never be initiated, but instead only used in defense, and you will almost always get agreement. So far, so good.

The second thing that one must conclude in order to understand Ron Paul is that all government action is violent action. This is where it gets difficult for conservatives and liberals alike. While it is easy to see the government’s use of its military as an act of violence, it is harder for people to see that other government activities represent violence. How could providing healthcare, ensuring workplace safety, or licensing barbers be violent acts?

This is the great truth that hides in plain site under every human being’s nose. In order to recognize it, one must disengage the deep, emotional attachments that almost everyone has developed to some or all government activity. Once you get someone to that point and they are truly ready to reason, they will come to the libertarian conclusion every time. To the genuinely interested and rational person, only one question is necessary:

“What if you do not cooperate?”

I cannot count how many times I have asked this question and received in response a stare – not a blank stare, but a thoughtful one. You can see the wheels turning. Sometimes they will begin to speak, then stop themselves while they think some more. They are looking for a hole in the theory. They are unable to find one. They are genuinely interested in either proving or disproving your argument. By that time, you have won.

For those who do not immediately “see the light,” you can pick any government action and walk them through that reasoning process:

You: Suppose that I do not wish to participate in Medicare and withhold only that percentage of my payroll taxes that would otherwise go to fund it. In return, I agree not to make use of any of the Medicare benefits. What will happen to me?

Him/Her: You will be charged with income tax evasion.

You: What if I don’t answer the charge?

Him/Her: You will be arrested.

You: What if I do not agree to submit to the arrest?

Him/Her: You will be physically forced to submit.

You: And if I resist further?

Him/Her: (reluctantly) You will be killed.

You: So, you now agree that we are forced to participate in Medicare under the threat of violence, correct?

Him/Her: (Even more reluctantly) Yes.

You: Is there any government tax, law, or regulation that we are not similarly forced to participate in under the threat of violence? Are not all of these answers the same in relation to even the least significant government regulation, like a parking ticket?

Recall the final scenes in the 1999 movie, The Matrix. After Neo’s “resurrection,” he stands up to once again face the agents that had apparently killed him a moment before. However, when we see the matrix through Neo’s eyes, as he sees it now, the whole world is made up of lines of green code. Neo had been told early in the movie that the matrix is a computer-generated illusion. He heard it, but did not know it. He is now seeing that world as it really is for the first time. His mind has reasoned through and understood all of the implications of what Morpheus has told him. Once he truly understands, he is invincible.

This is a wonderful metaphor for the libertarian “conversion.” Once one has had the epiphany that all government action is violent action, there are only three choices. 1) You come to the same conclusions that Ron Paul does on every issue, 2) You disagree with Walter Block and conclude that it is morally justifiable to initiate violence against other people, or 3) You abandon logic and stop acknowledging reality. This is why Paul told the Today Show’s Matt Lauer that “economic liberty and personal liberty are one and the same and foreign policy that defends America and not police the world [sic] – that’s part of the package as well.”

Doug Wead, John Stossel, and millions of Paul’s supporters have had this revelation. This is why they agree with Paul without exception. They refuse to accept the other two choices available to them: to support the initiation of violence or to abandon logic and refuse to acknowledge reality. This is not fanaticism. It is the inevitable conclusion that one must come to if one employs logic and faces reality. That is why Doug Wead said, “logic and the truth are on your side.”

During his 2008 presidential campaign, Ron Paul lost the Washington state primaries by a considerable margin. However, he won big in Spokane. Why? Because that was the one part of Washington in which Paul’s campaign was able to schedule an appearance. During that campaign, Howard Stern remarked about his exposure to Paul’s message just as Wead, Stossel and millions of Paul supporters have: “I think I agreed with everything that dude just said.” Stern went on to say that he had never heard of Paul before and that it was a shame that the Republican Party was not taking him seriously.

Once a reasonable person hears the libertarian message, it is inevitable that they will not only agree, but agree completely and without exception. This is the antithesis of fanaticism. It is reason. It is recognizing the real world for what it truly is and applying logic to those observations. It is the consistent application to separate political issues of one undeniable principle, which can only lead to libertarian conclusions. It is actually illogical and fanatical to come to any others.

During the 2008 presidential campaign, the Establishment media had a strategy to combat this very troublesome dynamic: Don’t let the message be heard. That is no longer a viable strategy. Paul’s grassroots supporters have forced his platform into the mainstream. The media is simply unable to ignore Paul’s campaign this time around. The libertarian message will be heard. Whether or not Paul wins the presidency is secondary. Every day, more Americans are hearing the truth for the first time and its power is irresistible. The revolution is underway. Whether it takes a year, a decade, or longer, liberty is going to prevail.

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

[1] This assumes that Paul continues to apply libertarian reasoning consistently. It is certainly possible to disagree with him if he misapplies the theory. There are also fine points of theory that libertarians would take Paul to task for, but not on his general positions on the domestic and foreign policy of the federal government.

Tom Mullen Talks Freedom

Every revolution starts in the minds of the people