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Why Progressives Will Enjoy Atlas Shrugged, Part I

I had the opportunity to see Atlas Shrugged, Part I on Saturday in the only theater in which it is being shown in Tampa, FL. It is running at Cinebistro, a specialty theater where you can enjoy a high-end meal and fine wine served at your seat, which is very similar to a first class airline seat. Admittedly, it is just the kind of venue that progressives might associate with an elitist gathering of selfish capitalists. However, the movie itself tells quite a different story than they might expect if their understanding of Rand is limited to her interviews with Phil Donahue or Mike Wallace.

Like libertarians, Rand’s Objectivist economic theory was rooted in what we today call “the non-aggression axiom,” which Thomas Jefferson and the liberal faction of America’s founders called “the law of nature.” According to this philosophy, each individual has an inalienable right to keep the product of his labor and to dispose of it as he sees fit. The non-aggression axiom forbids any individual or group from using force to take away the justly acquired property of another. Neither does it allow for anyone to interfere with voluntary contracts, as long as those contracts do not involve the initiation of force against anyone else.

This prohibits the government, which is by definition the societal use of force, from redistributing wealth or enacting laws which go beyond prohibiting aggression. Establishment media figures who interviewed Rand immediately focused on the implications of her philosophy for social safety net programs, charging that Rand’s philosophy would not allow for programs for the poor or handicapped. While this is true, it obscures the most important implications of Rand’s philosophy for economic policy in the United States.

What would likely startle progressives watching the film is its emphasis on the evils of what free market proponents would call “crony capitalism.” This is completely consistent with the novel, which demonstrates that the beneficiaries of government regulation supposedly enacted for “the common good” or “the benefit of society” are really the super-rich. Indeed, the film never criticizes the beneficiaries of social programs. Instead, it spends all of its time demonstrating the difference between those “capitalists” who acquire their wealth through government privileges and those true capitalists who acquire their wealth by producing products that consumers voluntarily buy.

This is a crucial distinction that has eluded progressives from Woodrow Wilson to Michael Moore. After seeing Moore’s film, Capitalism: A Love Story, I pointed out in my review of that film that there was very little that libertarians would disagree with. All of Moore’s criticisms of what he calls capitalism are really the result of crony capitalism. The biggest culprit in the economic collapse of the last decade was the Federal Reserve, a central planning/wealth redistribution institution that Rand explicitly condemns in her novel. Unfortunately, Moore incorrectly concludes that the economic distortions, inequitable distribution of wealth, and widespread harm to middle and lower income Americans were the result of a free market.

Rand would agree completely with progressives on the injustice of today’s American corporate state. That might also surprise progressives who probably assume that Rand would have supported the mainstream Republican policies of George W. Bush. Not only would Rand have condemned Bush’s version of state capitalism, but she was openly critical of Republican hero Ronald Reagan. When asked by Phil Donahue about Reagan during his administration, Rand said in so many words that he should have stuck to acting.

The only opportunity that progressives might have to disagree with anything in the film is the portrayal of the labor union official who tries to sabotage Dagny Taggarts launch of a new railroad line. This encounter takes all of about 3 minutes of the 113 minute film and is not a condemnation of labor unions in principle, but rather the illegitimate power that corrupt union officials can wield because of government privileges.

However, the true villains in the film are not union officials, beneficiaries of entitlement programs, or any other group associated with progressive philosophy. The villains are exclusively corporate executives and the government officials they get in bed with to illegitimately acquire wealth. The heroes are those who acquire their wealth by productive achievement and voluntary exchange. If one had to sum the film up in one sentence, it is an effective demonstration of the evils of crony capitalism and its difference from a truly free market.

I encourage progressives to see this film and to read Rand’s novel. If there is one thing that I hope they take away, it is that even great wealth can be acquired legitimately, when it is the result of human beings trading the products of their labor with the mutual, voluntary consent of all parties. Once progressives begin making the distinction between legitimately acquired wealth and wealth acquired because of government privilege, they will find libertarians and all other proponents of truly free markets standing by their side, fighting the evil corporate state.

The Bouncers Are Running the Nightclub

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Once upon a time there was a nightclub unlike any other that had ever existed. It was owned by the customers. The customers came to the nightclub to pursue their happiness, which was much easier there than in most other places. As you can imagine, most people were eager to cooperate under such conditions and generally enjoyed associating with one another.

However, there was the occasional disruption. One customer might have a dispute with another over a piece of property or a love interest. Sometimes a fight broke out. There are some people in every nightclub that are just looking for trouble. Sometimes uninvited guests tried to enter from the outside and assault the customers. For any and all of these reasons, the customers decided to hire people to provide protection. They hired bouncers.

The bouncers were not the “best and brightest” people in the nightclub. On the contrary. They were hired for their proficiency in using force. The customers only tolerated the knuckle-dragging bouncers because they assumed they needed them to keep order. “Stand by the door and try to stay out of the way, unless there is some kind of trouble.” That was the general attitude towards the bouncers.

Now, it goes without saying that there was always an inherent danger in having the bouncers around. Since they represented a potential for violence that no one customer or small group of customers could successfully resist, the safety of the whole nightclub depended upon all customers watching the bouncers closely. They had to make sure the bouncers did not start exerting their power against anyone other than the real troublemakers. For many years, they were successful in keeping the bouncers under control.

However, there came a time when some of the more affluent customers decided that they could utilize the bouncers for their own benefit. Since they bought more drinks and generally contributed more to the till than most of the other customers, they believed that they should enjoy certain privileges. They began to pay the bouncers extra money to get them seats nearer the stage than they would get if they simply followed the “first come, first serve” rule. They also got the bouncers to give them back some of the money they paid for drinks. They figured that since they bought more drinks than most other customers, they should get a percentage back. If anyone objected, the bouncers would drag them away and beat them senseless.

Eventually, the bouncers realized their position in the nightclub was not completely secure. Many of the customers resented the unearned privileges they were forced to provide to the wealthy. Since the affluent customers and the bouncers combined were only a small percentage of the whole, they were greatly outnumbered by their victims. While the bouncers were by no means the sharpest people in the nightclub, their primal instinct for survival was as vibrant as anyone else’s. They decided that they had to get more people on their side. They needed to find another group to support them.

However, most of the customers weren’t interested. They preferred to mind their own business, buy their own drinks, and sit at whatever tables they managed to get in fair competition with everyone else. The last people they wanted to have anything to do with, much less receive any assistance from, were the bouncers.

Finally, a solution presented itself. One of the less affluent customers approached the head bouncer. He said that it wasn’t fair that people like him couldn’t afford as many drinks as the rest of the customers and that the drinks they could afford were only well liquor, rather than top shelf. He suggested that the bouncers do something about it.

The bouncers were interested in this new opportunity to preserve their positions. If they could get the lower-income customers on their side, together with the wealthy customers, they might be able to keep the racket going. There was only one problem. The lower-income customers didn’t have any money of their own, so the bouncers didn’t know how they were going to buy the top shelf drinks that these potential new supporters demanded. For a long time, the bouncers were unable to solve this conundrum.

They were finally enlightened by a customer interested in seeing the new plan succeed. He was a “community organizer.” He didn’t have any identifiable skills or produce anything anyone would voluntarily buy. All he was qualified to do was to organize people into a group that could use their numbers to influence the bouncers. To him, the answer to the bouncer’s dilemma was simple. If the bouncers needed money in order to buy drinks for their new supporters, they should just get it from the rest of the customers.

What a great solution! The bouncers would now just collect money from the other customers and use it to buy drinks for their poorer supporters. This secured the support of the poorer customers, complementing the support of the affluent. Naturally, the majority of customers weren’t very agreeable to this proposition, but that was of little concern. The bouncers weren’t looking for agreement. They simply threatened anyone who complained. Since there were now two significant groups with an interest in supporting the bouncers, the rest of the customers reluctantly complied.

It never occurred to the bouncers to wonder where all of the money came from. At one time, the affluent customers had become wealthy by producing products that other people voluntarily bought from them. However, as the new system progressed, the affluent were increasingly making their money simply from kickbacks that the bouncers were giving them from the till. They were no longer wealthy because of what they produced. They were wealthy because of what the bouncers extorted from other people and gave to them.

The poorer customers had been corrupted as well. Before they joined up with the bouncers, they worked hard and sought to improve their skills so that they could earn more money for drinks. Many of them saved their money and invested it in small businesses, eventually becoming affluent themselves. Regardless of their income at any given time, they generally bought what drinks they could afford and were positive contributors to the nightclub.

However, as time went on, a larger and larger percentage of their drinks were being financed with money extorted from other people by the bouncers, rather than money that they had earned themselves. In addition, the number of people in this group was constantly growing. As more and more money was being taken by the bouncers to keep their supporters happy, the price of drinks rose and the available capital needed to employ most of the customers grew scarcer. Increasingly, average customers became poor and had no choice but to make a deal with the bouncers.

As a greater and greater percentage of the wealth acquired by both the affluent and the poor became simply transfer payments extorted by the bouncers, the nightclub as a whole began to make much less money. This was a problem for the bouncers, because both their own income and all of the payments made to their support groups came from the bar.

They decided that they better start getting involved in the way the customers made money. Obviously, the customers weren’t doing it as efficiently as they used to. If the bouncers gave them some direction, perhaps they would start generating the kind of revenue that used to drive higher sales at the bar.

The bouncers started going around to all of the customers and telling them how to do their jobs, run their businesses, and even manage their households. They told the construction companies how to build houses. They told the farmers how to grow food. They even told the brain surgeons how to perform brain surgery.

There was only one problem. They were bouncers. They didn’t even know how to turn on the nightclub’s sound system, much less do brain surgery. Their assistance didn’t help. Sales at the bar dropped even faster than before.

The bouncers contemplated these problems as deeply as bouncers are able to contemplate anything. They finally came to a conclusion: it was simply not possible to generate sufficient money from the customers to run the nightclub anymore. A new strategy was needed. They decided that the only way that they were going to be able to collect the funds they needed was to get it from the customers in other nightclubs.

Fortunately, they were well-equipped to do this. As their involvement in the activities of the customers had increased, their numbers had increased as well. It took a lot of bouncers to try to tell all of those customers how to do their jobs and run their businesses, especially since the bouncers themselves had no idea how to do any of it in the first place.

Moreover, since being a bouncer was highly profitable and required no real skills beyond being able to beat people up, everyone that couldn’t do anything else became a bouncer. As the nightclub was still relatively wealthy, the bouncers coerced the customers into hiring ever more bouncers, until there were almost as many bouncers as customers.

The bouncers’ new plan was simple. They assigned 25 of their number to go into a neighboring nightclub and take over. They picked out a nightclub that had only 5 bouncers in order to minimize the risk. They went in and quickly threw out the 5 bouncers and began trying to collect money from the customers of the nightclub that they had invaded.

Of course, those customers were no more willing to hand over their drink money than the customers in their own nightclub. So, the bouncers promised that they would keep order and protect the new customers from any other nightclub’s bouncers. The new customers agreed and began paying them off. The bouncers sent some of the money back to their affluent clients, who in return gave their full support to their activities in the other nightclub. After this apparently resounding success, the bouncers expanded their operation to every nightclub in the city.

However, there was a weakness in the new plan. The payments to the affluent, the payments to the poor, and the salaries of the bouncers in every nightclub in the city were all being paid by an ever-shrinking group of productive customers. Over 40 percent of the poorer group were producing nothing at all and just collecting drink money from the bouncers. While the affluent group was still producing some wealth, their productivity was greatly decreased because their activities were either being subsidized or directed by the bouncers.

Eventually, the whole operation collapsed. The tiny percentage of people still actually producing anything in the nightclub could no longer afford to pay for their own drinks, much less the drinks they were forced to buy for the bouncers’ supporters. The nightclub had to borrow money from other establishments, which was ironic because many of their creditors could only afford to lend because they didn’t have to pay for their own bouncers. However, these other establishments soon realized that they were never going to be paid back and ceased lending their money. The nightclub was forced to close.

There was a lot of finger-pointing in the ensuing chaos. The customers now had no nightclub at all and their standard of living had dropped considerably. The affluent group argued that the bouncers should have been buying less drinks for the poor. The poor group argued that they should have been kicking less money back to the affluent. The bouncers themselves only had one suggestion: to hire more bouncers. This was obviously impossible since there wasn’t even enough money to pay the existing ones.

After long deliberation and debate, the customers came to the conclusion that every one of their problems had actually been caused by the bouncers and they would be better off with no bouncers at all. So, they fired them and decided to provide security themselves. They reopened the nightclub and business immediately rebounded. There were now plenty of drinks for everyone and plenty of money to buy them with. And they lived happily ever after.

*Disclaimer: Obviously, our little allegory portrays bouncers in a highly stereotypical and unfair manner. While I am sure that many and possibly even most bouncers do not resemble the slow-witted brutes depicted in this story, one must sympathize with the challenge of finding any group useless enough to represent the political class. So, somebody had to be thrown under the bus and it turned out to be the bouncers. Being an Irishman, I sincerely hope that real-life bouncers and employees of drinking establishments in general will excuse any unintended offense.

*Photo by federico stevanin

Corporations and Labor Unions: Great Ideas Corrupted By Government

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There are no two institutions in American society more associated with the struggle between right and left than corporations and labor unions. Outside of foreign policy, there is nothing liberals are more hostile towards than corporations, nor anything conservatives are more hostile towards than labor unions. For most Americans, corporations and labor unions lie at opposite ends of the socio-economic spectrum. Corporations are “conservative and capitalist,” while labor unions are “liberal and socialist.”

This is an illusion. In all but the most superficial respects, corporations and labor unions are virtually identical to each other. They are both voluntary associations formed by individuals to achieve an economic goal. They would both provide enormous economic benefits to society if they were not completely corrupted by government.

A corporation is a group of people agreeing to pool their capital to create a larger venture than any of them could launch individually. The stockholders agree that none of their personal assets will be put at risk if the venture fails – only the assets of the corporation.

The stockholders also make these terms with the corporation’s creditors, customers, and other parties. In this way, the stockholders can cooperatively take more risk than they would if their personal assets were at stake. With greater risk comes greater reward. Thus corporations are able to innovate, produce, and expand more rapidly than smaller partnerships or sole-owner proprietorships. This benefits consumers by offering them more choice and higher quality products at lower prices.

The benefits of corporations are derived from the voluntary nature of every transaction. The stockholders, creditors, and customers all consent to doing business with the corporation, knowing the risks and the limited liability of the stockholders. All parties are exercising a natural right to associate and exchange their property as they see fit. One can never harm another merely by exercising one’s natural rights.

The prospect of the corporation becoming “too large” or dominant in a particular industry is countered by the equal right of all other members of society to form their own corporations and compete with the dominant one. In fact, it is this natural market occurrence – new competitors entering the market when there is an opportunity to offer consumers the same or better products at lower prices – that drives explosive innovation and growth and confers enormous benefits on the rest of society.

All of the associations necessary to realize these benefits can be achieved by voluntary contract. There is no reason that a government must enact a body of laws indicating how these corporations should be formed or how they should operate. Neither is there any reason why the government must create an “artificial legal person” in order to insulate stockholders from liability. That can be achieved by voluntary contract as well. All that is necessary is that the various contracts made between parties be enforced. However, voluntary association is not the government’s purpose in enacting corporate laws. [i]

The government corrupts the entire nature of corporations in virtually every way. First, it grants the corporation limited liability that applies not only to those who have consented to it, but to everyone. This completely skews a natural risk/reward balance and enables the corporation to commit torts against third parties without consequences to the stockholders. It overrides the right of individuals who did not voluntarily release the corporation from liability to pursue compensation for damages. It also has the effect of encouraging corporations to take more risk than they would if the stockholders’ personal assets were at risk with respect to these third parties.

Second, the enormous body of regulations constructed around corporations harms both the stockholders and the rest of society. The stockholders have the right to form and operate their corporation any way they see fit, as long as they do not invade the life or property of non-contracted parties. Regulations override their decisions and force them to operate the way the government tells them to, regardless of whether it is the best way or not. This adds tremendous costs to operating the corporation, which is then passed on to consumers.

Worst of all, these unnaturally high operating costs create impediments to the rest of society in exercising its most important right in this area: to form new corporations and compete with existing firms. This inevitably results in a few companies dominating each sector of the economy. Not only are consumers punished with higher prices and less choice than they could expect in a free market, but when these government-protected corporations get into financial trouble, those same consumers are often punished again when the government bails the corporations out with taxpayer funds. Without easy entry into the market for competitors, any corporation providing a service for which there is high demand becomes “too big to fail.”

Thanks to the corrupting hand of government, corporations are motivated to do exactly the opposite of what they would do if that artificial force were absent. Instead of trying to produce better products at lower prices, the corporation has an incentive to lobby the government for higher tariffs which keep out foreign competition. This allows them to keep operating inefficiently and charging higher prices than they could if they had to compete with the true market prices offered by those competing firms.

They also benefit by lobbying for more regulations that drive up their own operating costs. Why would they do something so illogical? They do it because those higher costs provide an entry barrier to new competitors. The established firm can pass those higher costs on to consumers, while the new competitor is either unable to start-up at all or unable to compete until it can match the established firms’ economies of scale. In the long run, government involvement with corporations results in lower quality, higher prices, and less choice for consumers than would occur in a free market.

The dynamics at play in regard to labor unions are virtually identical. Just like the stockholders of a corporation, the members of a labor union are exercising a natural right to enter into agreements with each other in order to achieve results that they would not be able to achieve individually. They form a partnership wherein all members agree not to accept compensation below a certain agreed upon amount. Compensation can take the form of any combination of wages, benefits, or working conditions.

It is important to recognize that the relationship between employee and employer is a buyer/seller relationship, with the employer being the buyer who purchases services from the employee. Like all buyer/seller relationships, both parties benefit when the transaction is voluntary. The seller benefits by getting the very highest price for his product that the market will bear. The buyer benefits by getting the highest quality product that he is able to obtain for the money he is willing and able to spend. If either party in any buyer/seller transaction does not believe that he is benefitting from the transaction, he can refuse to go through with it.

In the case of labor unions and employers, the union members benefit by higher compensation for their services. By bargaining collectively, they can control the supply of a particular type of labor demanded by employers and thus drive up the price. However, the employers actually benefit as well. As they are free to choose to hire people outside the union, the union must ensure that their product (labor) is superior enough in quality to persuade the employer to pay more for union employees than for cheaper, non-union employees. Such are the incentives in a free market, where all transactions are voluntary.

Under these conditions, labor unions would have an incentive to offer continuing education or training courses, to monitor the productivity of their members, to set minimum standards for entry into the union and to establish criteria for expelling non-productive employees. All of this would drive up quality, productivity, and profitability, further encouraging employers to pay more for union employees as a wise investment in more profitable products.

As with corporations, the benefits conferred upon society by labor unions depends upon contracts being enforced and all transactions between parties being voluntary. However, just as it does with corporations, government completely corrupts the nature of labor unions, eliminating many of the benefits they would otherwise provide. With interventions like the National Labor Relations Act of 1935 and subsequent legislation, the government destroys the voluntary nature of the employment contract, in many cases forcing employers to hire union workers. This violates the rights of employers to purchase services from whomever they wish and eliminates competition for the labor unions, encouraging them to behave in a manner completely contrary to how they would behave in a free market.

Instead of encouraging their members to be more productive, labor unions actually encourage lower productivity from their members. It is not uncommon for a union member to be threatened by his coworkers for working too fast or being too productive and skewing the lower expectations negotiated by the union in the interest of employing more dues-paying members to accomplish the same work. Instead of setting higher standards for entry into the union, the union actually forces new employees to join as a condition of taking the job.

Finally, with competition from non-union employees eliminated, the union has no incentive to control the price they are charging for their services. In a free market, there would be a price point at which the presumably lower-skilled non-union workers would be a more profitable buy for employers than the presumably higher-skilled union workers. However, once the government removes the ability of the employer to make this choice, there is no longer any control on the price of union labor. This is why unions played such a large role in the demise of the American auto industry and American manufacturing in general.

Despite the unnatural, corruptive influence of government, corporations and labor unions still manage to provide many benefits to society. Often overlooked is that all of the benefits they provide derive from the extent to which they are voluntary associations entering into consensual agreements with other parties. Conversely, all of the harm they cause and all of the animosity they and their supporters have for each other are the result of the coercive interference of government.

Instead of appealing to the government to assist them in invading each other’s rights, they should recognize that the government is their common enemy, preventing each from benefitting themselves and each other. If they wish to secure their rights and achieve positive results for themselves and society, they should kick the government out of their affairs and follow the law of nature.

[i] Special thanks to libertarian thinker and activist Steve LaBianca for his help in developing this analysis of the nature of corporations.

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

Eliminate Non-Essential Government Now

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Welcome to Tom Mullen’s New Website

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Dear Liberty Lover,

I’m Tom Mullen, author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. I want to welcome you to my new website here at tommullen.net, which is dedicated to ideas that are conspicuously absent from our current political discourse: the natural law and our natural, inalienable rights.

Some people say that these ideas are outdated; that they don’t work in the complex, technological world that we live in today. I disagree. In fact, I argue that not only are natural rights and the natural law still relevant, but that they are the key to solving every one of our societal problems.

Today, all political and economic debate focuses on aggregate results, with each side arguing that their program will achieve better ones. These are collectivist arguments, which sacrifice individual rights for collective goals. I believe that before we can solve any of our problems, we must first shift the discussion from results to rights. Only then are we prepared to take just and equitable action.

So, this website sets out to rediscover the natural law, our inalienable rights, and the true meaning of liberty. On it, you’ll find all of my latest articles, television appearances, speaking engagements, and radio interviews. There are also links to other great writers and educational resources on the subject of natural law. I invite you to participate in this discussion and to encourage your family, friends and neighbors to do the same. Together, let’s go wherever these timeless ideas take us…and reclaim the freedom that we were born to enjoy. Thank you for your support.

Best regards,

Tom Mullen

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

Government Solutions Are Anti-Intellectual

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One of the first things that children are taught is that might does not make right. When a fight breaks out among children, their parents tell them that the person who threw the first punch was wrong. Not only was the aggressor wrong, but he was acting unintelligently. It is the one who has run out of ideas that resorts to the use of force. The bully is the dummy, while the child who seeks to resolve disputes through conversation and agreement is the intelligent one.

Most adults continue to recognize this fundamental law of nature, at least most of the time. An adult who resorts to initiating violence to solve disputes is recognized as childish and unintelligent – except when it comes to public policy.

Somehow, we have forgotten that all government action represents the use of force. This is obvious when the government is utilizing its military during wartime, but it is no less true when the government provides healthcare, education, or regulates business activity. Regardless of what problem the government is attempting to solve, it is applying the use of force in order to solve it.

When the government runs a health care program, those who must pay for it are forced to pay. When the government guarantees loans for education, taxpayers are forced to pay when those loans default. Even the most minor laws are backed up by the threat of force. If anyone doubts this, he should neglect to pay a traffic ticket and see what happens.

America was founded upon the principle that government action was only justified when one individual or group had committed aggression against another. As Thomas Jefferson put it,

“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.”

How far we have drifted from this basic understanding of the natural law. Today, Americans not only look to government to address every aspect of life that they find displeasing, but they hold up those who advocate this use of brute force as the intellectuals and those who argue that most issues should be addressed through consensual agreement as unsophisticated or unintelligent. While Jefferson said that governments are instituted solely to secure our rights, we now have a government that violates them on a massive and systemic scale.

Instead of trying to understand elaborate theories on how government intervention into our lives is good for us, we should remember what we learned when we were five years old. Only dummies resort to the use of force.

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

Austrian Economics Is Scientific (Keynesianism Is Not)

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Ronpaul1 On February 9th, Rep. Ron Paul of Texas chaired his first meeting of the House Monetary Policy Subcommittee he now leads due to the Republican victories in last November’s congressional elections. Congressman Paul invited several expert witnesses to testify on monetary policy. Among these were Austrian economist Tom Dilorenzo.

Much has been made of Rep. Lacy Clay’s attack on Dilorenzo’s credibility due to Dilorenzo’s alleged association with a “politically incorrect” group called the League of the South. However, Clay also attacked the Austrian school of economics itself, calling the Austrian deductive method “a non-rigorous scientific method.” According to Clay this is because the Austrian theory is not based upon “an empirical method to study economics.” He further states the Austrian school does not recognize the Keynesian theoretical models or the aggregate data that those models rely upon to “prove” their theories scientifically.

As Robert Wenzel observed, Nobel Prize winner F.A. Hayek already addressed this criticism, arguing economists should indeed use the deductive method, rather than an empirical one, to understand economic principles. Wenzel even suggests Robert Rubin would likely agree with Hayek’s argument, because of what Rubin called “the very nature of reality–its complexity and ambiguity.”

It is somewhat futile to try to win this argument with entrenched government policy makers. The Keynesian school advocates massive government intervention into the economy to protect us from the supposed shortcomings of the free market. When crises in the economy occur, the Keynesians recommend even greater intervention in the form of increased government spending, regulation, and monetary expansion.

The Austrian school advocates no government intervention into the economy at all. They argue monumental crises are actually caused by intervention, so their cure is to cease whatever intervention has brought on the crisis, to relax regulations that impede adjustment in the labor market, and to allow the economy to rebalance itself through natural market forces.

Therefore, governments are not likely to reject Keynesianism, which grants them enormous power, and listen to the Austrians, who would strip it all away. One is reminded of the medieval governments which refused to acknowledge the world was round and called upon appointed court scientists to legitimize their assertion it was flat.

However, it is important for investors to understand which theory within the “dismal science” truly passes scientific muster. If you cannot dissuade the government from basing their policies on the wrong theory, you can at least choose the right one yourself to protect your own wealth and economic viability.

Anyone who has taken a basic chemistry class in high school remembers how you prove or disprove a theory. You conduct experiments to determine whether the predictions the theory makes are correct. For example, your theory might predict that mixing two colorless chemicals in a test tube will result in the mixture turning blue. To prove it, you must not only conduct the experiment once, but over and over again, each time yielding the same result. If your test tube turns blue under the same conditions every time, you have proven your theory. If not, your theory is considered invalid and a new one must be formulated.

Austrian economists like F.A. Hayek predicted the Great Depression when the Keynesians said that the economy was fine. Once the crisis hit, the Austrians argued that the Keynesian policies prescribed to cure it would fail, as they were merely repetition and expansion of the interventions that caused the crisis in the first place. When massive government spending and devaluation of the currency failed to pull America out of the Depression, the Keynesians argued more spending and inflation to underwrite WWII would finally do the trick. But the Depression lasted throughout the war and only subsided after massive post-war cuts in government spending, consistent with the predictions of the Austrians.

The Keynesian answer to this anomaly? Ignore the results and just state that Keynesian policies did cure the Depression, regardless of verifiable facts to the contrary. This is science?

The Keynesians were also explicit that high unemployment and price inflation could never coexist together. The Austrians made no such claims, as they recognized that monetary expansion causes both price inflation and the malinvestment that leads to unemployment. In the 1970’s, Austrian theory was again proven correct and Keynesian theory proven wrong.

Most recently, the Keynesians argued that the technology and housing bubbles were not bubbles at all, but sustainable increases in wealth caused by their wise stewardship of the economy. If you listened to them, you were either wiped out by the NASDAQ crash, left owning a house with an underwater mortgage, or both. If you listened to the Austrians, you got rid of your technology stocks early, during the formation of the bubble, and avoided buying houses whose prices had been bid to unsustainable levels by the combination of monetary expansion and government intervention.

Even after all of this proof is in, the Keynesians are still employing the only defense they have left that their theory is sound. Deny, deny, deny. With government and consumer debt threatening to cause cataclysmic economic collapse, the Keynesians are encouraging government and consumers to borrow and spend more. The Austrians advise consumers to pay down their debts and investors to avoid the next bubble. They urge investors to protect their wealth in gold and other commodities, as they have for the past decade. Those that have listened to them have turned huge profits during this historic economic calamity.

Imagine that you are back in your high school chemistry class lab, conducting experiments. In the row behind you, an Austrian economist is testing his theory. The test tube turns blue one time after another, just as he predicted it would. In the row ahead, a Keynesian economist is testing his theory. His test tube turns a different color every time and then finally explodes, lighting his beard on fire. Which one would you deem the better scientist? Which one would you bet your life savings upon in the next experiment? If you wish to take the scientific approach, listen to the Austrians.

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

Release the Kraken

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Titans_Kraken I prefer the 1981 film version of Clash of the Titans for many reasons. Among them is its nuanced portrayal of Zeus’ decision to release the Kraken upon the city of Joppa. He clearly does this reluctantly due to the immense power and possible unforeseen consequences of letting loose this uncontrollable force. When Poseidon opens the undersea gate and watches the creature emerge, he is clearly awestruck by the size and destructive potential of the beast. One can imagine what question must have been preeminent on his mind. “How am I going to get this thing back into the cage?”

There is no better metaphor for the United States and its government since the turn of the 20th century. It was at that time that government was released from its chains – and it has been on a rampage ever since.
In his seminal book, The New Freedom, Woodrow Wilson wrote,

“We used to say that the ideal of government was for every man to be left alone and not interfered with, except when he interfered with somebody else; and that the best government was the government that did as little governing as possible. That was the idea that obtained in Jefferson’s time. But we are coming now to realize that life is so complicated that we are not dealing with the old conditions, and that the law has to step in and create new conditions under which we may live, the conditions which will make it tolerable for us to live.”

While Wilson’s unqualified dismissal of America’s founding principle of government might startle 21st century readers, the reasoning he employs to justify it is even more incredible. Just a few pages after declaring that Jefferson’s system is no longer viable, he goes on to say that the Americans of his time are actually living under Alexander Hamilton’s system. He is to a great extent correct on this. By 1912, the Republican Party, philosophical descendants of Hamilton’s Federalists, had indeed made great strides in establishing the Hamilton platform of corporate welfare, protectionism, and a large and adventurous military establishment.

However, this system was completely antithetical to Jefferson’s truly free market, whereby the government merely enforced contracts and protected individuals from aggression against their rights. Here, Wilson has made a colossal non sequitur – that Jefferson’s system should be scrapped because Hamilton’s system isn’t working. The confusion – between crony capitalism and truly free markets – persists to this day.

Thus, we have not only released the Kraken, but we have done so for completely illogical reasons. It has been rampaging over our lives, liberties, and properties now for over a century and shows no signs of tiring. It is time to either get it back in its cage or find a man on a flying horse to save us.

Orlando Sentinel Op Ed: Vitriol Has Been a Proud Tradition

But I Paid Into It…

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The left criticizes Tea Party activists who oppose President Obama’s “socialism” as hypocritical because they do not oppose Social Security for themselves. The most common rebuttal is something along the lines of Social Security being fundamentally different because the recipients pay into it. This is no different than arguing for a right to steal your younger neighbor’s car because an older neighbor stole yours.

Most people are aware Social Security has begun paying out more in benefits than it collects in payroll taxes. However, it had run surpluses for decades that most beneficiaries honestly believe is funding the shortfall until the demographic imbalance caused by the baby boom evens out. Since they “paid into it all of their lives,” supporters of Social Security distinguish it from Aid to Dependent Children or other wealth transfer programs. Inherent in this thinking is both factual inaccuracy and flawed logic.

First, even if those surpluses had gone into a “trust fund,” no one disputes Social Security has always been a predominantly “pay-as-you-go” program. The overwhelming majority of the money collected from payroll taxes went to fund benefits for current beneficiaries. Thus, payroll taxes were taken from one group of people and paid out to another, just like public welfare.

One might argue the surpluses generated previously mean at least part of the money being paid to current beneficiaries is their own money, held in trust for their retirement. This is also completely untrue. The surpluses have not been held in cash since 1939. Instead, when the program runs a surplus, the government is legally obligated to use the money to purchase U.S. Treasury bonds, which are securities documenting you have loaned the federal government money. So, by law, any surplus collected in payroll taxes for Social Security must be lent to the federal government, which immediately spends it on operating expenses. In return, Treasury Bonds are put into the trust fund.

For those who decry this 1939 change as a betrayal, remember the FDR administration had also taken the U.S. off the gold standard (domestically). Had the government continued to merely hold reserves in cash, those reserves would have been outstripped by inflation by the time the benefits were payable to most beneficiaries.

Most people think of the treasury bond arrangement as the government putting their money into a “secure investment” which will pay them interest with very little risk. This is absurd. Treasury bonds are not “an investment.” An investment is a loan or advance of capital made in the hopes of earning interest from a producer of goods or services. The fundamental question anyone asks before risking their money with a bond issued by a private business is “How are you going to pay me back?”

The private sector business answer would be, “By using the capital you have loaned us, we are going to expand our productive capacity. With the new products we will produce and sell, we will be able to pay back your investment with interest and still make a profit.” Thus, if you purchase a bond issued by a computer manufacturer (i.e. lend it money), then the computer manufacturer repays you with interest from sales of the new computers it produced using the money borrowed from you.

But the federal government doesn’t produce computers. The federal government doesn’t produce anything. How does it answer the question, “How will you pay me back?” There is only one possible answer: “We will tax people in the future to pay back your loan principle and interest.”

Thus, even the so-called “trust fund” does not represent a store of your own money, held in trust for your retirement. 100% of your money was spent the moment the government received it. Most went to underwrite current beneficiaries’ benefits. The rest was spent on other government boondoggles and replaced by promises to repay you by taxing other people. Not one dime of current benefits represents a “payback” of one’s own money. Social Security is every bit as “socialist” as Aid to Dependent Children, Medicaid, Medicare, or any other government transfer of wealth. Where do you think it got its name?

There is a bit of irony here that probably also escapes most Americans. While the federal government’s modus operandi for many years now has been to merely pay off the interest on its debt and issue new debt to cover the principal as bonds come due, let’s consider what would happen if they actually started repaying the principal on their bonds.

The longest term bond is a 30-year Treasury note, which means you loan the government the money for 30 years. Suppose that in 1970, you were a 34-year-old, dutifully paying your Social Security taxes. Most of your money went to pay current beneficiaries, but a small portion (your share of the surplus) went into 30-year Treasury notes. In 2010, you are one year from retirement and ask the government, “Where are you going to get the money to pay back the principal and interest on that 30-year Treasury bond?” As bizarre as the answer might seem, the answer would be, “Why, from you, of course.”

However, the most socialist aspect of Social Security is not that it represents a transfer of wealth. It is that the program is mandatory. The only way for the government to accomplish a transfer of wealth from one party to another is to force people to participate. This is why George W. Bush’s proposal to “privatize” Social Security would not have made it any less “socialist.” People would still have been forced to participate; only they would now have the option of handing their money over to W’s tax-subsidized buddies on Wall Street rather than to the federal government. Imagine if he had been successful in implementing this in 2004.

Free market capitalism and socialism truly are opposites, but the fundamental difference is one of rights, not economics. True free market capitalism recognizes every individual’s right to keep the product of his labor and dispose of it as he sees fit. Social Security denies this right. It should be responsibly phased out and replaced with nothing. That prospect should scare no one at this point. With a government $14 trillion in debt and planning to borrow more every year for the foreseeable future, I would trust the most irresponsible individual I know before the federal government – with his retirement money and mine.