Category Archives: Property Rights

>The Government Bubble Heads for a Blow-Off Top

>I have a friend that tends to express his ideas about everything in the jargon of a securities trader. Of course, this is probably because he has been a very successful trader, both in bull and bear markets, for many years. “Every trend in history, even liberty, can be charted like a stock,” he has often observed. I tend to agree.

As any trader will tell you, bull markets do not go straight up and bear markets do not go straight down. Rather, they tend to meander in the direction that they are headed. During a long-term bull market, a trend will have major pull-backs and long periods of consolidation. It is the experienced trader that knows how to “buy low and sell high,” taking advantage of the back and forth action of a stock or a sector on its journey. However, even wiser is the investor that can spot the trend at the beginning and keep buying lows without having to attempt to time the market and sell at all. The legendary Jim Rogers has often said that he is “the world’s worst short-term trader.” He would rather buy something that he can own forever than buy with the intention of having to sell.

Gold has been the most spectacular bull market over the past decade. Like all trends, it had periods of dramatic rise, followed by sharp pullbacks that gave back a portion of the gains, and then long periods of consolidation. Once a consolidation was over, another dramatic rise in price followed. The first run began at the beginning of the decade, with gold selling under $300 per ounce. It ran up to over $700 per ounce in 2006 before pulling back sharply under $600. The price then consolidated there for an entire year before the next leg up began. That second leg ran all of the way over $1,000 per ounce before pulling back to the low $700’s. Again, there was a long consolidation before this latest run, which will take gold we know not where.

All of the movements in the price have explainable reasons. When the fundamentals are stronger than the actual price of the security or commodity, investors begin buying. Once the price starts to move up, traders begin wading in to make profits on the movement of the price, both up and down. At any given time, there are those who are long and those who are short. Contrary to the nonsense you hear from government officials and their kept economists, short sellers play a vital role in keeping the market healthy. When a stock, commodity, or sector beings to fall in price, short sellers help stabilize that price because they have to buy the stock that they sold short to cover their short sales.

You will often hear the wisest of investors say that a trend is about to reverse when there is no longer any disagreement about it. When everyone is positive on a stock or a bull market, it is about to go down. When everyone is negative, it is about to make a run up. When all of society agreed that the NASDAQ would never go down – when every conversation in every coffee shop, supermarket, or dinner party revolved around the wonderful opportunities in technology stocks, wise investors knew it was time to get out.

Of course, this is not some sort of market magic or voodoo. It is simple cause and effect. When there are few sellers in a market and many buyers, the price is going to be inflated far beyond its value. From an opposite standpoint, when short sellers are forced out of the market in a “short squeeze,” there is now nothing to stop the price from falling precipitously once it starts to fall. With no short sellers covering their shorts, the price falls like a stone. Thus, at the end of long bull market, a bubble usually develops, characterized by a final, parabolic “blow off top,” followed by an equally dramatic drop in price.

The past 100 years has been a bull market for government. While the seeds of the run were sown in the mid-19th century, the bull market in government really began at the turn of the 20th century. The first signs of the bull could be spotted as early as the (Teddy) Roosevelt administration, but the real advances came under Woodrow Wilson. The income tax, the Federal Reserve, and the 17th Amendment were advances in government that made gold’s move from $275 to $700 look tame.

There was then a period of consolidation during the so-called Roaring Twenties. It was not so much a pull-back of government as a slow-down in the pace of its growth. Under three Republican presidents, the government bull market consolidated as Americans convinced themselves that they had restored a free market (because the Republicans said they did, despite their actual support of big government fundamentals).

The next big move came during the Great Depression. While the stock market and the real economy went south, government went on another tear as FDR fully instituted the modern welfare state, the fascist regulatory structure, and took America to war. After 16 years of absolute misery, even the most enthusiastic government bull must have thought it was time for a pullback. It was brief, but it came.

Americans again elected a Republican president in the 1950’s and convinced themselves that they had restored the American system and rejected the big government philosophy of FDR and his liberals. However, this, too, was only another consolidation. In actuality, it was Eisenhower that paved the way for LBJ’s Great Society by creating the Department of Health, Education, and Welfare (now the Department of Health and Human Services). The 1950’s are fondly remembered as a period of (mostly) peace and prosperity for America. It was only another consolidation period for government’s century-long bull run.

The next great move came during the 1960’s, when LBJ again lead a tremendous run up for government. Medicare and Medicaid, the other two entitlement monsters that will eventually combine with Social Security to bankrupt the United States, were born during this fabulous period for big government. The move ran right through a two-term Republican presidency (counting Ford’s mop-up after Nixon’s resignation) and into the Carter administration.

Most bull markets have two legs. Some have three, but usually no more than that. It seemed like that axiom would hold true for government as Ronald Reagan gave his first inaugural address. “In this crisis,” he told us, “government is not the solution to our problems – government is the problem.” It was the greatest inaugural speech of the 20th century. The government bull market was over. Or so we thought.

We now know that government didn’t get smaller during the Reagan years, but much bigger. However, there was at least a feeling of negativity about government during the Reagan-Bush years that even forced Bill Clinton to pass himself off as a free-market friendly centrist. It was another consolidation period, with a seemingly impossible fourth leg to follow.

We are in the midst of that fourth leg now, as government makes a more precipitous run up than at any time in history. In a few short years, the government will have nationalized the banking, auto, and health care industries. There are no more government bears to be found anywhere, either among Republican or Democratic politicians or (let’s face it) among 99% of the citizenry. Outside of a tiny constituency of libertarians, paleo-conservatives, and anarchists, there are absolutely no non-believers in government left. The rise is accelerating too fast for any protest or community organizing to stop. It’s a short squeeze as the government bull stampedes.

While this might be a terrifying period for anyone remotely interested in living his own life, there is much reason to be hopeful. As most bull markets eventually do, government is experiencing a blow-off top. The curve has bent straight up, with nary a short to be found in any political party or in any bowling alley or church social. Americans have convinced themselves that government either “should” or “must” do something about absolutely everything. We should expect the run to pick up speed, as government invades every aspect of our lives. Never before – not even in the most barbarous ages – has government made such enormous claims upon the life, liberty, or property of its subjects. Medieval serfs were taxed less. Ancient slaves were freer. Not even the brutal Romans killed with such efficiency and on such a scale.

For all of these reasons, it is about to end. With almost uncontested faith in government, its role has expanded so far beyond what it is actually able to deliver that soon we will see a fall that will make the real estate meltdown look like a mild pullback. Having rode the last leg of the move and squeezed out the last of the shorts, government is about to remind everyone that it not only should not be providing what it is attempting to provide, but that it cannot provide it.

At the moment that the whole world has accepted that government will centrally plan all of the economy, take care of its citizens from cradle to grave, and rule a worldwide military empire –all with money that comes from nowhere – at that very moment the age of government will end. The end is going to come fast, too, just like the end of the bull markets in technology stocks and real estate. Ben Bernanke will still be telling government bulls that there is nothing to worry about long past the moment when his time is up. That’s how fast it’s going to be. As in any market, the moment when every bear is gone is the moment that the bull run is over.

This will not be a pleasant experience. No correction ever is. Fortunes will be lost (albeit mostly fortunes dishonestly made), but innocent people will be hurt, too. All of society will come to the realization that government really can’t provide anything, beyond the brute force that is only justified in self defense. It may take a generation to repair the damage. It’s going to be rough.

However, we should remember one thing. When a bubble deflates, the capital that is not destroyed seeks another refuge. When the NASDAQ melted down and the U.S. dollar began to implode, the smart money fled to gold. It will be no different during the bursting of the government bubble. With a precipitous fall in government, there is an equally dramatic rise in its opposite – liberty.

Americans will have to forego the ill-gotten gains provided by government and do with less while they rebuild. That is unavoidable. While the NASDAQ bubble actually started on a real foundation, the fundamentals of the government bubble were never real. It was all an illusion and it is five minutes from ending.

It’s going to be great.

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

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Make Obama Watch Ghostbusters

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It’s now clear neither economics nor historical precedent will prevent our government from embarking on another expensive, disastrous program. While debate on government destruction of the health care industry continues in the Senate, President Obama prepares to make a trip to Copenhagen. There, he and other elite “experts” will cook up a new assault on free enterprise – under the tired pretense of “saving the environment.” Since intellectual, scholarly attempts to convince our rulers of the error of their ways have failed, I humbly suggest a simpler solution: make President Obama and the U.S. Senate watch the 80’s classic, Ghostbusters. Everything they need to know about government’s role in the environment is there. It is presented simply enough that even a career politician can understand it.

The Ghostbusters story begins with three university professors who decide to try their hand in the private sector. They start a going concern with their own money to investigate paranormal activity. They face hard times early on, spending “the last of the petty cash” on Chinese food. They have a dearth of customers and face the same fate as the majority of new businesses in their first year: bankruptcy. There is no suggestion the government will bail them out. The market has seemingly determined there was not sufficient need for their services and they will have to figure out some other product to offer in order to make a living.

At that moment, a disturbance occurs in a local hotel and their first paying customer places an order. The Ghostbusters successfully capture the offending spirit and collect their fee. The incident results in some publicity for the young firm and business booms. Soon, the Ghostbusters are running their own commercials and have more business than they can handle. They bring on a fourth Ghostbuster to keep up with the demand.

So far, the story has been a happy one for all parties concerned. The Ghostbusters have achieved success and have become enriched. Why? They have earned their money by making New York City safer (more “ghost-free”) and have created jobs in the process. Most importantly, all of this has occurred through private, voluntary exchange. Customers pay their fees happily because the Ghostbusters offer them a service they deem worthy of the price.

But a story without a major conflict is no story at all. Ghostbusters is a superior story in that it correctly recognizes the source of all human conflict: government. Instead of the rather mundane epilogue the story would have had at this point, where competing firms enter the ghostbusting market, prices fall, and soon all of society can afford to have a paranormal housecleaning, the government rears its ugly head. A representative of the EPA knocks on the Ghostbusters’ door. What happens next couldn’t be more analogous to the real world.

The EPA agent Walter Peck is played to perfection by vastly underrated William Atherton. What is abundantly clear from his limited time onscreen is that, as a low-level federal agent, his primary motivation is not protecting the environment, but rather lording it over any individual or business that fails to immediately submit to his absolute authority. Under the pretense of protecting the environment, he attacks a private enterprise that has harmed no one, has helped the community, and has created jobs.

Having obtained legal authority to invade the Ghostbusters’ facility, despite the lack of evidence of any crime, Peck discovers what he deems to be a threat to the environment in the Ghostbusters’ ghost storage equipment. Of course, sophisticated equipment that could pose a threat to the environment is ubiquitous in a developed, industrial nation. But thus far in the story, the Ghostbusters have managed their equipment safely and responsibly. They have done so both out of respect for their own safety and the safety of others and because their livelihood would be jeopardized if the ghosts they had captured were to escape and return to re-haunt the premises of their customers.

Despite pleas from the Ghostbusters, the EPA agent shuts off their ghost storage machine and chaos ensues. Remember that up until this point, no environmental disaster had occurred. But by violating the liberty and property rights of the Ghostbusters under the pretense of a false threat to the environment, the government has created a real environmental disaster that now threatens everyone’s lives. In fact, the entire world is now threatened because of this government intervention.

Consider how closely this story recreates the real world, ghosts and goblins notwithstanding. The government’s record on protecting the environment has followed this pattern since the moment activists got the idea the government could save the world. Among the sparkling achievements of government environmentalism has been the banning of DDT, a safe and effective insecticide that was vilified and ultimately banned because of its supposed threat to the environment. Subsequently, farmers were forced to employ less effective insecticides that really do harm the environment, while a later study showed DDT could actually be eaten by humans over an extended period of time with no adverse health effects.

In another historic blunder, the government decided to employ its ability to coercively override private decisions in order to encourage the production and distribution of ethanol, the fuel additive made from corn. This had the unintended consequence of causing food shortages and skyrocketing prices while failing to significantly affect America’s dependence on fossil fuels. The crowning achievement of this boondoggle was the revelation that the production of ethanol actually consumes more fossil fuel than it produces and is a net positive in carbon emissions. Had property rights been protected, instead of destroyed by the government, none of this would have happened.

Most recently, the government decided it would address two problems at once by “stimulating the economy” with its Cash for Clunkers program. Not only would this supposedly help the economy, but because those trading in their clunkers would have to buy “greener” cars (with other people’s money), it would also help the environment. Of course, the result was perfectly good used cars were destroyed while their owners took out loans for new ones, resulting in a decrease in wealth and an increase in debt for society as whole. In addition, it turned out the owners of the clunkers had previously been limiting their driving due to either concerns about breakdowns or the general lack of pleasure inherent in driving their clunkers. Once provided with new cars by the government, they began driving far more than they previously had, producing more exhaust and consuming more fossil fuels. Another government disaster funded by legal plunder.

As in the movie, every attempt by government to use its coercive power to protect the environment not only fails, but actually creates the very problems it purports to try to solve. In most cases, the problem does not even exist until the government undertakes to solve it. What is the government’s solution? Always it is to attack private property and free enterprise.

It never ceases to amaze me that the American public at large exhibits absolutely no skepticism towards the politically connected segment of the environmental movement. For 100 years, members of a certain political movement claimed private property and free enterprise would destroy society. The 20th century proved them absolutely wrong. Those societies which did away with private property and free enterprise were destroyed themselves, while those which (for the most part) retained property rights flourished. Subsequently, the members of this same political movement suddenly became activists for the environment, studied the problem, and concluded there was only one way to save the earth from environmental disaster: by abolishing private property and free enterprise. Does no one find this conclusion – by these people – an odd coincidence? Does no one even suspect their motives? Are we a nation of fools?

President Obama, please watch the movie. Appoint a “Ghostbusters Czar” to ensure every legislator in the federal government watches it as well. When you have had time to reflect upon its profound message, please declare the environmental war on private property over. If you are looking for wise stewards of the land, you will not find them within the ten square miles you presently inhabit. However, there are some 300 million people who can do a better job just outside of town.

*This article originally appeared on the Campaign for Liberty website.

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

>The Democrats Privatize Wealth Redistribution

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>George W. Bush redistributed more wealth during his presidency than any president had since Lyndon Johnson. Republicans really have never had any problem with redistributing wealth as long as the proceeds go to the right people. Since Medicare benefits senior citizens, a constituency that no election can be won without in the baby boomer retirement era, Republicans had no problem using the force of government to take money from one individual and use it to buy “healthcare” for another – as they did with their Medicare prescription drug benefit. Neither do they hesitate to redistribute to bankers, under the cover of “saving the financial system.” God help us if there is ever a constituency of senior citizen bankers.

In fact, if one looks at the federal budget as it existed before the massive bailouts started – pre-TARP – at least 80% of the almost $3 trillion budget amounted to wealth redistribution. Always there was some rationalization for why this or that group must receive federal funds “for the good of all.” The farmers must be subsidized because there is absolutely no way to sustain farming in a market economy. If large farming corporations weren’t subsidized, we would all starve. Medical research must be subsidized because we will eventually all die of cancer, AIDS, and other horrific diseases if the government doesn’t subsidize medical research. Corporations in general must be subsidized because if one were to go out of business, everyone would be unemployed.

The Democrats typically attempt to characterize the Republicans as racist or elitist because the Republicans have traditionally resisted wealth redistribution for the poor or minorities. However, the reality is that Republicans do this for the same reasons that Democrats resist redistribution to bankers and corporations (or at least they used to). The poor and minorities don’t vote Republican. That is the only reason that Republicans attempt to leave them out.

No one in America seems to know any American history. Following the American Civil War, when black voters universally supported the Republicans due to their perception that the “party of Lincoln” had set them free, it was the Republicans who promised “40 acres and a mule” to blacks and the Democrats who proclaimed themselves “the party of white men.” Enslaved by their former ruling class and now used as pawns in a political power game by the new one, the freed black voters of post-Civil War America serve as a perfect metaphor for the supposed “beneficiaries” of all government redistribution schemes. Whether it is elderly people trying to scrape by on a Social Security Check, poor people trying not to starve on public welfare, or Iraqi citizens enjoying their newly provided “freedom,” the so-called beneficiaries of government wealth redistribution are never the winners. It takes an alarming lack of skepticism not to ask who the real winners are.

As this new century has “progressed” (pun intended), even the blurry lines separating the two parties have begun to melt away. Remember that George Bush’s redistribution schemes also included stimulus “tax refunds” to everyone, whether they actually paid taxes in the first place or not. “Compassionate conservatism” was nothing more than a euphemism for attempting to blend traditional Republican rhetoric about “free markets” and “limited government” with thinly-veiled redistribution schemes. By doing so, Bush’s Republicans hoped to hold onto their own base while chipping away at the Democratic voting blocks by promising them other people’s money, just as the Democrats do.

Throughout the 20th century, the two parties employed this strategy of “borrowing a page from the other’s playbook” over and over, always hoping to win voters away from the opposition while retaining the loyalty of their own traditional supporters. It was this that caused many liberals to criticize Bill Clinton for being “too much like a Republican.” Why George Bush has managed to hold on to his image as an “extreme conservative” defies explanation.

Until now, there has always been at least one thing to say in favor of the Democrats. They have been honest about their intentions. They have come right out and said that their intention was to redistribute wealth in order to achieve “equality” or “social justice” or some other utopian goal. Certainly, no lucid American can deny that the Democratic platform has been a socialist one for at least the last century. It has been the Republicans who have deceived their followers to a much greater extent by promising them liberty and property rights and then redistributing almost as egregiously as the Democrats.

One hallmark redistribution strategy used by the Republicans was “privatization.” Somehow, they managed to successfully characterize forcibly extracting money in taxes from their citizens and redistributing it to private corporations as “free enterprise,” as if “private” and “free” were synonymous. Alexander Hamilton must have smiled in his grave.

However, the Democrats have truly broken new ground during this presidential administration. Not only have they managed to outspend the voracious Bush administration in just ten short months, but they have taken a page from the Republican playbook and actually privatized wealth redistribution. Formerly, however transparent the scheme, the money at least made it into the federal treasury for a moment before being paid out to the special interest that had bought it with votes. However, H.R. 3962, the so-called “Affordable Health Care for America Act,” dispenses with this formality. Now, using the coercive power of government, private citizens will be forced to pay their money directly to government supported health insurers whether they wish to or not. The veneer that this is “public money” being spent for the “public good” has been completely stripped away. There is now simply a government pointing a gun at its citizens and forcing them to pay directly to the special interest that has successfully lobbied for their money. Even King John of the Robin Hood tales did not extort for his friends this overtly.

A more perverse merger of left and right political corruption is unimaginable. Using the government’s numbers, this will provided coverage for 36 million uninsured Americans at a minimum of $15,000 per covered life. Assuming these numbers to be at least “in the ball park,” President Obama and his so-called liberals have just handed over a half a trillion dollars a year to corporate America (the health insurance companies). What true progressive could possibly support this?

The price of this corporate welfare, of course, is that any remaining vestiges of voluntary contracts between insurer and insured that health insurance still retained has been eliminated. Insurers are no longer allowed to determine rates demographically and based upon a real risk model. They are no longer allowed to offer diverse coverage packages to compete with one another for different customer groups. They now must offer low rates and uniform benefits to everyone as entitlements. Like individual welfare recipients, they have surrendered all of their liberty and property rights in return for other people’s money. They are now just one more arm of the state bureaucracy.

The worst aspect of this great fraud is the implications it has for the liberty of every American. The closest parallel to this heretofore has been automobile insurance. Americans have been forced to buy auto insurance directly from an auto insurer in order to exercise the “privilege” of driving on the government’s roads. This was of course enacted for the public good, to ensure that poor drivers could not bankrupt the innocent by demolishing their cars or saddling them with exorbitant hospital bills. However, as hostile to liberty as these laws are, they still leave the driver a choice. He can choose not to drive, however impractical or unrealistic that choice might be.

However, with this new bill, even that smattering of liberty is ripped away. Americans are now forced to purchase insurance from a government-protected and subsidized health insurance company merely because they are alive. Worse yet, they are not merely forced to make a single payment of tribute to satisfy their “individual responsibility.” They must go on paying, year in and year out, for as long as they live. They cannot decline. They cannot conscientiously object. There is no escape from this tyranny save one: death. For those individuals that can demonstrate that they are completely incapable of paying, someone else will be forced to pay for them. No matter what, the government’s corporation will be paid. Even life is no longer a right, but a privilege that the government extends to its subjects for a fee.

From 2001-2006, the Republicans controlled all branches of government. It was an horrific period of utter destruction of American liberty. The Democrats have now been given their chance and in ten short months they have far outdone the Bush Republicans for this dubious distinction. Make no mistake. If the Republicans regain power, they will be worse still. Americans should understand that they will affect no “change” in their government by electing either of these two parties. The federal government is a monster that has taken on a life of its own. Both parties are now its minions and are indistinguishable from one another.

Our Declaration of Independence says that “mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

Are we there yet?

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

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>What Is This Free Market We Keep Hearing About? Part II

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>Previously, I wrote an article entitled “What Is This Free Market We Keep Hearing About?” In it I attempted to demonstrate that a free market is the only economic system compatible with liberty, in addition to being the system that will yield the best results for society. The dissenting views were familiar ones, which I will attempt to answer.

The first category of dissenting opinions came from those that somehow misunderstood the article to have argued that a free market exists right now, or has existed in the recent past (perhaps under the Republican regime that has thankfully gone the way of the hula hoop). For the record, we have not had any semblance of a free market since at least the New Deal, and probably not since the institution of the Federal Reserve and the income tax in 1913. If anything, we have had markets that have been “progressively” less free in each succeeding decade, the trend accelerating markedly during a few notable periods, including the 1910’s, the 1930’s, the 1960’s, and the present devastation of our liberty that is occurring before our very eyes. As I have argued more extensively before, the Bush years did not represent free markets.

The next broad category of comments could generally be grouped as those which implied that a truly free market system would amount to no government or restrictions at all and therefore necessitate that market participants would have to be trusted to “do the right thing” at the expense of their own profits. Those making this argument went on to say that history shows that “the corporations” or other wealthy market participants will always choose profit over the good of society.

This is a complete misunderstanding of the concept of free markets presented in the article and of the non-aggression principle of liberty in general. “Non-aggression” does not mean the absence of the use of force (government) under any circumstances. In a free market, there is a very necessary role for government to play, just as in nature there is an appropriate time for the use of force. Specifically, the government brings force to bear against those who have committed or are committing aggression against another’s rights. In a truly free market, the government prevents any party from using coercion or fraud to secure an exchange of property. If a company lies on its financial statements to attract investors or credit, it is the government’s job to prosecute those responsible for fraud. If a company employs violence or the threat of violence in trying to eliminate its competition, it is the government’s responsibility to prosecute the aggressor in defense of the victims.

However, if the company participates in exchanges of property whereby all participants voluntarily consent to the terms and all information pertaining to the transactions are represented truthfully, then that activity is beyond the reach of government, just as speech, religion, and conscience are beyond the reach of government because they do not represent acts of aggression against anyone else’s rights.

With the natural boundary of non-aggression enforced, the market requires no consideration for any participant other than the pursuit of profit. With truly free markets, it is never true that society is threatened unless firms sacrifice their profits to benefit society. Rather, firms can and should pursue only profit so long as they commit no aggression against another’s rights. The law should never be a positive force – it should never compel anyone to do anything. It should only prohibit certain actions, namely those that amount to aggression (fraud being aggression against the rights to property). It is this principle that is consistently violated by our modern brand of “regulation.”

This brings us to a third category of objections, namely that insufficiently regulated markets have resulted in the massive consolidations that have occurred over the past quarter century, decreasing competition and creating overly influential corporations that dominate markets and our government. This argument is rooted in the same misconception as the first – that we have had free markets at some point in our recent past. However, even if one argues that some “deregulation” has taken place and that is the reason for the consolidation, the position still begs one question. Why are new competitors not entering the market to compete with these overly dominant corporations?

There are only two possibilities. One is that the corporations in question have achieved natural monopolies. A natural monopoly is a good thing. It means that one firm is producing products of such high quality and such low price that no other firm is able to compete with it. A natural monopoly can only be sustained as long as the monopolist continues to offer products that consumers prefer over all others based upon their own voluntary decisions. Natural monopolies harm no one.

The only other explanation for a dearth of competition is that there are artificial forces at work that are keeping competition out. This means that market participants are not acting voluntarily, but make their choices under some type of coercion. There is only one entity that can legally coerce participants in any market – government. In fact, it has been the ocean of rules and regulations itself – in violation of every market participant’s natural rights – that has led to the dearth of competition in our supposedly free markets. This conclusion is intuitive. If the corporations are not natural monopolies then their competition must have been eliminated unnaturally or artificially, i.e, by the government.

It is abundantly clear that our labyrinthine regulatory structure is an artificial barrier to new competition, particularly since the regulations are now written by the very corporations they are supposed to govern. However, the root of the problem is not bad regulations or corruption. It is the fact that any barriers to human action exist at all beyond those that prevent aggression. Even without back door deals and outright corruption, these artificial barriers necessarily favor entrenched market players over new firms trying to enter the market, as compliance with regulation drives up start up and compliance costs beyond what all but the largest firms can afford.

The so-called “deregulation” in many of our markets did nothing to dismantle this quagmire of regulation, but merely eliminated barriers to consolidation while continuing to insulate established players from new competition. The results were predictable but certainly not the results of natural market forces. The proper solution to this problem is not to violate the rights to liberty and property by prohibiting one company from buying another, but rather to remove the further violations of those rights that our massive regulatory structure represents.

On this point there were some thoughtful comments attempting to determine whether corporations have rights or whether only people have rights. I would argue that the rights in question when discussing corporations are those of the shareholders, who retain all of the same rights to life, liberty, and property as any other market participant. Some argued further that the shareholders obtain certain privileges granted by government, particularly in limiting liability, that justify taxes or restrictions that would not be justified on individuals.

However, this argument ignores the fact that corporations are required to register and therefore declare to all of society their corporate status. As the decisions to form a corporation, buy its stock, lend it money, or purchase its products are all made voluntarily and with full knowledge of its corporate status, there is no justification for government to impose special restrictions upon a corporation outside of those disclosure requirements necessary to inform the public that it is a corporation.

Finally, there were those that argued that unfettered free markets result in corporations achieving too much “power,” rather than merely too much wealth. Corporate “power” is a misnomer. Power is the ability to use force. Only government has power. It is government’s sacred duty to wield that power only in defense of each individual’s rights. No matter how much wealth a corporation obtains, it exercises no power, unless it literally spends its capital to raise an army and engage in open rebellion. Clearly, this has not been the case. However, it is also clear that corporate or other wealthy interests have used their wealth to buy political favors and to induce politicians to pervert the laws themselves, leading directly to the quasi-fascist economy that we find ourselves confronted with today.

This has been a failure of government, not the free market. It is certainly not admirable when an individual or group uses its wealth to achieve injustice. Nor are interested parties participating in a free market when trying to bring government force to bear upon competitors or other market participants. However, it is ultimately government that is entrusted to preserve justice. The members of government are never compelled to allow wealthy interests to persuade them to abandon their duty. It is the government’s job to say “no,” and when they fail to do so they are destroying the free market, not licensing it.

This brief article certainly does not answer every specific argument made against free markets, but it does illustrate something common to all of them: all objections against free markets result from a misunderstanding of what a free market is. A free market is one in which no one’s rights are violated, resulting in all transactions occurring by mutual, voluntary consent. Participants in a free market practice the non-aggression principle. This does not require unrealistic virtue from market participants, because it is government’s duty to enforce the non-aggression principle. Every economic problem plaguing American society today stems from some departure from the free market, which is some violation of the rights of market participants. Justice is the protection of those rights. Social justice can only be achieved when absolutely free markets exist. Properly understood, freedom and free markets are one and the same.

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

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>What is This Free Market We Keep Hearing About?

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>“…every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interests his own way and to bring both his industry and capital into competition with those of other men.”

– Adam Smith (1776)[1]

As President Obama and his pet Congress continue their crusade to expand the reach of government into our lives, “conventional wisdom” continues to tell us that socialized medicine, rampant wealth redistribution, and government control over one industry after another is “necessary” because of the supposed failure of the free market to adequately address the needs of society. The way the “free market” is characterized by politicians and media pundits, it is not surprising that most Americans seem to regard it as some sort of special interest group (Mr. Undersecretary, the gentlemen from the free market are here to see you). Doubtless, when most Americans hear the words “free market,” they picture the CEO’s of Detroit automakers flying in on corporate jets or Wall Street financiers busy mastering the universe. This mischaracterization of the free market is ironic, seeing as both of these groups have recently sought and obtained capital from people who were not free to refuse (taxpayers).

So, before trying to ascertain whether or not the free market has failed society, it is necessary to define exactly what it is. This is not so much difficult as it is inconvenient for those who either wish to exert control over our lives or who wish to be controlled by those that they believe can offer them security in exchange for their liberty – even if it means destroying liberty for everyone. For both of these groups, the “free market” is something that must be characterized as something that it is not. To recognize it for what it is would both threaten their own ability to justify their positions and concede to their victims that what they advocate is in fact abject slavery. Neither result is palatable to opponents of the free market, so gibberish is necessary for them from both a moral and practical perspective.

So, let us say here what it seems that no one anywhere wants to come out and say: the free market is simply all members of society exercising their inalienable rights. It is nothing more and nothing less. Any other system, by definition, violates some or all of these rights.

Every individual has a natural right to labor and to keep the fruits of his labor (his property). This is his only means of pursuing his happiness. There is only one role for government in this area: to defend the property of each individual against theft by another person or group. A truly free market limits government’s role in regards to property to this natural boundary – for any further role constitutes government committing the very crime it exists to prohibit.

Every individual has a natural right to liberty – to do as he pleases as long as he does not commit aggression against the equal rights of another. In a free market, there can be no “regulation” (as we incorrectly understand the term today). The laws that restrict human action must be limited to those few necessary to ensure that no individual is forced or defrauded while paticipating in an exchange of property nor forced to accept any terms that he does not freely consent to. As the quote from Adam Smith illustrates, one cannot talk about “free markets” without at the same time incorporating the Non-Aggression Principle of Liberty. While Smith is generally regarded as the “father of capitalism,” he never actually called his economic system by that name. Instead, he referred to it as “a system of natural liberty.” Given the confusion that now accompanies the word “capitalism,” it might be better to revert to Smith’s terminology.

Since a free market is by definition the only system that allows individuals to exercise their rights, to say that an unfettered free market does not work is to say that society will not work unless those rights are systematically violated and that those violations must be protected by the law. A greater perversion of justice is unimaginable. Yet, the majority of our elected officials champion exactly this. Sadly, the majority of their constituents blindly parrot their horrific slogans.

In response to this argument, the more cunning opponents of liberty will say that we have given the free market a chance to work and it has failed. False prophet of freedom Alan Greenspan is notable among this gang of vipers. However, any lucid analysis of the difficulties that we find ourselves in now can indisputably be traced to the aspects of our society that prevent free markets. Bad mortgage loans were made because government committed the fraud of monetary inflation combined with the theft of guaranteeing loans with taxpayer money. The skyrocketing cost of health care is a result of government committing the theft of taking money from one individual and using it to buy health care for another, suspending the natural law of supply and demand with artificial demand. Contrary to the idea that individual rights must be balanced with societal needs, it is the violation of individual rights that causes all of our societal problems, most pervasively our economic problems.

As it is merely the economic application of the Non-Aggression Principle of Liberty, the free market is the only system that allows individuals the ability to exercise their right to pursue their happiness. By doing so, they naturally seek to profit from their labor and compete with each other without committing aggression against each other’s rights. History shows that individuals acting in this manner produce enormous benefits for their fellow human beings. The steam engine, the automobile, the airplane, the telephone, and virtually every other technological advance that provides a tangible improvement in the quality of human life have been the result of human beings peacefully competing with each other for profit.

Conversely, the atomic bomb, the concentration camp, and every other technology which serves the purpose of death, destruction, and enslavement have been the result of governments forcefully confiscating property from their citizens which would otherwise have been put to productive use.[2] It has only been by violating the individual, inalienable rights to life, liberty, and property that any of these horrors were able to come to fruition.

The free market has not failed. The free market is Freedom itself, and while it has only occurred for brief moments throughout history, it has never, will never, and can never fail. When we are confronted with gibberish about the failure of free markets and the need for government to “play a role in the economy,” or for a “public-private partnership,” let us not let ourselves be led into a carefully framed argument about what might provide more health care, produce more automobiles, or save more jobs. Let us recognize these arguments for what they are: a declaration of war upon our inalienable rights.

As our Declaration of Independence states, government’s purpose is to secure our rights, including our inalienable right to a free market within which to exchange our property. Whenever any Form of Government becomes destructive of this end, it is our right and our duty to alter or abolish it. Not only must we resist further government expansion into our economy, we must begin dismantling the institutions of tyranny that government has already established over the past century. Our representatives must hear this from us every day until they call off their attack upon our rights or until they can be removed from office. There is nothing in any of our lives that is more important than this right now.

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!
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[1] Smith, Adam An Inquiry into the Wealth of Nations from An Inquiry into the Wealth of Nations: Selections edited by Laurance Winant Dickey Hackett Publishing Indianapolis, IN 1993 pg. 165
[2] The reader should avoid confusing private companies developing weapons for the government with “the free market.” The fact that the companies are privately owned does not mean that they are operating in a free market. Quite the contrary. Since the buyers of their products do so involuntarily (taxes), the development of new weapons and subsequent sale of them to the government has nothing to do with a free market.

Life, Liberty, and Property Are Inseparable

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The reason why men enter into society, is the preservation of their property; and the end why they chuse and authorize a legislative, is, that there may be laws made, and rules set, as guards and fences to the properties of all the members of the society, to limit the power, and moderate the dominion, of every part and member of the society: for since it can never be supposed to be the will of the society, that the legislative should have a power to destroy that which every one designs to secure, by entering into society, and for which the people submitted themselves to legislators of their own making; whenever the legislators endeavour to take away, and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any farther obedience, and are left to the common refuge, which God hath provided for all men, against force and violence.

– John Locke[1]

Life, liberty, and property were the central, inalienable rights that formed the foundation of the great experiment in self government called the United States of America. The founders of our country never broke apart this sacred triumvirate, because each one of these rights is inextricably bound to the other. No one of these three can exist without the other. Moreover, when all three are secured, it is almost impossible for injustice to exist. Wherever one does find injustice, one invariably finds a violation of one of these three basic rights at its root.

While it is certainly true that today the rights to life and liberty are grossly violated in innumerable ways, they are nevertheless at least spoken of by our politicians. However hypocritically, they at least say that they value life and liberty, even as they pervert those sacred rights as justification for their wars and plunder.

Yet, they never even hypocritically evoke the right to property. No journalist ever challenges them based upon it, and honestly, most average Americans don’t talk about it either. As a principle, property has vanished from our consciousness. However, as all of the great philosophers throughout history have understood, there is no right to life or liberty without property. In fact, property is part and parcel of life itself.

What is property? It is that which an individual rightfully owns. Included among every human being’s property are his mind, his body, his conscience, and his actions. Every act of mind and body undeniably belongs to the actor, including that act which he engages in more than any other: his labor. To deny someone’s right to ownership of his mind, body, or labor is to make him a slave.

It is labor that allows each individual to sustain his existence and pursue his happiness. All consumption must be preceded by production. Production can only be achieved through human labor. In fact, there is no way for an individual to pursue any goal, whether material, intellectual, or spiritual, without exertion. Even the search for God requires an intellectual and spiritual effort – it cannot commence without labor.

For most of us, the bulk of our labor is devoted to providing the basic necessities of life for ourselves and our children. Some portion of it also provides the extras – the toys, the vacations, or the dining out that enriches our lives and adds to our happiness. A further portion is devoted to study, prayer, or just simple reflection – the quest for meaning and purpose in our lives. None of these things are possible without labor; our labor provides them all. Every item in every store is the product of someone’s labor. Every phone call you make is made possible by someone’s labor. Healthcare is someone’s labor, as is education.

However, the actual effort of mind and body is not the most precious aspect of labor. If human beings were immortal, we could afford to spend our labor and its fruits indiscriminately, consuming as much as we wished and providing anything to anyone who asked it of us. If a shoemaker were able to make shoes for the rest of eternity, then certainly there would not be a bare foot on the face of the earth. If the land developer were immortal, we would all live in a mansion.

However, we are not immortal, and it is this fact that places such a premium on our labor. Our labor is not just composed of the exertion of mind and body that is necessary to produce some good or service. That exertion happens over time, the hours or days of the laborer’s life. Every hour of our labor is an hour of our life from a limited supply which cannot be replenished. Whatever we have produced with our labor now contains that portion of our life which we have sacrificed to produce it.

So, when human beings trade their goods or services with one another, they are really trading pieces of their lives. If they have exchanged their labor for money with an employer or customer, that money now contains some part of their lives – a part that can never be reclaimed. That is why the same verb is used for both money and time – both are “spent” in exchange for some benefit. Both also represent each individual’s means of self determination.

Therefore, it is impossible to call a person free if he does not own his labor and all the product of his labor. It is only through his labor that he can provide better food, clothing and shelter for himself and his family, send his children to better schools, or realize the leisure time necessary to grow intellectually and spiritually. His labor is his means to determine the course of his life. Without self determination, there is no liberty.

Furthermore, to deny a human being ownership of his labor is also to deny his right to life itself. Since his labor is his means of sustaining his existence, once his right to ownership of his labor is denied he lives only at the arbitrary whim of whoever has claimed ownership of it. For such a person, life is now a privilege granted by someone else, rather than a right.

To the founders of the United States of America, all of this was self evident. When one reads the writings of Samuel and John Adams, Jefferson, Madison, or Locke, one finds one word that is used many times more often even than liberty: property. Recognizing property as nothing more than the individual’s labor and/or the product of his labor, the founders placed the protection of property as the very highest priority of government. In fact, they often stated that it was the only priority of government. While no high school history book or Hollywood biopic even hints at this fact, merely reading the words of the founders for oneself puts any debate on this point to rest.

Let us apply this concept to a contemporary issue. The unambiguous statements in the Declaration of Independence that all human beings have unalienable rights and that government’s sole purpose is to secure them should absolutely beg at least one timely question from most Americans today. Why did the founders not provide for the right to health care? Why did they not establish Medicare or Medicaid? Given a whole system of government whose purpose was to secure individual rights, why was this right so glaringly overlooked?

Of course, the answer to that question is that the founders recognized that health care was not a right. Health care, like every other good or service, is someone’s labor. No one but the laborer can have a right to it. To say that people have a right to health care is really to deny the health care provider a right to his own life, for it is impossible for both he and his patient to have a right to ownership of his labor. It is no less a crime to forcefully rob the health care provider’s fee from a third party (the taxpayer), for that simply denies the taxpayer’s right to his own life. In either case – whether the health care provider is forced to treat the patient for free or a third party is forced to pay the bill – someone’s labor, some part of someone’s life, is being stolen from him. This is the specific crime that government exists to defend its citizens against. By instead committing this crime, government becomes the most grotesque absurdity imaginable.

This is not to imply that we are at some sort of crossroads because President Obama and his pet Congress are closing in on expanding government healthcare. We came to that crossroads decades ago and quite undeniably took the wrong road. Until our philosophy changes and we recognize that retirement benefits, health care, research grants, corporate subsidies, investment in alternative energy – all money, goods, and services – are really pieces of someone’s life that cannot be seized from them without their consent (not even by majority vote), we will never restore the liberty that we have lost. Instead, we will continue to be the most pitiable form of slave, not bound to one master, but to everyone.

When a fellow human being offers to buy your product or hire you for your services, he has paid you the highest compliment imaginable. That person has offered a piece of his life to you in exchange for something that you have to offer, which is itself a piece of your own life. He is saying that you have value and that what you offer is worth hours or days of his life that he can never reclaim. This consensual interaction between free people is the most beautiful aspect of civil society and has been responsible for every improvement in the quality of human life that has ever occurred throughout history.

Conversely, when a fellow human being points a gun at you and demands that you provide him with some good or service, he commits the most egregious crime imaginable, short of pulling the trigger and ending your life at that moment. For in reality, he is really stealing a piece of your life that you can likewise never reclaim. He may be committing this crime because he wishes to increase his wealth without earning it, or he may desperately need whatever he takes from you, but it is the same crime nonetheless. This interaction is the most evil aspect of civil society and has been responsible for every war and human misery that has ever occurred throughout history.

Government can only be organized to fulfill one of two purposes: to protect your property or to take it from you – for whatever purpose government or its constituents deem fit. There is no third choice. To organize society around competing groups stealing from one another is to create a society whose citizens exist in a perpetual state of war with one another – for the use of force to obtain another’s property without his consent is the definition of the state of war.

Such a society cannot endure indefinitely. Ours has come to the beginning of its inevitable end. Countless empires throughout history – some much more preeminent in their worlds than we are in ours – have disintegrated for exactly the same reason. We can still choose justice over injustice but our philosophy must change. We must again institute a government that secures our rights, rather than annihilates them in the attempt to provide us with the property of others.

This will not happen by any act of government itself. Whether we elect a liberal or a conservative, we will never achieve different results by continually electing different people or parties but asking them to do the same thing – provide us with the property of others. It must be the people who change their philosophy and then demand that government assume its appropriate role according to that philosophy. Our government ultimately gives us what we ask for. For the past century, we have increasingly asked it to make us slaves, seduced by the siren’s song of comfort and security without responsibility. This can only be provided to each of us at another’s expense and can only be provided to others at ours. Once we reject the idea that we can claim a right to another human being’s life, the chains that bind us will be broken. Then, it will matter not who makes our laws.

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

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[1] Locke, John Second Treatise of Government Hackett Publishing Company, Inc. Indianapolis, IN (1980) Pg. 111

Politicians Talking Gibberish About Health Care

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Joint_blog_close_PS-0774 Every minute of every day, Americans are subjected to politicians and media pundits talking gibberish. There really is no other word for it, whether the particular subject is economics, foreign policy, or even climatology. However, the gibberish that is getting the most attention right now concerns health care “reform.” President Obama is leading the Democrats with the familiar socialist model that has failed in every industrialized nation in which it has been tried. The Republicans are answering with gibberish of their own. You have to especially admire the Republicans, because they are not only fomenting nonsense from a discredited, minority position, but are actually trying to suck up to voters by selling their version of government-run, loot-funded health care as a “free market solution.” Only the party of George W. Bush could be capable of gibberish like this.

To truly appreciate how bizarre the arguments are, let’s break down what our ruling class is really saying. Sometimes the music bed, the interruptions by the self-absorbed interviewer, or even the graphics leading into next segment can obscure the gibberishness of some of their assertions.

Let us start by examining the position of the Democrats. They assert that every human being has a right to health care, and that it is the government’s job to provide for those who cannot afford it. There are three key terms here: right, health care, and provide. Let’s define the first two.

Right: that which an individual is entitled to without the consent of or compensation to anyone else. For example, people have a right to life. That is, they do not need anyone’s permission, nor are they obligated to compensate anyone in order to live. It is appropriate for an individual to demand, rather than ask for, their right to life to be respected.

Health care: a service which primarily consists of the labor of health care providers. For example, a physician exerts his mind and body, utilizing his education and experience, to attempt to diagnose and treat a patient’s illness or injury. That physician’s labor is “health care.”

Let us now restate the argument made by the Democrats, using these definitions in place of the terms themselves.

“Every individual is entitled to the labor of health care providers without compensating them or obtaining their consent. It is appropriate for individuals to demand, rather than ask, that health care providers treat them for free.”

Gibberish.

To be fair, although the Democrats repeat their slogan about the “right to healthcare” ad infinitum, they do not actually propose that the government defend this “right” directly. Instead, they use their own peculiar definition of the third term previously cited, “provide.” Americans continue to be bewildered by this parlor trick, whether because they are easily confused or because it is more convenient to be fooled than not. In any case, “provide” to the government means that they will employ the method described by William Graham Sumner where A & B get together to pass a law requiring C to do something for X. So as not to miss the opportunity to describe this plainly, this really means that they are going to use the brute force of government to force some people to pay for health care for others. That is all it is, when you peel away the doubletalk, jingoism, and spin.

Moreover, it is not just your property that the government will take in order to run its program. It will also require another huge portion of your liberty as well. In a recent speech about his health care reform plans, President Obama suggested that “we” must begin encouraging healthier lifestyles, including getting our children away from computer games and back to playing outside. “We” means “the government.” Of course, when it is the government’s responsibility to pay for the health care of other people, the government now claims a right on behalf of taxpayers to see that those people keep themselves as healthy as they can in order to limit the cost. There are already government-imposed exercise programs in Japan. Americans should be aware that the same rules will apply here. One can almost hear the government “instructress” from Orwell’s 1984 screaming from the telescreen.

“Smith W.! Yes, you! Bend lower, please! You can do better than that. You’re not trying. Lower, please! That’s better, comrade.”[1]

Political gibberish often conceals rather horrifying ideas. Thankfully, we have an opposition party that is opposing these heinous proposals, correct? As the people from Hertz say, “Not exactly.”

It is true that Republicans oppose a government-run health care plan. As reported in the Wall Street Journal, the Republican summary of their “Patient’s Choice Act” argues that “ The government would run a health plan “with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.”[2] All true, but of course the so-called party of individual liberty and free markets fails to argue the main point: the government – we the people – do not have the right to forcibly take money from one person and give it to another, not even for the purposes of paying for their health care. Nowhere in any report made public nor in any interview with a spokesperson for this “opposition party” will you hear this argument. There is a good reason for that.

Of course, the Republicans will argue that their plan works through the tax system and actually let’s families “keep more of their own money” to spend on health care, but a careful read of the WSJ article reveals that the same redistribution scheme is hidden within the stale “free market” rhetoric. First, the Republican plan would eliminate the tax exemption for employers when they provide health insurance benefits to their employees. This amounts to a tax increase on employers, whether they continue to provide the benefits or whether they eliminate them and merely pay taxes on the extra net income. What would the government do with this new revenue?

“Instead, it would give an annual tax credit of $2,300 to each individual and $5,700 to each family that they could use to offset the cost of their health insurance. Low-income families would get extra money to buy into private insurance plans.” [emphasis added]

So, in an effort to appear to be protecting the property rights of their more affluent base but at the same time buy the votes of those who cannot afford health care, the Republicans will simply tax those whom they think they can get away with taxing and call their own version of wealth redistribution a “tax cut,” much like George Bush’s “tax refunds” of the past decade. Of course, there is only one word for the suggestion that you can “cut” or “refund” taxes for people who are not paying taxes.

Gibberish.

As usual, the American public is served up a carefully framed debate that attempts to appear to have two sides but doesn’t. In either case, we are getting “reform” of the health care system in the only way that any government can “provide” anything. They are going to forcibly take away the property (taxes) of one group of people and use it to provide property (health care) to another group. Lest anyone mistakes this brutal practice as “the wrong means to a compassionate end,” let us remember the only reason that politicians from either party suggest this: to buy the votes of those who believe that they will benefit from it. Since there are more who would receive benefits in the voting base of the Democratic Party, they are more open about what they are really doing. Since there are more of those who will be forced to pay in the base of the Republican Party, they try to spin their redistribution scheme as a “free market solution.” However, it is dressed up, it amounts to one thing; stealing.

In addition to ignoring the fundamental violation of rights that is part and parcel of any government provided service, both the Republicans and Democrats seem completely unaware of the root cause of the problem: health care is only so expensive because government already provides so much of it. This is the other elephant sitting in the corner whenever politicians from either party start talking about health care reform.

Last year, total health care spending in the United States amounted to roughly $2.4 trillion dollars. Medicare and Medicaid alone accounted for over $800 billion, or 33% of that. Add the Veteran’s Administration and other smaller government health care programs, and government is directly providing almost half of all health care delivered in this country. What does this have to do with the price? Any first-year economics student can tell you.

Price is determined by the intersection of supply and demand. Demand has two components: the desire to buy a good or service and the ability to buy that good or service. Let us assume that the desire for health care services is unlimited, as it is for many other goods or services. In that case, the only factor that can limit demand for health care services is ability to pay. This is the factor that most influences the price of every other good or service provided in the marketplace, including food, clothing, and shelter, which are even more vital to human life than health care. It is the finite amount of money that the buyers have to spend which keeps the price down and makes most goods affordable to those on limited budgets.

However, when government makes something an entitlement, demand suddenly becomes unlimited. Since the government now must provide the benefit and they have the option of taxing or printing what money they need to provide it, there is no longer anything holding down the price. This is the reason that we have seen health care prices skyrocket in recent decades. They will continue to rise until all resources are consumed trying to provide them.

State and local governments have already been experiencing this for years because of the exploding cost of their shares of the Medicaid programs (half of Medicaid benefits are paid by the states, some of which require their local governments to pay a percentage as well). They cannot print their own money, so they have instead cut their police forces and other legitimate functions of government in order to divert money to the insatiable Medicaid beast. In one local county in upstate New York, 100% of the property taxes collected in that county and $40 million dollars of sales tax revenue – the county’s only other revenue source – went to pay that county’s share of the Medicaid bill for their recipients. Now, it has been reported that the majority of the TARP funds that were supposed to go to “shovel-ready infrastructure projects” are instead being earmarked for “existing state social programs.” An audit of these payments would undoubtedly reveal that the bulk will go to Medicaid.

Economic laws are like the forces of nature. They can be held off, as a levy holds off a flood, but they will eventually overwhelm any attempt to violate them. The most fundamental economic law is this: you cannot consume more than you produce without taking the difference from someone else. Government produces nothing. Therefore, any health care benefit that government provides must be funded with money taken by force from someone else. There is no political theory, mathematical equation, or black magic incantation that can change this.

However, even if we are able to put aside the moral repugnancy of this practice, we cannot do so forever. Once voluntary exchange is abolished, market forces are suspended and the price of providing health care will rise until the government is no longer able even to steal enough to pay for it. That day was only a few decades away for the existing government health care programs before the economic crisis we find ourselves in now (which was similarly caused by government for all of the same reasons). If government attempts to provide everyone with health care, the end will come much sooner.

This sheds light on a fundamental misconception that underlies all of the societal problems that American society faces today: the belief that there is a conflict between individual rights and the “needs of society.” This conflict doesn’t exist. Protecting the rights of every individual serves the needs of society. Violating those rights, for whatever purpose, destroys society. In fact, it is by violating the individual rights of its constituents that government causes nearly every societal problem we face. The high price of health care is just one example.

There is only one moral and practical answer to the high cost of health care: we must get government out of the health care business entirely. That includes rejecting new programs proposed by either major party and figuring out a humane way to get our children out of the existing entitlement system without cutting off those presently dependent upon the benefits. The only lucid argument I’ve heard so far has been put forth by former presidential candidate, Congressman Ron Paul. He suggests that we dismantle our $1 trillion per year overseas military empire and use that money to pay Medicare and Social Security benefits while our children are allowed to enter the workforce without enrolling in the system themselves.

What do you know? A politician moved his lips and something besides gibberish came out.

[1] Orwell, George 1984 Part I Ch. 3

[2] Adamy, Janet “Republicans Offer Health-Care Plan” The Wall Street Journal May 21, 2009

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

>A Nation of Hyenas

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>One never knows where one will find profound metaphors for human existence and society, and I certainly wasn’t looking for one while channel surfing last weekend after a morning of yard and house work. However, I had the good fortune to flip on Mutual of Omaha’s Wild Kingdom and observe a perfect analogy to what our once-great society has become.

That episode was about the cheetah, the fastest land animal on earth. The cheetah is a beautiful creature. As the show pointed out, it is literally built for speed at the expense of brute strength, of which it has relatively little compared to other predators in its habitat. While unfortunate for the antelope, it was nonetheless quite inspiring to watch a high-speed pursuit of that animal by the cheetah, exhibiting gracefulness which rose to the level of poetry. Having made her kill, the cheetah brought the antelope back to feed herself and her young.

However, the story was not to end so happily for this family. The smell of blood in the air had attracted a pack of one of the cheetah’s competitors, the hyena. While the aforementioned lack of brute strength would probably not allow the cheetah to fight off even one hyena, that fact was irrelevant in that it was ten or twelve hyenas which now threatened her. Why? They were after the antelope – the fruits of the cheetah’s labor – and were going to use their greater numbers to take it from her by force. They weren’t intent upon killing the cheetah or her young, but were willing to do so, if necessary, to obtain her property without her consent. The cheetah weighed the risks to herself and her cubs and retreated, left to try to make up the loss elsewhere to provide for her family.

A few nights later I broke an embargo of sorts and actually watched a “news” program. I tuned in Cavuto on Fox News[1], which is one of the few shows where actual journalism seems to occur occasionally, despite its network affiliation with right wing propagandists Hannity and O’Reilly.

Cavuto’s regular panel of guests is arguably the most libertarian one can find anywhere in the “mainstream media,” regularly featuring Jonathan Hoenig, Peter Schiff, and even Yaron Brook, President of the Ayn Rand Institute.

That night, the auto company bailouts were again on the docket, and familiar arguments were made by Hoenig and the other panelists about why the results would be worse if the government took control of the auto industry. Cavuto’s token panelist from the left[2] (a female panelist whose identity I have been unable to verify), made the now also-familiar argument that “we bailed out Wall Street and now Main Street is demanding that the government do something for them.” Most of the panelists answered correctly that they were against the Wall Street bailouts as well, a point that was left unemphasized due to several people talking at once. However, the real chance for a meaningful debate still lay ahead. The boisterous Cody Willard set the stage when he said, “if you want to help them, send them your money, but don’t hold a gun to my head.”

The reply from the panelist arguing the liberal perspective was monumental:

“That’s why we have a democratically-elected government and the people want the government to do something.”

When she gave that answer, it was time to stop the quips, the witticisms, and even delay going to a commercial, if necessary. Despite the fact that the host trivialized the exchange by talking over part of both her and Willard’s comments, the exchange between the two was enormous beyond what most viewers probably realized.

There are many who would probably consider Willard’s statement a half-facetious exaggeration for effect. It was not. It is the horrifying reality of what any government bailout or other redistribution of wealth represents. We as Americans have forgotten that all government action is exercised under exactly these circumstances: at gunpoint. That is the purpose of government, to exercise brute force on behalf of its constituents when it becomes necessary to do so. That is why our government was originally so limited. The founders of our nation believed that brute force was only justified in self defense. Therefore, government action was limited to protecting its constituents from harm by other people, whether it was harm by a fellow citizen or a foreign army.

However, when the government undertakes to “do something” about a failed bank or auto company, it really means that We the People have decided to apply brute force to the problem, even though it is not a matter of self defense. Willard was completely accurate: a government bailout of a distressed auto company, whether it saves jobs or not, is really the people using their collective means of brute force (the government) to take property from one group of people and give it to another. This exchange is done at gunpoint – there is no consent by the party being taken from. Had the managers or the employees of the auto company armed themselves and sought to raise the funds themselves by stealing them at gunpoint from the people directly, they would have been arrested and prosecuted for armed robbery. However, Willard’s opponent in the debate argues that there is some ethical difference because a “democratically-elected government” acts as the armed robber in their stead. What can the difference possibly be?

This is the fundamental question that we as a society must answer if we are ever going to reverse the downward spiral we find ourselves in. Do we believe that individuals have inalienable rights or do we believe that a majority vote can take those rights away?

If one takes an objective look at our society as it has evolved over the past century, one must conclude that we have already answered it. Stripped of euphemism, almost every government institution in our society amounts to us using the brute force of government to violate the inalienable rights of our neighbors. Let us consider just a few examples.

Government involvement in healthcare has driven the price so high (through the artificial demand it creates) that the poor and elderly cannot afford it. Our answer is to apply the brute force of government to steal the money at gunpoint from one group of people to provide healthcare to another. In a truly bizarre development, that practice has now resulted in such high prices that almost no one can afford healthcare. So, we will now steal from everyone to provide healthcare for everyone. Lewis Carroll couldn’t have dreamed of anything quite so mad.

In order to be able to stop working but still enjoy the quality of life we feel we deserve after a certain age, we use the brute force of government to steal from those who are still productive to support those who are not. We could save for our retirement, but we choose instead to steal. We call this “Social Security.” It should be called, “Anti-Social Insecurity.”

Similarly, in order to afford to buy a house without saving the necessary down payment and establishing superior credit, we use the brute force of government to compel our neighbors to guarantee our mortgage loans with their money. When the inevitable tsunami of defaults occurred last summer, some objected to the government stealing the money to cover the losses of the banks. In truth, the money had been stolen decades ago, the minute that Fannie Mae was established.

Rather than saving the money for college tuition or allowing our children to work their way through college if we cannot afford to pay the tuition in full, we use the brute force of government to compel our neighbors at gunpoint to guarantee our student loans with their money. As with healthcare, this evil practice has driven the price of college tuition so high that not only are students going into long-term debt just to pay for their education, but their parents are taking out decades-long loans as well.

Should fortune not smile upon us or should we not develop marketable skills with which to obtain employment, we use the brute force of government to steal the money needed to sustain us from our fellow citizens. We call this the “social safety net,” but it also should be recognized as “anti-social.”

If we believe that we have a scientific theory that could lead to a new discovery that will benefit society (and enrich ourselves), we do not seek out capital to research it from those who can provide it voluntarily. We use the brute force of government to steal the money from our neighbors with the flimsy justification that “federal funding of research” will “benefit all of society” with a new medicine or a new technology.

This is by no means the length and breadth of the ways in which we violate each other’s rights on a daily basis. Every program funded by government, besides those that have the express purpose of defending our rights (police forces, the courts, the military), amount to the same thing: using our collective means of brute force to extract money from one group and give it to another.

What should be obvious is that it is not one evil group (the poor, the elderly, the corporations, Wall Street, etc.) that engages in this morally repugnant practice. Politicians will pick their scapegoats to play to their own power bases. The Republicans will blame the poor to get votes and campaign contributions from their base, the corporations and the rich. The Democrats will blame the rich and the corporations to get votes and campaign contributions from their base, the unions, average Americans, and the poor (the poor have only their votes to give and get back only the most miserable portion of the loot).

However, we must wake up to the fact that we all have a hand in this. The steady growth of one redistribution scheme after another has made it virtually impossible to function in our society without in some way participating in the looting of our fellow citizens, while we are at the same time looted ourselves. We have established all of these redistribution schemes through the democratic process. This past century has not been a progressive century. It has been a regressive one. We have regressed from a society of free people that respect each other’s inalienable rights to a society that is based upon competing groups stealing from one another through the brute force of government. We use only the support of greater numbers (majority vote) to justify the institution of each new crime. We have regressed to the brutal law of the jungle. We have become a nation of hyenas.

This has all followed logically from one fundamental break we made from our founding principles. We have elevated democracy to an ideal, at the expense of the individual rights that our government – and any government of free people – was constructed to protect. We have convinced ourselves that anything a majority vote sanctions is just, even if it violates those rights. Once we accepted that premise, the seeds of our destruction were sown.

As one might expect, this is something that the founders of our nation warned us specifically against. When one takes an objective look at our founding documents, the first thing that should jump off the pages is how little democracy there really was in our original government. Only the House of Representatives was chosen directly by the people, with the president and senate chosen indirectly by electors or the state legislatures, respectively.

More importantly, it is vital to realize what all of the limits, checks and balances, and even the Bill of Rights were intended to protect us from. They were intended to protect us from democracy.

One does not need to engage in interpretation to support this claim. The founders said it explicitly on more occasions that one could count. Here are just a few examples:

“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,”[3]

“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]

“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.”[5]

These vitriolic attacks upon democracy and majority vote from the founders of our nation would probably surprise most Americans. Nevertheless, there they are. The founders understood that democracy was a means, not an end. Their end was protection of the inalienable rights of each individual. Democracy was only good and just insofar as it helped to defend those rights. Furthermore, it must be prevented from being used to violate them. Again, the founders said this explicitly.

“In short, it is the greatest absurdity to suppose it in the power of one, or any number of men, at the entering into society, to renounce their essential natural rights, or the means of preserving those rights; when the grand end of civil government, from the very nature of its institution, is for the support, protection, and defence of those very rights; the principal of which, as is before observed, are Life, Liberty, and Property. If men, through fear, fraud, or mistake, should in terms renounce or give up any essential natural right, the eternal law of reason and the grand end of society would absolutely vacate such renunciation. The right to freedom being the gift of God Almighty, it is not in the power of man to alienate this gift and voluntarily become a slave.”[6]

This passage elucidates another conclusion that proceeds from natural law. Not only is each individual prohibited from using the majority vote to violate the rights of his fellow citizens, he is prohibited from using that vote even to relinquish his own rights. That is because rights are not granted by society. They are inherent in man’s nature itself. They are non-transferable. They cannot be taken or even given away. That is the meaning of “inalienable.”

It was at the turn of the last century that we made the fundamental change in our philosophy. Since that time, we have held democracy up as our ideal at the expense of our natural rights. We did this primarily to justify the routine violation of one specific right: property. It is no accident that as democracy has become more and more extolled as an ideal, property has become more and more reviled. We have even had professors in American universities teach their students that “property is theft.”

Of course, like the hyena, we really do not care what our fellow citizens say or believe. We will not expend much energy in violating their rights to free speech or freedom of religion, because in the end we have nothing to gain from violating those rights. However, by violating their rights to the fruits of their labor, we do gain enormously at their expense. This is the true danger of democracy. We must face up to this plain fact and stop talking about everything but property. As Adams also said, “Now what liberty can there be where property is taken away without consent?”

We are at a crossroads. The system we have built upon the brutal law of the jungle is about to collapse. We are presently suggesting even more brute force (government) to try to preserve it. If we continue on this course, the relationship between predator and prey on the African savannah will seem civilized compared to the state of our society. Unfettered democracy – not unfettered capitalism – has brought us here. We must choose respect for our inalienable rights over the loot that unfettered democracy can provide us with. If not, we must admit to ourselves that the way in which we live and deal with one another is no different from that of the savage beasts of the jungle. A return to our founding principles is our only hope.

Are we not men?

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

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[1] “Cavuto” Fox Business News May 27, 2009.
[2] While hard-core progressives might call her a “Fox News Liberal” for even appearing on the hated network, her role on this telecast was without question to argue the liberal side of the issue.
[3] Madison, James Federalist #10
[4] Jefferson, Thomas To Dupont de Nemours Washington ed. vi, 591 1816
[5] Madison, James Letter to James Monroe October 5th, 1786
[6] Samuel Adams The Rights of the Colonists (1772) The Report of the Committee of Correspondence to the Boston Town Meeting, Nov. 20, 1772 Old South Leaflets no. 173 (Boston: Directors of the Old South Work, 1906) 7: pg. 419.

The Myth of the Laissez Faire President

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It is generally accepted that one must wait several decades before looking back at an event or an era with sufficient “historical perspective.” Only from that vantage point can the significance and long-term effects of any piece of history be objectively observed, quantified, and analyzed. However, there is a dilemma inherent in this long-standing tradition. It is that there are always interested parties who wish to characterize significant events or eras in history in a way that suits their own agenda. As a result, by the time sufficient time has passed to satisfy the need for “historical perspective,” these interested parties have created an official story regarding the events in question and have had time to convince the majority of people that this official story is the truth. By the time a generation has passed, the official story has become both accepted history for academia and “conventional wisdom” for average citizens. Regardless of facts, reason, or any perspective whatsoever, the official story now is the truth.

Such has been the case countless time throughout American history. It is universally accepted that America’s Civil War started over slavery, and credits Abraham Lincoln with “freeing the slaves.” History and conventional also wisdom tells us that the quality of life of the working class in America declined during the industrial revolution, and credits the “progressive movement” for instituting needed reforms that saved the working class from capitalism. Most relevant to our situation in America today, history blames the Great Depression of the 1930’s on Herbert Hoover’s “laissez faire capitalism” and “unregulated free markets,” and credits FDR’s New Deal with ending the Depression and restoring prosperity.

When presented in the textbooks of high school history or college survey courses, there is a certain logic and reasonableness to these versions of historical events that makes them very easy to understand and accept. There is only one problem: none of them are true.

Americans are already familiar with the official story of our present crisis. Too much laissez faire capitalism” has resulted in an unprecedented crisis caused by predatory lenders, irresponsible borrowers, speculators, and other market participants acting in an environment with too little regulation. Without oversight, “unregulated free markets” naturally resulted in market players choosing short term profits over long-term prudence. This process was fueled during the past decade by George W. Bush’s “laissez faire policies.”

There is only one problem with this story – none of it is true, either. None of the problems we face today were caused by unregulated free markets and the policies of George W. Bush were in no way “laissez faire.” This is much more than an academic argument. The premise that unregulated capitalism is to blame for our present economic crisis is the basis for every action that our government is taking right now. If that premise is incorrect, then the results of action taken based upon it could be disastrous.

It is probably a good idea at this point to define some terms. Assuming that “laissez faire capitalism” and “free markets” mean the same thing, what I mean when I use those terms is this: a market economy where all exchanges of property are made with the mutual, voluntary consent of all parties to those transactions. While government’s role is limited in such a system, it is nevertheless crucial: to ensure that all transactions are made with the mutual, voluntary consent of all parties. To put it most succinctly, government’s role in a free market is to protect the property rights of each individual.

Is this what George W. Bush did or at least attempted to do? Let us examine the Bush economic policies and see for ourselves.

Bush campaigned on and did follow through upon a promise to cut taxes. He did this by reducing the income tax on the highest income earners and by sending each American family a “refund” of several hundred dollars. One might be tempted to argue that this was a move in the direction of free markets, as the returned money represented reductions of a government that had grown far beyond its role of defending life, liberty, and property. Thus, the tax money collected for these illegitimate functions was a violation of the property rights government was supposed to protect and the tax cuts were a partial remedy for those violations. This is what any self-respecting Republican would have you believe.

There is only one problem: there were no reductions in government. In fact, Bush greatly increased the size of the government with military and new entitlement spending. As a result, he ran huge deficits and doubled the national debt. Looked at objectively, there was a tenuous relationship at best between the money taxpayers had previously paid in taxes and the checks sent out by the government after all of that tax money was already spent. Furthermore, millions of Americans who hadn’t even paid taxes received “refund” checks anyway. Seen for what it was, this “tax refund” was merely a ploy to buy votes with other people’s money dressed up in Republican rhetoric, as well as a way to perpetuate debt-fueled consumerism for the benefit of President Bush’s friends in corporate America. Handing out money to people to whom it doesn’t belong has nothing to do with free markets, whether that money is borrowed from other nations or printed out of thin air. It represents complete distortion of the markets by government, along with a fundamental violation of the property rights of present and future generations.

Amidst this confusion we seem to have forgotten one major contributor to the aforementioned deficits: the Medicare drug plan. The Medicare drug plan was the Bush administration’s program from start to finish, and it was rammed through the legislature despite its dubious administrative plan and complete lack of funding. While it was rightly criticized for both of these faults, no media outlet seems to have recognized its complete antagonism toward free markets. In addition to violating property rights by forcing one group of individuals to pay for the healthcare services of others, Medicare and other government health care programs completely distort the health care market, creating artificial demand that inflates prices and suspends market forces. Here we have another major component of President Bush’s policy that is the complete antithesis of laissez faire capitalism.

The mass illusion about this president’s policies doesn’t stop there. The American public also seems to think that major deregulation occurred under President Bush, but actually the exact opposite is true. Even the Gramm-Leach-Bliley Act (repealing the Glass-Steagall Act), often mistakenly blamed for the massive expansion of derivatives that helped fuel the housing bubble, was actually passed when President Clinton was still in office. Bush’s only significant effect on the regulatory structure was to increase regulation, not decrease it.

Due to the political fallout from the accounting scandals during the early years of Bush’s presidency, especially the Enron scandal, Bush championed new, completely unnecessary, and profoundly destructive regulations under the Sarbanes-Oxley act. Despite the fact that the accounting scandals were clear cases of fraud, which was already illegal and which was prosecuted without a single new regulation, President Bush had a political need to show that he was “doing something” about corporate crime.

So, again in complete opposition to “free markets,” Bush signed Sarbanes-Oxley into law, saying as he did so that the bill represented “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.”[1] Invoking FDR should have been enough on its own to erase any perception of Bush as a champion of free markets, but the hated “laissez faire” moniker seems to be a tough one to shake. As we now know, the Sarbanes-Oxley Act has been terribly destructive to American markets and has contributed to a migration of new investment away from America and to more business-friendly countries. Chalk up another victory for Bush against free markets.

Finally, there is Bush’s role in the housing bubble, the straw that broke the proverbial camel’s back regarding America’s borrow and spend economy of the past several decades. Here it should be noted that the lion’s share of the blame for this debacle should go to the Federal Reserve System, which kept interest rates artificially low and expanded money and credit to counter what would have been two recessions in the late 1990’s and early 2000’s. Remember, the private Federal Reserve System does not answer to any branch of the federal government. One could certainly argue that both Clinton and Bush merely happened to be in office while the Federal Reserve blew up two massive bubbles during their presidencies (the NASDAQ bubble and the housing bubble).

However, it was not just low interest rates or the expansion of money and credit that caused the housing bubble to inflate. There was also the role of government-sponsored enterprises Fannie Mae and Freddie Mac, which guaranteed mortgages that would not have been written in a free market. Starting with Clinton and continuing with Bush, the executive branch played cheerleader to the “ownership” society whereby every American was entitled to own their own home, whether they could afford the mortgage that went with it or not.

The mortgage debacle is often cited as an example of the “unregulated free market” producing negative results. Since both the “predatory lenders” and the “irresponsible borrowers” were acting voluntarily, the millions of subsequent defaults are characterized as the result of too little regulation on the market, allowing these freely-acting participants to eschew prudence for short-term profits. However, this analysis omits one very important fact: there were not two parties to most of these mortgage transactions, but three.

The forgotten third party was, of course, the taxpayer. It was the taxpayers’ money that was put up as collateral for the loans guaranteed by Fannie Mae and Freddie Mac, and the taxpayer was not acting freely. The taxpayer was forced by government to back these loans without his consent and against his best interests. Had the government not committed this crime against property rights to serve its goal of an “ownership society,” none of the defaulting loans would have been made.

In a truly free market, the desire for profit is balanced by the presence of risk. When one is lending one’s own money, the possibility that the borrower will default forces the lender to adhere to high lending standards to avoid making a bad loan. This is not done out of some civic duty or professional integrity (not that many lenders don’t possess both of these qualities), but out of recognized necessity for economic survival. The balance between desire for profit and risk is a naturally occurring market force when all participants are acting voluntarily in their rational self interest. However, by allowing lenders and borrowers to use other people’s money as collateral, this natural market force was suspended. To go on to call the resulting disaster the result of “unregulated free markets” is nonsense in the first degree.

Ironically, Clinton and Bush each pursued the exact same policy regarding the housing market for very different reasons. Clinton pressured Fannie Mae to take more and more risk in order to play to his base: low-income Americans who would not qualify for a mortgage in a truly free market. Bush went right on encouraging the process in order to appease his base: Wall Street investment houses that were making a killing securitizing mortgages. Regardless of the motivation, what is important to realize is that this policy is completely antithetical to the concept of free markets or laissez faire capitalism.

Of course, once the crisis began, most people recognize that nothing President Bush did could be characterized as “laissez faire.” Bush himself admitted that he was abandoning free market principles because “the market is not functioning properly,” a bizarre statement from one who supposedly believes in free markets in the first place. His massive intervention into the economy and egregious redistribution of wealth are characterized by the media as a departure from his previous “laissez faire approach.” Yet, anyone can see that this “laissez faire approach” was complete fiction. So why do all but a few contrarians keep saying it anyway?
There is an answer to that question. Characterizing Bush’s policies as “laissez faire” does serve a very useful purpose for politicians. It provides them with justification to loot more property and seize more power. The all-out war on free enterprise presently being waged by President Obama and his cohorts in Congress would not be possible if most Americans did not believe the official story that Bush’s presidency was an era of “laissez faire capitalism” or “unregulated free markets” and that these policies caused the economic crisis. Only the continued willingness by the majority of Americans to swallow this economic gibberish allows the destruction of our liberty to march forward.

To my fellow Americans, I say this: No politician (save perhaps one) is going to come forward and tell you the truth. Most of them don’t know the truth, and those that do have figured out that this official nonsense serves their own ambitions, just as saying that the world was flat once served the ambitions of medieval rulers. It is up to you to rub your eyes and look at the world as it really is. Two plus two does not equal five and you know that. Similarly, people voluntarily exchanging their own goods and services with one another can never cause anyone harm and deep down you must know that, too. It is time to reject the idiotic history that is being written about our present difficulties and demand that the evil incursions into our liberty cease immediately. You have enormous power when you know what to demand. It all starts with recognizing the obvious despite the well-funded efforts of those who wish to deceive you. As the good book saith, the truth shall set you free.[2]

[1] Bumiller, Elisabeth (2002-07-31). “Bush Signs Bill Aimed at Fraud in Corporations“. The New York Times
[2] John 8:32

>The Forgotten Right

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>“The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If ‘Thou shalt not covet’ and ‘Thou shalt not steal’ were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free.”

– John Adams (1787)[1]

It is starting to become apparent to even the most disinterested observer that something much bigger than even a worldwide recession is happening. The seeds of revolution have taken root. Iceland led the way by taking to the streets to force regime change through peaceful demonstration. The French are currently protesting en masse against their government’s bailout of the banking system. One would be naïve to think that these are isolated incidents. It is apparent that these are just early warning signs of a worldwide cauldron that is about to boil over, catalyzed by the financial and economic cataclysm that will plunge untold millions into poverty and desperation.

While I applaud the peaceful demonstrations going on in France and Iceland, I also recognize that they are premature. As did Americans in the last election cycle, these Europeans are demanding “change.” However, also like Americans in the last election cycle, they have failed to first answer the crucial questions, “From what? To what?” They have not looked within to assess who they are, what their society is, and what they want it to be. Therefore, they run the risk of simply replacing one oppressive tyranny for another.

Likewise, we will never regain our freedom in America until we address the fundamental problem in our society. I say “the problem,” because at the root of all of what we perceive as a myriad of problems, including the police state, the welfare state, the warfare state, the military industrial complex, the Wall Street oligopoly, the high cost of healthcare and education – everything – there is one philosophical problem that ultimately leads to them all: the repudiation of property rights.

It is likely difficult for most 21st century Americans to absorb this statement, based upon the fact that they have been told now for generations that property is about greed, that accumulating property is oppression, or even that “property is theft.” However, let us look back at the philosophers who inspired our founders and see what they have to say about property. Of course, as I have written here, the primary philosophical basis for the American Revolution came from Locke. What did Locke have to say about the purpose of government?

““The great and chief end, therefore, of men’s uniting into commonwealths, and putting themselves under government, is the preservation of their property.”[2]

Certainly this statement must be startling to most 21st century Americans, who believe that they are supposed to look to their government to fight unemployment, manage the economy, ensure access to healthcare, promote democracy abroad, and pursue a myriad of other ends outside of protecting property. Surely, Locke has over-emphasized property rights here, has he not? Certainly he is alone in his simplistic assessment of the role of government, is he not?

He is not. In seeking guidance on how to construct our government, the American founders also looked to the ancients, particularly the Roman Republic. There, we find Cicero writing,

“For the chief purpose in the establishment of constitutional state and municipal governments was that individual property rights might be secured. For, although it was by Nature’s guidance that men were drawn together into communities, it was in the hope of safeguarding their possessions that they sought the protection of cities.”[3] [emphasis added]

The conditioned response of Americans today is to view these ideas as a defense of one class of people at the expense of another. We have been trained to associate “property” as a concern of the “property class,” or in more common American terms, “the haves,” as opposed to the “have nots.” This is a great deception that has lead directly to our ruin. In fact, it is the poor and those of modest means for whom property rights are most important. It is they who, not possessing significant material wealth, must all the more jealously guard the property that they do have. In the end, however, we are all property owners when one considers the most fundamental, most important property of all: our labor itself.

We learn from Locke that all property has its roots in labor. In order to survive, man must work to produce the means of his survival. This is true for people no matter what their financial circumstances. The doctor, the lawyer, the construction worker, the janitor – yes, even the Wall Street financier – must sell his efforts to his fellow man in order to acquire the means of his survival. Therefore, whoever has control over the individual’s labor has control over the individual’s life, and control over the individual’s future. If I steal all of your possessions, you can acquire more. However, if I appropriate your labor, I own all of the property you can ever or will ever acquire. This is an undeniable reality that we have lost sight of, to our peril.

America was founded upon the idea that each individual had an unqualified right to the fruits of his labor.[4] This more than anything was what the founders meant when they spoke the word “liberty.” It was the extent to which this right was respected that made America different than every other society in history, before or since. This was the great secret that made America the engine of prosperity and innovation that it was. This is what made America the land of opportunity to change one’s lot in life. It was this right that gave birth to the American dream.

However, we no longer hold this right up above all others. Instead, we have become a society that is based upon competing groups seeking to plunder each other via the force of government. The rich plunder their neighbors with corporate bailouts, subsidies, and regulatory fascism. The middle class plunder their neighbors with Social Security, Medicare, and criminal unions. The poor are forced to accept legal plunder that they do not want and which provides them with the most miserable quality of life, when the stolen capital that underwrites it could employ them all if it weren’t seized from its rightful owners. Of course, these examples are only the tip of the iceberg; there is much, much more. Virtually every political movement in America is based upon a promise to provide its followers with other people’s property.

This scenario is neither unprecedented nor has it been unrecognized by the great lights of liberty. Bastiat wrote,

“Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter — by peaceful or revolutionary means — into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it.”[5]

This vision of Bastiat’s has become reality in America. However, it cannot go on forever. Fortunately for humanity, a society based upon legal plunder is ultimately unsustainable. Just as respect for property rights provides the means to prosperity, violation of them leads to poverty and want. As force replaces voluntary exchange, productivity decreases, and subsequently more force is required to plunder even more. This cycle repeats until society is reduced to an authoritarian nightmare, the first signs of which are becoming apparent in the former “land of the free.” If the people wake up, the nightmare can end. If they continue to slumber, the nightmare can get much, much worse.

This is the great truth that we must rediscover before any revolution can be successful. Before we commit to “change,” we must answer the questions, “From what? To What?” The answers to those questions must be “from a nation of looters to a nation of free individuals who acquire property in the only civilized manner: via voluntary exchange.” We must reject the use of force as the means to pursue our happiness, and renew our faith in freedom. Once this great work has been accomplished, let the revolution begin.

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

[1] Adams, John A Defense of the Constitutions of Government of the United States of America (1787)
[2] Locke Second Treatise Ch. IX, Sec. 124
[3]Cicero, Marcus Tullius De Officiis Book II Chapter XXI
[4] “Individuals” who were included in the system. Of course, the founders recognized but did not remedy the obvious contradiction to this inherent in slavery.
[5] Bastiat, Frederic, The Law