Tag Archives: economic policy

>A New Declaration of Independence? No You Can’t!

>I knew that there would come a day when I would not just roll my eyes at something our new president said, but instead would be gripped by genuine, cold fear. I thought that at least the traditional honeymoon period would go by (the first 100 days in office – when we would be treated to meeting the new president’s dog, watching him wave during cornball photo ops, and generally doing nothing of real substance) before he said something that truly terrified me. However, if I have to find something good to say about “the savior,” it is that he has certainly hit the ground running. The only problem is that he is trying to get us all running toward our mutual destruction.

In a speech on Saturday in Baltimore, he said words that should be sparking mass protests all over the United States. President Obama has called for “A New Declaration of Independence,” which of course would provide the ideological backdrop for his plans to try to “perfect our union.” So that I am not taking his words out of context, I will quote him verbatim based upon the official transcript provided by his staff.

“And yet while our problems may be new, what is required to overcome them is not. What is required is the same perseverance and idealism that those first patriots displayed. What is required is a new declaration of independence, not just in our nation, but in our own lives – from ideology and small thinking, prejudice and bigotry – an appeal not to our easy instincts but to our better angels.” [emphasis added]

It will certainly be argued that this was just a rhetorical figure of speech, as Obama did not actually call for the drafting of a document. The dreaded words are certainly watered down by what follows them, making the statement seem more like an appeal to each person to make some sort of personal commitment to help make a better world. However, I here and now warn the reader not to write this statement off as just another speech. During his campaign, Obama repeated the words “service and sacrifice” so many times that it is likely that most Americans now feel that service and sacrifice are now required of them. Of course, the questions, “Serve whom?” “Sacrifice what?” and “For whom?” were never answered, but they certainly will be when our new emperor begins dictating policy to his rubber stamp Congress.

It should come as no surprise when we hear these new words from Obama again and again, until one day a story breaks that someone is actually working on a new declaration. Likely we will be told that this person – maybe a Congressman, maybe some other servant of the empire – was “so inspired” by Obama’s ideas that he decided to take him up on this one. It will of course be served up as the spontaneous action of this inspired person, and will be lauded as one of many wonderful results of Obama’s “transformative presidency.” Whether the official story is true or not will not change the disastrous results.

Most Americans reading this would probably wonder why a new declaration would be such a big deal. After all, the original Declaration does not have the force of law. Why would a new one constitute any substantive change?

While it does not have the force of law, the Declaration of Independence is monumentally important. It is not law itself, but the declaration of what the purpose of every law passed is supposed to be. As that document says, our government only exists to secure our individual, unalienable rights. Therefore, we declare in that document that we shall only pass laws whose purpose is “to secure these rights.” Implicit in “the Pursuit of Happiness” is the central, most important right: the right of each individual to the fruits of his labor.

As I argue in my book, this is the right without which no other rights can exist. This was the central theme in Locke’s Second Treatise of Civil Government, which was the direct source for our Declaration by Jefferson’s own (repeated) admission. This was the true reason that our American Revolution was fought. We have ignored this plain fact for too long, as our increasing loss of liberty proves.

Unlike our last president, President Obama does not have the dubious freedom that a more limited intellect can provide. He knows how troublesome the original Declaration is to his agenda. While it still stands as our declaration of what our government is supposed to be doing, it stands in the way of what he wants our government to be doing, regardless of the fact that our government already violates its principles in so many ways.

Like the United Nations “Universal Declaration of Human Rights,” I would anticipate that Obama’s new declaration would grant additional rights to everyone, including a minimum standard of living, healthcare, unemployment benefits, and the rest of the entitlements granted in Article 25 and beyond in the U.N. document. At first, that might seem like a great idea. How can more rights be bad?

The answer is that the price of these new “rights” is the surrender of the most important of the true natural rights – the right to the fruits of your labor. For example, “healthcare” is nothing more than the fruits of the labor of healthcare providers: doctors, nurses, technicians, hospitals, etc. Therefore, no one can have a right to healthcare. If the doctor has a right to the fruits of his own labor, then other people cannot have a right to that same labor. It is a logical contradiction. In order for everyone to have a right to the doctor’s labor, either the doctor – or whoever is forced to pay the doctor’s bills for “everyone” – must give up the right to their labor. No one can have a right to something that someone else must be forced to provide – at least not in a society that wishes to be “the land of the free.”

Of course, I am certainly not the first to point out that the U.N. Universal Declaration of Human Rights was modeled on the Soviet Union’s Constitution, not ours. That is why it grants the “non-rights” that it grants – because it is based upon communist philosophy. Granting everyone a right to the fruits of everyone else’s labor is the definition of communism, and almost all of President Obama’s rhetoric is consistent with it. He never talks about protecting the individual. Instead, he says “out of many, we are one.” We all have a responsibility of service (to the collective) and sacrifice (for the collective). We have no protection from the collective, no matter what they demand out of our labor or out of our hides.

However, our Declaration of Independence stands in the way of all of that. Unlike his predecessor, President Obama is an intellectual and he knows that the Declaration can still provide an impregnable defense against his monstrous plans, if only the American people would rediscover its meaning. Once a new declaration is in place, he can make the argument that the old one is outdated and that “we have all agreed” that “the challenges of the 21st century” demand a different role for our government.” While rights are unalienable and therefore cannot be taken away, they can certainly be violated. A house resolution recognizing a new declaration of independence would provide strong support for just that.

This is a line that our government must not be allowed to cross. From this day forward, each time President Obama mentions a new declaration of independence, our voices must be raised together in deafening unison: No You Can’t! No You Can’t! No You Can’t! (I can’t hear you) No You Can’t!

Home

The Bill Clinton Myth Finally Debunked

1 Reply

clinton Whether you are watching the stock market, the headlines, or merely your 401K account balance, there is not much positive about the economic collapse just getting underway in the United States. With each new negative earnings report, bankruptcy, and ominous unemployment report, it gets a little harder to see any silver lining around the black cloud. However, there is one positive consequence of the economic debacle: The Bill Clinton Myth has finally been debunked.

Most people are familiar with the Myth, but mistake it for history. It’s a wonderful story if you are a Democrat or other variety of government-worshipper. For those who practice that religion, the Bill Clinton years serve as a Golden Age to talk about, write about, maybe even pray about, hoping for their return.

Unforunately, this myth does not even offer the benefits of its more interesting ancient predecessors. While the ancient myths of gods and monsters contained spiritual and philosophical truth underneath their obviously fictional storylines, the Bill Clinton Myth contains no truth at all. Perhaps “myth” is the wrong word, because it gives good myths a bad name.

The Bill Clinton Myth goes something like this. After “mismanagement” of the economy by President George H.W. Bush, which resulted in the recession that coincided with the 1992 election, Clinton took office and “managed the economy” wisely during his eight year presidency. Clinton’s “centrist policies” were just what the economy needed at a time of technological revolution, and his wise stewardship resulted in not only unprecedented growth and low unemployment for the economy, but balanced budgets and even surpluses for the federal government. By the time Clinton left office, the United States was more powerful economically than it had been at any time in its history.

Like the Populist Myth of the 19th Century, this one is a great story, but none of it is true. While even some Republicans begrudgingly credit Clinton with the mythical budget surpluses or the equally mythical prosperity in the 1990’s, they do themselves a disservice in regard to their quest to discredit every Democrat who ever (or will ever) lived.

In reality, there were no federal government surpluses. The lion’s share of the prosperity was a Federal Reserve-created bubble (the dot com bubble) and what real economic growth there was occurred despite Clinton’s policies, not because of them.

It might be necessary to go back and read that last sentence again. It is heresy, as surely as Galileo’s heliocentrism was to the Inquisition. It’s also just as true.

First, the so-called “surpluses” were bogus. As Craig Steiner explains, the appearance of a surplus was merely increased tax revenues from the dot com bubble allowing the Clinton administration to borrow more money from Social Security. While the public debt went down in the last four years of the Clinton presidency, the intergovernmental debt (mostly to Social Security) went up by an even greater amount, resulting in an increase in the national debt in each of those years. These are easily verifiable facts out of the published federal government budgets for those years. Anyone who doubts this can simply look up the budgets from 1997- 2001 and see the deficits for themselves.

Certainly, there were astounding developments in technology in the late 1980’s and throughout the 1990’s. One could look at this decade as a mild version of the technological revolution that occurred at the turn of the 20th century, although the breakthroughs, mostly in computing, were not as paradigm-shifting as the invention of the steam engine or the automobile, much less the telephone or the computer itself. These advances resulted in vast increases in productivity. A whole industry was born, employing people in higher paying jobs and revolutionizing communication, commerce, and production.

All of this happened during Bill Clinton’s presidency, although its roots go back at least as far as the Reagan years, possibly even Carter. But what did Bill Clinton do to cause this technological revolution? Nothing. Microsoft, Oracle, Apple, and the rest of the real new companies that emerged during this technological revolution were children of the free market. Gates, Ellison, Jobs and the rest were all entrepreneurs who took enormous risks based on their superior vision of where breakthroughs in technology could take commerce.

Anyone old enough to remember knows the government had very little understanding of the tech sector and frequently complained it didn’t know how to regulate the new types of products or business processes the tech sector presented. In other words, much of the reason for the explosive growth was the absence of government involvement. Until the lumbering machinations of government caught up, a free market in technology existed that allowed for spectacular innovation and growth.

The most significant action undertaken by the Clinton administration regarding the tech revolution was its anti-trust case against Microsoft. Here, Clinton’s contempt for free markets and property rights came shining through. This particular anti-trust case had a bizarre twist, as it was based upon the ludicrous assertion that Microsoft had some responsibility to build opportunity for its competitors into its own product. As usual, the government tried to “ensure competition” by using its coercive power to cripple the leader, rather than protect the property rights of all.

There was another side to the tech revolution that wasn’t the natural result of free markets: the dot com bubble. This was Pets.com, online supermarkets, and other hare-brained schemes that only got capitalized due to the reckless monetary policy pursued by the bubble-maestro himself, Alan Greenspan.

To be fair, Clinton doesn’t deserve much blame for this bubble. Most politicians demonstrate little understanding of monetary policy, beyond their belief that lower interest rates raises stock prices and higher stock prices equals votes. At one point, Clinton actually made a speech in which he claimed the business cycle had been eliminated.[1] That shows his understanding was as limited as most other presidents’.

Regardless, the dot com bubble had nothing to do with Clinton. It was merely the Fed doing what the Fed does, inflate and distort the economy, regardless of who happens to occupy the White House.

Finally, in addition to the false credit Clinton receives for his imaginary role in the perceived prosperity of the 1990’s, he has somehow escaped all blame for his very real hand in the problems we are facing now. Remember, it was Clinton who appointed FDR II (Franklin Delano Raines) as CEO of Fannie Mae, and then pressured the GSE to significantly increase its loans to riskier sub-prime borrowers.

The Clinton administration bragged it had not only had a hand in the first black CEO of a Fortune 500 company,[2] but also that it had made home ownership possible for millions of Americans that otherwise could not have obtained mortgages. Raines is now the subject of over 100 civil lawsuits and a huge percentage of those mortgages are defaulting. As usual, the government’s results when interfering in markets are exactly the opposite of its intentions.

Contrary to the Clinton Myth, the Clinton presidency had nothing to do with what real prosperity there was in the 1990’s. The Clinton administration was as clueless and impotent as most others while the Federal Reserve blew up an enormous bubble on its watch, sowing the seeds for the mortgage crisis that started the present economic disaster. Economically, the Clinton presidency was an unmitigated disaster, and hopefully it is clear to all but the most fervent believers that his “stewardship of the economy” is a myth.

Lest this be seen as partisan, let me clear the air. There have been two presidents credited with prosperity that seemed to coincide with their years in office during the past 40 years. One was Reagan, a Republican, and the other, Clinton, a Democrat. In both cases, they were falsely credited with prosperity that was mostly an illusion caused by the Federal Reserve. Their policies otherwise failed miserably.[3]

With the Clinton Myth exposed as a fraud, perhaps we can get rid of the entire government religion. Centuries ago, most people of the earth ceased sacrificing animals to bring rain, better crops, or good fortune hunting. They had finally realized there is no cause-effect relationship between killing a goat and the end of a drought. We need to likewise recognize that no politician has ever had any more to do with prosperity than those unfortunate goats had to do with the weather.[4] Freed from this superstition, it becomes clear that only free markets, individual effort, and creativity can create wealth and prosperity.

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.

[1] I recall him making this ludicrous statement, but have not been able to reference it. Perhaps someone can provide the citation in a comment.
[2] The focus by both the Clinton administration and the media on Raines, a political hack who took over a Government Sponsored Entity, was a disservice in that it distracted attention from REAL black executives, like Kenneth Chenault, and Richard Nanula, who had risen to their positions based upon their talent and hard work.
[3] To be fair, Reagan’s rhetoric was admirable. He talked constantly about lower taxes, smaller government, and more personal liberty. However, he failed to implement this ideology to any significant degree, possibly because of a Democratic Congress. More importantly, he ran huge deficits due to defense spending and the growth of entitlement programs on his watch that constituted bigger government rather than smaller.
[4] Actually, the government religion is far more harmful than the ancient religious cults. When the ancients sacrificed a goat, they neither benefitted nor harmed anyone (other than the goat). When government tries to “create prosperity,” it harms everyone in society.

>The Bursting of the Socialism Bubble

7 Replies

>In the midst of what “debate” there has been about the eventual bailout of the financial sector, it is clear that even most of those opposed to the bailout do not understand what is happening. The unfortunate aspect of some of the commentary is that there is a faction arguing that without the bailout, the stock market will not crash. Thus, the debate is shifted to “which course of action can best protect stock market values?” They cannot be protected. The government argues that the credit squeeze could result in unemployment, while the other side argues that unemployment will not necessarily result if the bailout is not passed. Another position blames the crisis on too little regulation. All of these positions are wrong. There will be a painful adjustment in the stock market and massive unemployment, whether the government bails out the financials or not. The only question is how long it will last. That is reality when any bubble deflates.

The most unfortunate result of all of this misunderstanding would be for the American people to reverse their position and support the bailout just because there are severe market losses if it does not pass. Their initial instinct was correct, whether for the right reasons or not. The losses that these companies suffered due to massive malinvestment are real, and that must eventually be reflected in the value of their stocks.

Similarly, it will be unfortunate if the American people are convinced that more regulation is needed to prevent this from happening again. More regulation will not prevent a problem that was in part caused by too much regulation.

We have heard about the “tech bubble,” the “housing bubble,” and even the “dollar bubble.” All of these are real. The dollar bubble is about to burst, with global catastrophic consequences, but even that is not the biggest bubble that is out there. The biggest bubble, which has been building literally for the past century, is what I will call “the socialism bubble.”

What is the socialism bubble? Let’s define “bubble” first. The term “bubble” is used in economics to describe a large misallocation of resources (malinvestment). Anyone with even a passing familiarity with economics knows the basics: the central bank artificially infuses money and credit into the economy, that money flows toward projects that appear to be profitable under the artificially created conditions, but aren’t, and those projects ultimately fail, causing the bursting of the bubble. The worst part of the bursting of a bubble is that the greatest misallocation of resources has been human resources, and those people now have to find new jobs. They have to be reemployed elsewhere, in more profitable ventures, just like the capital goods that were misallocated to the projects. That is why unemployment accompanies recessions.

Like any other bubble, the socialism bubble is also a misallocation of resources. It has just taken longer to form and is much huger in scope. The principles behind it are the same, however. It represents government intervening into the economy to create artificial conditions that misallocate resources. Under these artificial conditions, the entire economy appears to be profitable, but isn’t. When the inevitable bubble bursts, all of the resources, including human resources, that were misallocated, become unemployed. We are about to experience the massive correction following this socialism bubble.

How did it happen? One must look back to before it started to understand it completely. It started at the turn of the last century. The United States of the 19th century had the closest thing to laissez faire capitalism ever achieved in history, arguably followed next by Great Britain. The defining principle of laissez faire capitalism is VOLUNTARY EXCHANGE. With everyone acting in their rational self interest, the minds of all participants were leveraged by the system to consistently produce optimal results.

In the laissez faire marketplace of the 19th century, wages generally declined over time. A pitiable lack of understanding of economics caused social reformers to condemn the free market for this.[1] They ignored the fact that the general price level fell faster than wages, making workers richer in real terms. They attempted to improve on the results that laissez faire capitalism had produced with government policy.

However, there is only one alternative to voluntary exchange: INVOLUNTARY EXCHANGE. Government economic policies FORCE economic agents to make choices that they otherwise would not make. No matter how one tries to euphemize socialism, that is what it is. By attacking voluntary exchange, socialism attacks the mechanism that creates wealth. That is the true root of the problem.

One way in which this manifests itself is in the cost of production. Government cannot come to a company that makes automobiles and force them to pay their employees more, provide them healthcare or pensions, pile one regulation on top of the next in terms of how the company operates its business, and then expect the company’s cost of making that automobile not to rise. As the cost of production rises, the company must find a way to keep the cost of producing their product below the market retail price. They might decide to manufacture SUV’s, which have larger margins, even though a spike in gasoline prices could put them out of business. See General Motors. The truth is that none of the American auto manufacturers are able to produce an automobile that is competitive in the market. Government will come up with a host of villains to blame for this, but look at the balance sheets of the Big Three and you will see why they are not viable. Concessions to labor unions (mandated by government) have made it too expensive for them to operate.

Similar government intervention is behind virtually all of America’s loss of manufacturing infrastructure. It is simply not economically viable to manufacture anything in the United States anymore. This is not a natural result of free markets. As previously noted, wages and other costs of production fell under the laissez faire system. Falling prices are a natural result of economic growth and innovation. Only the artificial conditions created by government intervention – the use of force to coerce economic agents – have made it more expensive to make things in America.

The cost of production is not the only pressure that socialism has put on the American economy. The welfare programs currently consume 11% of GDP. Keynesians would say that this is ok, because the recipients spend that money and increase demand. Hopefully, the coming calamity will discredit this economic school of charlatans once and for all. Wealth is created by production, not consumption. This redistribution destroys voluntary savings and ultimately capital. It also eliminates the other conditions that accompany a period of voluntary savings that facilitate natural expansion of the productive structure.

In any case, increasing socialism has put artificial pressures on the American economy for almost a century, and those pressures have accumulated to make America profoundly less productive. Like the communist countries, we have lived in a dream world in which government could use coercion to change economic reality. We have pretended that a business venture can spend more than it takes in and continue to survive. For a time, the free market aspects of America’s “mixed economy” allowed her to overcome these negative pressures, but that time has passed. Economic reality is about to assert itself in devastating fashion.

For at least two decades now, America has been producing far less than she consumes. All things being equal, this would not have gone on for long. However, all things have not been equal. The United States has a central bank, and the privilege of printing the world’s reserve currency. This is why the socialism bubble has been become so enormous.

Instead of a drop in consumption and a rise in unemployment[2] as its manufacturing sector migrated overseas, America went right on consuming, and those employees found new jobs in the “service economy.” With the Federal Reserve providing an unlimited supply of fiat currency, and with the ability to ultimately export that inflation overseas by importing foreign goods in exchange for U.S. dollars, America has been able to maintain the same standard of living as it enjoyed in its productive days. As long as foreigners accepted U.S. dollars, the dream world could persist. The bubble continued to inflate.

The ominous part of this is that today a large percentage of the American labor force is now misallocated by this bubble. There are tens of millions of American workers that are employed in ventures that will cease to exist once the socialism bubble bursts. We have seen the beginning of this with the failures of large retailers and restaurant chains, but that is only the tip of the iceberg. Worse yet, unlike previous recessions, there are no manufacturing jobs for these displaced workers to redeploy to. The productive structure must be rebuilt, and that doesn’t happen overnight.

Therefore, Americans must realize that a stock market crash[3] and mass unemployment are inevitable, whether government intervenes or not. The only question now is how long those undesirable conditions will last. There is no “solution,” government or otherwise, that will allow us to avoid this correction. If the government does not intervene, the stock markets will crash faster and the layoffs will begin sooner, but the total period of adjustment will be far shorter. If the government intervenes, no matter how they do it (including by allowing the Federal Reserve to massively inflate the currency), the adjustment period will be stretched out, with continued new malinvestment even as liquidation of current malinvestment occurs. That was the story of the Great Depression.

The only course of action that can speed up the recovery is a return to the laissez faire capitalism that made America great in the first place. This would include eliminating unnecessary regulation, abolishing the central bank and restoring sound money, eliminating minimum wages and other artificial price controls, capping and eventually phasing out the entitlement programs, eliminating other massive government spending like military welfare for other countries and unnecessary war, and restoring protections of property rights. In other words, Freedom. Don’t you think it’s time we tried it again?

[1] The lack of understanding of “real wages” was certainly not the only misconception of the social reformers, but it was a major misconception and representative of others.
[2] The European mixed economies have already experienced this adjustment, debased their currencies, regrouped under the European Union and an new currency, and are presently pursuing the same failed ideology to destroy this new economy as well.
[3] It is conceivable that the Federal Reserve could inflate the currency so much that the stock market remains at $11,000. However, if $11,000 only buys 10 loaves of bread at that point, it would still represent the same devaluation as a crash.

Home

>Life in the Post-5/7 America

2 Replies

>We have spent the past seven years in a “post-9/11 world.” We started hearing this insidious slogan not long after the terrorist attacks occurred. To translate the slogan for anyone who has not realized what it means, it means this: Whatever was left of your personal liberty before the 9/11 attacks is no longer a privilege your government can afford to grant you (and make no mistake, your government considers liberty a privilege, not a right). It seems that personal liberty is something that was nice in the Old America, but is just impractical in a “post-9/11 world.”

Of course, the struggle for economic freedom was lost decades ago with the onset of public and corporate welfare, the abolition of the gold standard, and the emergence of the American Empire. However, as with the other “civil liberties,” some traces of the economic freedom of America’s former Republic have survived several decades into America’s post-WWII social democracy. Those last traces are about to disappear as well. The following is one way it could happen.

Why May 7th? There is no compelling reason for the exact day. However, it is the Thursday of the first full week after the next president’s first 100 days in office are completed. It may be just a coincidence, but cataclysms never seem to happen during those 100 days. Perhaps world market movers don’t do much until they get a feel for the new administration. Perhaps it is some kind of statist magic, left over from government sorcerers like Merlin or Morgan Le Fay. In any case, even the terrorists respected the first 100 days of George Bush’s administration before launching their attacks. So, I am going with the odds to say that the economic day of reckoning will not manifest itself until May 7, 2009 – the new “Black Thursday.”

Even if the American economy is already dead for all intents and purposes, an historic crash of the stock markets will officially signal the dawn of the new era. When it does, all pretense of the “possible moral hazard” accompanying massive government interventions into the marketplace will be dropped. We will be in a “post-5/7 economy,”[1] much like our “post-9/11 world,” and the last vestiges of your economic freedom will be lost, just as your personal liberty was lost after 9/11. Forgotten in debates regarding whether these interventions will be good or bad for “the economy” is the fact that each one amounts to stealing from someone – legal plunder because it is committed by government. Each new intervention, “unavoidable” because of the latest threat to the U.S./world economy, will cause three more problems for the government to solve with further interventions. Pointing out that the original problem was caused by a previous government intervention will be pointless. Free markets were a nice idea in the 20th century, but government control of the marketplace will be needed in a post-5/7 world.[2]

Despite the fact that government already treats the right to the fruits of your labor as a granted privilege, the small percentage Americans have been allowed to keep will seem relatively large compared to what they will be allowed after the big event. At that point, there will be a continual state of economic emergency that requires “Americans and Europeans to do more, not less,” as Barack Obama recently said in Berlin. There will be Housing in the New America and Universal Healthcare to be paid for, tens of millions of unemployed Americans to feed and clothe, and the “challenges of the 21st century (all created by government)” to meet.

Perhaps at that point it will occur to someone, somewhere, that none of this is necessary. Without the parasitic influence of a few thousand people, the other 300 million would naturally trade with each other to their mutual benefit, and would have little to fear from people thousands of miles away whom they would never think to bother themselves. It really is that easy. Americans can make a decision for freedom anytime they wish to, and rid themselves of the parasites once and for all. Hopefully, there will come a time when they will be easier to convince in the post-9/11, post-5/7 world.

[1] Whatever the actual date of the crash, simply insert it into the new government slogan and it works just as well.

[2] While it would be impossible in a Republic to enslave people with such nonsense as a market crash or a terrorist attack creating “a new world” where natural rights no longer exist, it is relatively easy in a Democracy, where only 51% of the people have to believe it for the scheme to work. This is just one reason why no politician refers to America as anything other than “a Democracy” anymore. Be suspicious of anyone who speaks likewise.

Home

The Nazis: Right Wing Extremists or National Socialists?

Leave a reply

It has become conventional wisdom to characterize Nazi Germany as an extreme “right wing” or “conservative” reaction against communism. There is no doubt that Hitler hated communism, which he saw as a Jewish conspiracy. Hitler blamed the Reichstag fire, which most historians suspect him of orchestrating himself, on Jewish communists. Hitler’s book, Mein Kampf (My Struggle), contains page after page of Hitler railing against the lies and the evils of communism. Does that make Hitler a “right wing conservative?” If by “right wing conservative,” we mean that he was an advocate of free markets, property rights, low taxes, and low regulation, then definitely he was not. The name “National Socialist” should be some indication of what Hitler’s economic policies were, and the plain facts of history bear that name out. Nevertheless, the Nazis are almost universally regarded as “right wing conservative extremism,” a misconception with more ominous ramifications than are obvious at first glance.

Investigation and analysis are not really needed to determine whether Nazi Germany operated under a capitalist, free market system or a socialist one. The economy was centrally planned, with wage and price controls imposed by the Goering, under the threat of concentration camp imprisonment.[1] Hitler sought foreign investment in manufacturing the Volkswagen, but because he sought companies that would not seek to make profits on the “people’s products,” American manufacturers GM and Ford dropped out of the project.[2]

When the Nazi’s came to power, unemployment was nearly 30%.[3] One of Hitler’s stated goals was to eliminate unemployment by 1939, a goal he proclaimed he met when the official unemployment rate fell under 1% that year. However, those statistics are somewhat deceiving when you consider that the Nazi’s forced women and Jews to quit their jobs and were subsequently not counted as unemployed, while unemployed German men replaced them.[4] The balance of the unemployed were absorbed into massive new government works projects to build steel plants, rubber factories, and other capital goods projects, funded by inflating the German currency that was now off the gold standard.[5]

The central planning and control did not stop at the macro level, but reached down into the life of each individual German. The right to quit your job was abolished in 1935, with consent from your previous employer required to accept another job. Trade unions were abolished, and investment was heavily regulated to serve the needs of the state rather than to encourage profit. Heavy taxes on profits made private ownership of companies virtually impossible. While the largest companies were not taxed on profits, they were so heavily controlled that they were privately-owned in name only.[6]

While the unemployment rate was made to look low by simply excluding the people that didn’t have jobs, nothing about the Nazi economy was truly sustainable. You can manipulate statistics for a while, but sooner or later reality will prevail. However, like the languishing American economy (itself suffering from the effects of the socialist New Deal), the German economy found temporary new life in building its war machine. The last of the recognized unemployed were now put to work, with the printing press of Germany’s central bank ready to provide whatever liquidity was needed. The inevitable consequences of inflating the currency were postponed once the war began, as Germany merely plundered the gold to back at least a portion of this new money from the countries they conquered.

In The Road to Serfdom, Friedrich Hayek addressed the very issue of whether the Nazis were a right wing or left wing movement. His thesis was that not only were the National Socialists every bit as socialist as their name, but that they were the natural result of socialism itself. Hayek warned his present-day England that they were traveling down the same “road to serfdom” that Germany had traveled decades before, and that he feared that socialism in England would lead to the same horrors there that it had lead to in Germany – that socialism MUST lead to wherever it is practiced.[7]

So, in terms of economic policy, the Nazis were every bit the “National Socialists” that their name suggested. However, they were also militaristic. Hitler launched aggressive, unprovoked wars against Czechoslovakia and Poland. Doesn’t that make him a “right wing conservative?”

Again, it is not “conservative” or “right wing” by any definition that we have ever used here in America until very recently. As Ron Paul pointed out time and again in his presidential campaign, the conservative position has always been anti-war and non-interventionist. Prior to the “neo-conservative” Republicans, the Republican Party always ran on an anti-war platform. It was a Democratic President that took us into every conflict we fought in the 20th century: Woodrow Wilson in WWI, Franklin Roosevelt in WWII[8], Truman in Korea, Johnson in Viet Nam.[9] Conversely, it was conservative, right wing Republicans that opposed each of these wars. “Mr. Conservative” Robert Taft actually opposed the U.S. joining NATO. Even the “right wing extremist” Barry Goldwater ran in 1964 on ending U.S. involvement in Viet Nam. Despite the Democrats’ success in characterizing Goldwater as a “nuke the commies” nutcase, the plain facts are that Goldwater campaigned against the war in Viet Nam and Johnson campaigned for it.

Nazi Germany was arguably the most horrible totalitarian society in history. By characterizing the Nazis as “right wing,” socialists proceed to make the argument that “conservative, right wing” philosophy – i.e. individual liberty, free markets, low taxes, less regulation – spawns a brutal totalitarianism when taken to the extreme. Therefore, any society built upon these principles has to be carefully guarded and imbued with the virtues of socialism to protect against the horrors of another Nazi Germany. In other words, too much freedom leads to totalitarianism, while government control protects us against it. To borrow my favorite line from Ron Paul’s Revolution, “If you think this sounds fishy, then you understand it just fine.”[10]

Welfare and warfare have always gone hand in hand in political ideology. Wherever you have found one, you have usually found the other. We have lost sight of the fact that the two are not merely related, they are actually siblings, or at least first cousins. Welfare is the use of government force to loot individuals and redistribute their wealth. Warfare is the use of government force to loot foreign nations (and their individuals) and redistribute their wealth. They are really one and the same ideology. Both are the antithesis of individual liberty. The only question one must ask in determining what is “right wing conservatism” and what is not is this: Does this policy support individuals dealing with each other by mutual, voluntary consent, or is the initiation of force involved? If the answer is mutual, voluntary consent, the policy is “right wing conservative.” If the answer is the initiation of force, it isn’t.

Ron Paul has been called by some a “right wing extremist.” He is. Ron Paul rejects the initiation of force without compromise or moderation. He is truly the last “right wing conservative” in American politics. This is not an encouraging sign. Already, the terms are being redefined once again.[11] A recent news story on the presidential election characterized Barack Obama’s recent support of the changes to FISA as a move “toward the center,” as was his support of AIPAC and strong rhetoric regarding defense of Israel. It is fair to say that economically, Obama is as far left as we have seen in a presidential candidate in decades. John McCain is considered “conservative” because of his strong support for the war and his support for government encroachment on civil liberties in the name of “security” against terrorism. Neither Obama nor McCain question the need for Medicaid, Medicare, Social Security, or Welfare. Property rights and free markets are completely off the table. Where are the right wing conservatives?

I wrote at the beginning of this article that the misconception of the Nazis as an extreme right wing, conservative movement had ominous ramifications. Let us look back at history in Germany and speculate for a moment about our own future. Before the Nazis came to power, there was a socialist government in place that is best known for the most famous currency destruction in history. In the last days of the Weimar Republic, pictures of citizens carrying the near worthless currency to the supermarket in wheelbarrows illustrated the economic state of the nation. It was this crisis that allowed the Nazis to come to power.

We now have a nation that is thoroughly fed up with the Republican administration of the past eight years. The Republicans lost Congress in the previous mid-term election. Obama has a double-digit lead over John McCain. The public has become confused into thinking that the debate is between “right” and “left,” when in fact there is no “right” in this debate. Why is this ominous?

Let us suppose that Obama wins a landslide victory. It will be hailed as a mandate from the people for all of his policies. While Obama is still officially against the Iraq War, he is not against the rest of the American Empire. So, financially speaking, Obama may cut defense spending by about $150 billion dollars. That would not erase the federal deficit. In fact, the federal government currently spends more on providing the poor and elderly with healthcare than it does on its entire defense budget, and Obama wants to cover EVERYBODY. His positions on other forms of welfare, both direct wealth redistribution and the more covert brand via government intervention in the marketplace, are for much, much more.

America already has a crisis on its hands due to decades of inflating its currency. By comparing its $1.5 trillion entitlement spending to its $650 billion defense spending, it becomes obvious that a 20% decrease in defense spending combined with even a 10% increase in entitlement spending is going to ADD to the deficits, not decrease them. Such an entitlement increase may actually be very conservative when converting some of Obama’s rhetoric to U.S. dollars. Imagine a U.S. in much worse economic crisis four years from now, with inflation that makes today’s problem look mild, and with a citizenry that now blames “the liberal left” for everything. Where will they turn?

An Obama presidency accompanied by a Democratic House and Senate could accelerate an economic cataclysm that, fairly stated, is coming, no matter which party is in power. However, with most Americans considering the neo-con Republicans as the “right wing,” it will be this brand of Republican that America turns to four years from now. With economic decline accelerating, the so-called “neo-cons” could be swept into power in four years with a stronger mandate than the Democrats had in this election. This is a party that has demonstrated its unrestrained desire for war at any cost, its utter disregard for individual liberty, its record-setting government spending, its policy of spying on its citizens, and its policy of unwarranted arrest, imprisonment, and torture. At what time in history have we seen such a unanimous mandate from the people for a political party like this? Do we really think that it couldn’t happen here?

Tom Mullen

[1] https://en.wikipedia.org/wiki/Nazi_Germany#Economy
[2] https://en.citizendium.org/wiki/Adolf_Hitler
[3] https://www.historylearningsite.co.uk/nazis_and_the_german_economy.htm
[4] https://www.search.com/reference/Nazi_Germany#Economic_policy
[5] https://www.search.com/reference/Nazi_Germany#Economic_policy
[6] https://en.wikipedia.org/wiki/Nazi_Germany#Economy
[7] F.A. Hayek The Road to Serfdom (rather than cite specific passages, the reader is encourage to read the entire book, as this topic is its central thesis
[8] It is only fair to point out that after the attack on Pearl Harbor, FDR had unanimous support for a declaration of war on Japan. However, if you examine FDR’s foreign policy before the attack, which many historians regard as having provoked Japan unnecessarily, you will find that it was “conservatives” that were opposed to it.
[9] While the United States had “advisors” in Viet Nam as early as the Eisenhower administration, Viet Nam did not become anywhere near a full scale war until Johnson’s first full term –after the 1964 election. Kennedy has planned to get the U.S. out of Viet Nam while the commitment was still minimal enough to do so.
[10] Ron Paul The Revolution: A Manifesto pg. 141
[11] Remember that the term “liberal” was used 100 years ago to describe what later became the “conservative” position of the 1950’s and 1960’s. In 2008, neither “conservative” nor “liberal” mean what they have in the past.