Tag Archives: free market

It’s Time to Repeal and Replace the Republican Party

Gop slash 2 President Trump attempted Friday to put a smiley face on the defeat of the American Health Care Act (ACHA), known to its opponents as “Obamacare Light.” From his perspective, the failure to secure enough Republican votes to pass the AHCA will lead to a “better bill” in the long run, because that future bill will have bipartisan support. The president did not elaborate on how the bill he envisions would be better or what about this bill, which he virtually threatened members of his own party to vote against, he didn’t like.

Opponents of the AHCA opposed it because it was too much like The Affordable Care Act (Obamacare) itself. Trump’s comments beg the question for anyone hoping for less government in health care, rather than more: How exactly will participation by the Democratic Party make the next bill better?

It’s fair to say Trump is far from a typical Republican, especially on health care. He’s supported single payer government health insurance in the past, even as recently as his 2016 campaign. But what about the rest of the GOP? If the House of Representatives is any indication, merely tweaking and renaming Obamacare was a viable solution to what they have denounced for seven years as the first step down the slippery slope to socialism.

This is by no means an isolated incident in the GOP’s history. Despite running on reducing the size and influence of the federal government, Republican presidents and Congresses have consistently presided over more significant expansions than the Democrats. A look at historical data on federal outlays reveals that federal spending increases far more when a Republican is in the White House than under a Democrat, regardless of which party controls Congress.

Beginning with Nixon, federal spending has virtually doubled during the administrations of all three two-term Republican presidents. Even Eisenhower increased it fifty percent, despite two year-over-year cuts in 1954 and 1955, respectively, equaling the percentage increase under LBJ’s “Great Society” (although the latter was accomplished in one term). Spending increased far less under Democratic Presidents Clinton and Obama than under any post-war Republican president who served two terms. It seems unlikely that trend will change under President Trump, who has proposed $60 billion in increases to military and Homeland Security spending.

Republican rhetoric also typically includes “slashing” regulations on economic activity, but the reality rarely bears any resemblance to the rhetoric. Like many of his Republican predecessors, Eisenhower created an entire new department, Health, Education and Welfare, which paved the way for LBJ’s medical entitlements. Nixon created the EPA, which alone is responsible for some of the most stifling regulation on business. Reagan is widely credited for massive deregulation, but most of the meaningful deregulation was passed while Carter was president. George W. Bush’s only two meaningful economic policies were the economically destructive Sarbanes-Oxley Act and the TARP bailout.

Over the entire sixty-four years since 1953, voters truly interested in reducing the size and influence of the federal government have decried what have recently come to be called, “RINOs,” (Republicans-in-Name-Only). This is a term popularized during the Tea Party era to describe Republican politicians who run on shrinking the federal government, but who govern more like liberal Democrats once in office. If only a real Republican could be elected, say the grass roots, then the federal government would finally be brought back within its constitutional limits.

But when have these “real Republicans” ever existed? Once upon a time? If one goes back to its founding in 1854, the Republican Party was the big government party. By 1860, the platform included all the familiar big government planks from its predecessors, the Whigs and the Federalists. And spend big they did, particularly on railroads and other infrastructure, in addition to raising protectionist tariffs.

It wasn’t until Woodrow Wilson and the new Democratic Party leapfrogged the Republicans in terms of big government that Republicans even campaigned on shrinking the federal government, which wasn’t exactly a radical idea following the spending and regulation ramp-up during the largest war in human history to that point. Evidently, Warren Harding and Calvin Coolidge are the only “real Republicans” to have ever occupied the White House. And let’s not forget that both merely returned policy to that of their 19^th century Republican predecessors. Harding and Coolidge praised Alexander Hamilton’s economic policies and governed accordingly.

Considering the present Republican administration, there has never been a better time for those truly interested in smaller government to confront reality: the ninety percent of Republican Congressman who would have voted for the AHCA are the real Republicans. They represent what the Republican Party has been about for the entire 163 years of its existence: big government conservatism.

It’s time to repeal the GOP and replace it with a party truly committed to less government, free markets and a peaceful foreign policy. While the numbers associated with third parties are not encouraging, one cannot ignore the vast potential represented by that half of the electorate who don’t vote at all. Together with the large number of Republican and Democratic voters who “hold their noses” and vote for the lesser of two evils, a new party formed from the Libertarian, Constitutional and Reform Parties, marketed to disaffected non-voters, could represent a viable alternative.

At this point, what could those seeking smaller, less intrusive government possibly have to lose?

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

What Bible is Pope Francis reading?

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TAMPA, December 18, 2013 – There has already been a lot said about Pope Francis’ EVANGELII GAUDIUM, in which he is critical of free markets. Reactions by Christian proponents of capitalism have ranged from respectful disagreement to full-on denial that he was critical of the market at all.

The latter group is not facing reality. While having since clarified that he is not Marxist, the pope clearly rejected the laissez faire approach to the market in favor of the highly regulated, redistributionist model promoted by the left. His offering is chock full of the usual sophisms leftists use to justify overriding freedom of choice in exchanges of property.

There is no need to address each of the pope’s arguments against free markets from a purely economic perspective. Tom Woods has already done this thoroughly during his December 6 episode of the Tom Woods Show, “Pope Francis on Capitalism.”

What is more surprising than the pope’s leftist economic ideas is his ability to ignore the overtly pro-capitalist themes in the gospels themselves. Jesus’ teaching consistently holds capitalists up as heroes. He never once even hints that the government should direct economic affairs.

The misconception that Jesus’ message is anti-capitalist probably stems from the same confusion that pervades all leftist thinking: the inability to distinguish voluntary from coerced human action. Jesus often exhorts his followers to voluntarily give to the poor. Nowhere in the gospels does he suggest that the Romans or the vassal Jewish government should be empowered to tax the wealthy to provide for the poor.

Tax collectors are de facto sinners, remember?

Jesus also warns against the temptations that great wealth may expose one to. Being consumed with accumulating wealth to the exclusion of all other concerns leaves no room for devotion to God or charity to one’s fellow man. This is summed up in Luke 16:13 when Jesus says,

“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”

Again, Jesus charges his followers to manage their own passion for wealth. There is no suggestion that the government should be involved.

Jesus doesn’t expound on political economy because, as he told Pilate, “my kingdom is not of this world.” (John 18:36). However, his parables have consistently pro-capitalist themes.

In the parable of the bags of gold (Matthew 25: 14-30), the servants who choose to be capitalists with the master’s money are richly rewarded upon the master’s return. The servant who chose not to be a capitalist is not only not rewarded, he is “cast into the outer darkness, where there will be weeping and gnashing of teeth!”

Certainly, the story is symbolic. The money in the story represents the abilities given to each individual by God. But even on that level the story does not support the anti-capitalists. First, the master, the ultimate capitalist in the parable, actually represents God. Certainly, Jesus would have found another way to make his point if capitalists were de facto sinners (like tax collectors).

Notice also that the servant who chooses not to invest the master’s money is the one given the least. Symbolically, he represents the person who has the least natural gifts or who is born to disadvantage. Does Jesus suggest that the other two servants should be taxed to help him? No. The most disadvantaged servant is expected to do the best with what he has. He isn’t punished because he achieves less. He is punished because he fails to try.

In two other parables, Jesus represents God as the owner of a vineyard. In Matthew 20: 1-16, he makes the point that it is never too late for salvation and that a repentant man can claim the same salvation as one who has been devout all of his life. He represents salvation as wages paid to laborers. When a laborer who worked longer complains that he is paid no more than one who only worked an hour, the master replies,

“Friend, I do thee no wrong: didst not thou agree with me for a penny? Take that thine is, and go thy way: I will give unto this last, even as unto thee.”

Again, the message is spiritual, but Jesus uses the very libertarian, capitalist idea that no one is entitled to any more wages than both parties voluntarily agree to.

God is again depicted as the owner of a vineyard in Matthew 21: 33-41. In this parable, the vineyard owner is even more overtly capitalist. Verse 33 in particular highlights that it is the previous work of the owner in planting the vineyard, hedging around it, and building a tower that makes the land productive before it is ever rented out to the husbandmen.

In other words, the capitalist has sacrificed his own consumption in the present to invest in land and capital goods to improve the productivity of the land. This has created an opportunity for the husbandmen to be more productive by working on the owner’s land than they would be on their own, without the land or the capital goods the owner has provided.

The owner then enters a voluntary agreement with the husbandmen whereby each party keeps part of what is produced. Both owner and husbandmen benefit from the agreement. The owner is entitled to the profits because he is the one who created the opportunity by sacrificing his own consumption in the past.

The husbandmen are evil specifically because they act like Marxists and renege on the agreement. They kill the owner’s agents and even his son, hoping to seize all of the wealth for themselves.

In verse 41, Jesus teaches that the owner will destroy the Marxists and rent the land to other husbandmen who will make him profits. The right of the owner to profits is affirmed, the idea that the workers are being exploited or should be able to take more than the owner has agreed to pay them is completely absent.

Nowhere in any of these parables are socialist ideas advanced. On the contrary, God is consistently represented as a capitalist and his children judged by how profitable they are to Him.

While the purpose of the parables is to teach a spiritual lesson, these are not the literary tools that an anti-capitalist author would employ. Jesus’ pro-capitalist bias couldn’t hit one over the head any harder, prompting the question:

What Bible is Pope Francis reading?

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.

Why a free market would work for health care

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TAMPA, October 26, 2013 – Conservatives are confused again, rejoicing in Obamacare’s early operational struggles. One would think that their only objection to the legislation has been that the Democrats wouldn’t run it efficiently. Maybe it was. After all, the Republicans ran a candidate against Obama that had implemented virtually the same program in Massachusetts, promising only to “repeal and replace.”

Replace?

Jon Stewart took the opportunity to join conservatives in criticizing the government’s performance during his interview with Kathleen Sebelius because he knew it wasn’t a principled argument. That the government didn’t have its website ready to handle the volume doesn’t address the principle of Obamacare.

This wrongheaded criticism by conservatives allowed Stewart to join in and appear to viewers as if he were being objective, while at the same time delivering the message that Democrats ultimately want Americans to accept: that “a market-based solution doesn’t work for health care.”

First, it is important to define “free market.” When attempting to do so, both conservatives and liberals tend to focus on competition, private ownership of the means of production and the profit motive. These are actually results of the free market, not defining characteristics.

The free market has only one defining characteristic: that all exchanges of property occur by mutual, voluntary consent. Period.

That the means of production are privately owned is a result of this, as no government acquisition of anything occurs by voluntary consent. Competition, too, occurs because customers are free to choose which products they buy or whether they buy at all. This motivates producers to make their products more attractive in quality, price or both. They are also motivated to operate at a profit, both for their own enrichment and in order to survive. Losing money eventually results in the dissolution of the firm.

Applying the definition, a free market in healthcare means simply that all exchanges of property, including the labor of doctors, occurs by mutual, voluntary consent. There is only one alternative to this: coercion. If all participants are not acting by voluntary consent, then some or all are being forced to make exchanges under the threat of violence if they don’t.

Anyone who doubts this should simply withhold the Medicare portion of his tax payments and see what happens next.

Stewart made a familiar argument that is compelling on its face. The free market doesn’t work for health care because patients in need of treatment are often not in a position to make choices the way they do when buying shoes or automobiles. Patients may be picked up in an ambulance delirious or even unconscious. It is unreasonable to assume those patients can make rational decisions about which hospitals they are taken to, which providers treat them or what treatments are administered to them.

Granted, but here’s the rub. Their situation is worthy of compassion, but it does not give them the right to force others to do their bidding. They have every right to ask for help, but not demand it. Their misfortune may not be their fault, but bad luck does not grant them a legal claim on the property of others. Nor does it give them the right to dictate the terms under which an exchange of property is to take place. That exchange either happens by mutual, voluntary consent or freedom is annihilated.

The same argument applies to those who simply cannot afford to purchase health care. Again, many find themselves in this position through no fault of their own. That doesn’t give them the right to use force on innocent third parties.

American governments were once constituted with the assumption that the government’s role was to ensure a free market. As John Locke said in his famous treatise, “The great and chief end, therefore, of men’s uniting into commonwealths, and putting themselves under government, is the preservation of their property.”

It is no accident that Thomas Jefferson had a resolution passed in Virginia declaring that Locke’s treatise was the basis for American liberty.

However, the argument against Obamacare is not just a moral but a utilitarian one. There are cause and effect relationships between the manner in which exchanges are made and the affordability of products. When all exchanges are voluntary, supply expands, prices fall, and wealth is distributed widely. That’s why real wages rose so dramatically during the 19^th century, contrary to leftist myths.

When exchanges are involuntary, these cause and effect relationships are disrupted. It is no accident that the most heavily regulated and subsidized industries, like education and health care, are the most disproportionately expensive. Heavy regulation artificially limits supply. Forced subsidies artificially expand demand. Both interventions make prices go up. It’s simple economics.

The health care market suffered from both interventions long before Obamacare. Medicare and Medicaid alone make up about a third of all health care spending. Regulation regarding who can dispense care makes medieval guilds look liberal. It’s no mystery why the price of health care is outrageously high.

If the Republican Party is to remain relevant at all, it has to stand for something other than myopic cheap shots over inconsequential issues like the Obamacare website. It has to stand for freedom. If not, it’s time for it to step aside, as its forbears the Whig and Federalist parties did. There just might be a party waiting in the wings that more faithfully represents voters who truly want a more limited government.

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

Charles Goyette’s Red and Blue and Broke All Over: A refreshingly different argument for freedom

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TAMPA, April 20, 2012 — Best-selling author and former talk radio host Charles Goyette follows up on his New York Times bestseller, The Dollar Meltdown, with a more comprehensive look at all that ails America. In Red and Blue and Broke All Over: Restoring America’s Free Economy, Goyette makes a compelling case that America’s many problems are not due to a dizzying array of complex moral and socio-political dilemmas. Instead, they are all the result of one simple problem: diminishing freedom.

This book is not a partisan attack on the Obama administration by a conservative talk radio host. Goyette is more accurately described as libertarian and he has plenty of criticism for both political parties. However, what makes this book so valuable is Goyette’s ability to express timeless philosophical ideas in simple, everyday terms and then demonstrate how those ideas apply to today’s problems here in the real world.

The book is divided into three sections: “Liberty,” “The State” and “Dead Ahead,” respectively. Goyette lays the philosophical foundation by explaining the inextricable link between liberty and non-aggression, recognized by modern libertarians and the founding fathers. He quotes Murray Rothbard, who said that liberty is “the absence of molestation by other people,” and Friedrich Hayek, who maintained that it is “the condition in which man is not subject to coercion by another or others.”

Continue at Communities@Washington Times…

The Free Market Resolved the Sandra Fluke Affair (Tom Mullen on the Daily Caller)

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The controversy over Rush Limbaugh’s incendiary statements about Sandra Fluke and Limbaugh’s subsequent apology has reached its second week. In this age of 24-hour news cycles and government involvement in just about everything, we’ve been treated to opinions on this from presidential candidates, pundits, reporters and, of course, the president. Even in the wake of his apology, Limbaugh continues to weigh in.

We’ve also heard this incident discussed from just about every angle. Is this about religious freedom? Is it about a supposed “right to health care”? Is it about “silencing women,” as Fluke herself claimed in a recent interview?

Even Ron Paul missed an opportunity when he opined, “I think he’s [apologizing] because people were taking their advertisements off his program.”

Yes, Limbaugh apologized because he was losing sponsors. But no one on the right or the left seems to be gleaning the most important point here: the free market solved this problem.

Read the rest of the article at The Daily Caller

Government Solutions Are Anti-Intellectual

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

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

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

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

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

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

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

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

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

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Hooray for Hollywood?

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Libertarians generally cringe at most of what comes out of Hollywood and for good reason. The consistent message from its movies and movie stars is that private property and free enterprise are the scourge of society, that profits are made by exploiting the poor and working classes, and that private industry is the enemy of nature that will eventually destroy the earth.

Given this consistent anti-freedom message, it would be hard to blame anyone for a reflexive roll of the eyes upon hearing that Kevin Costner has come forward regarding the BP oil spill. However, this real-life story has a surprising twist. Costner is not calling for some tax-funded government boondoggle. Nor is he taking the opportunity to lecture the masses about their responsibility to sacrifice their lives and property to save the earth or why they should feel guilty for polluting it merely by being alive. Instead, Costner has provided a solution, born out of his entrepreneurial interest in a new technology, that may be effective in cleaning up the oily gulf.

According to an article in the LA Times, Costner and a business partner acquired Ocean Therapy Industries after the Exxon Valdez oil spill and “has spent 15 years and $24 million of his own money on this technology.” The technology had little commercial potential until the Deepwater Horizons accident, which may also qualify Costner as – gasp – a speculator.

The article goes on to say that, “The machines essentially operate like big, floating vacuum cleaners, which suck up oily water and spin it around at high speed. On one side, it spits out pure oil, which can be recovered. The other side spits out 99% pure water.” Costner and his partner hope to sell the reclaimed oil and donate most of the profits to local parishes which have suffered because of the spill. Presumably, the revenues for selling the machines themselves will constitute a handsome return on investment for Costner and his partner.

Whatever Costner’s political views may be, his actions speak louder than words. He is demonstrating yet again that every innovation that has improved the quality of human life has been the result of entrepreneurs taking risks in the hope of profits. While President Obama is making speeches and looking for asses to kick, private enterprise has stepped forward with a solution that will benefit all parties involved. Like all exchanges in a free market, the customer benefits from a new product that it needs or wants, the entrepreneur is enriched for risking his own money and devoting his own labor and time, and all of humanity benefits from the existence of new technology. There are no “losers” in a voluntary exchange of property.

In all fairness, this technology was originally developed by the U.S. government. However, it took the vision, commitment, and risk tolerance of a private investor to transform the technology into something useful and make it available when the time was right. This is also not without precedent. In the 1980’s, entrepreneur’s saw opportunity in a little-known technology called ARPANET, the result of a partnership between MIT and the Department of Defense. They decided to risk their own money developing this technology into something that would actually be useful to everyday people. They created products and services that billions now benefit from and the entrepreneurs were enriched in the process. Today, we call that technology the Internet.

Hopefully, Costner’s fellow actors, producers, and directors will not vilify Costner for “making money on this environmental tragedy.” I recommend that they look at it that Costner is “making the big, bad oil company pay” for the damage it has done. However, no amount of spin can change the facts. This solution was provided by a private entrepreneur who took a risk in the hope of profits. As far as this crisis is concerned, the score is Market 1, Government 0.

Libertarians don’t get to say this very often, so let me be the first: Hooray for Hollywood! Oh, and Kevin, good luck with your venture. I hope you make a million bucks.

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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>Symbolism Abounds at the Winter Olympics

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>Perhaps there are those who will say it is a stretch, but for me the medal presentations last Monday night (Feb. 15) for the men’s moguls competition at the winter Olympics were steeped in symbolism. Most of the media attention was focused on the fact that Alexandre Bilodeau was the first Canadian to win Olympic gold on Canadian soil. He also knocked off the heavily-favored former gold medalist, Dale Begg-Smith, who had turned in one of his best performances. However, the fact that Begg-Smith and Bilodeau finished ahead of American bronze medalist Bryon Smith contained a hidden message that I doubt most Americans caught.

Consider Begg-Smith’s story. As a teenager in Canada, he was not only a skiing phenomenon but a tech entrepreneur. His coaches told him that he was spending too much time on his business and not enough on skiing. Perhaps his coaches were simply skiing purists that insisted on a total commitment to the sport. On the other hand, perhaps they suffered from that epidemic philosophical disease that promotes contempt for all entrepreneurs and vilifies all who seek to profit from voluntary exchange – in other words to accumulate wealth by producing far more for their fellow human beings than they consume themselves. In any case, Begg-Smith and his brother/partner Jason decided to exercise their rights and vote with their feet. They moved to Australia where they could ski on their own terms and pursue their business interests as they saw fit.

It was symbolically appropriate that this man finished ahead of the American, because his life embodied a principle that Americans have forgotten. When the opportunities that he deserved were not made available to him where he was, he voted with his feet. He left his country and emigrated to one where he was free to pursue his happiness in the way that he wished to. This did not cost him victory on the ski slopes. In 2006, he took the gold medal in men’s moguls in Italy, having also become a millionaire from his internet business. Like most of the early Americans, he wasn’t deterred from leaving the country that stifled him by false platitudes about “patriotism.” He was proud of rather than ashamed of his desire to seek his fortune. Like our American ancestors, he was justly rewarded with victory on both fronts.

However, Begg-Smith finished second to an athlete who inadvertently embodied an even more American principle. While most Americans probably think first of government health care when they think of Canada, Alexandre Bilodeau didn’t just come from Canada. He came from Quebec – the French-speaking province that has smoldered for decades with the most American of all ideals: secession. Yes, the Parti Québécois espouses some of the precepts of social democracy that are ultimately hostile to true liberty, but the movement nevertheless recognizes one core American principle that most Americans have forgotten. The state exists solely to serve the individuals who comprise it, and the loyalty of those constituents ends where the state ceases to govern with their consent. Certainly, none of these ideas entered the mind of the talented young man who earned that gold medal, but that didn’t diminish the symbolic significance of a Quebec native besting an American.

Let me take a moment to congratulate Bryon Wilson. He skied magnificently and the difference between him, Begg-Smith, and Bilodeau (literally milliseconds) is too infinitesimal to have any real significance. All three athletes should be deservedly proud of the fact that they have achieved greatness in their discipline. However, I hope that somehow the allegoric message of this competition will burn itself into the hearts of every American. The two athletes that finished ahead of the American represented ideas that Americans have forgotten:

1. Let no nonsense about (false) patriotism keep you from pursuing your happiness.

2. To seek your fortune through trade is to seek to benefit your fellow man more than most other people do by large orders of magnitude. There is no nobler aspiration.

3. You have a right to choose not to vote with your feet, but instead to alter or abolish any government that fails to secure your rights or becomes destructive of that end. In other words, you have a right to secede.

Should Americans rediscover these simple, uniquely American values, who could set bounds to the heights to which they could ascend?

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 Do Oranges, Furnaces, and Your IRA Have in Common?

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>On Friday, an average American spent the entire day with the federal government without ever leaving his home. No, there was no knock on his door by some plain-clothes Gestapo. Neither was he treated to one of those infamous “no-knock raids” where a small army of thugs with various acronyms spelled out on their backs burst into the homes of the innocent and terrorize whomever happens to cross their paths. Nothing so dramatic happened that day. However, the long arm of the federal government made itself equally palpable nonetheless.

The first thing that he tried to do that day seemed innocuous enough. Being a native of Western New York and now living in Florida, he attempted to schedule a pick-up to ship some freshly-picked Florida oranges to a friend back home. He had purchased the oranges from a local orchard a day earlier, putting aside about two dozen for his friend in the wintry north. Anyone who has eaten oranges fresh from the tree here in Florida can tell you what a difference there is in freshness and taste from those purchased in grocery stores in the north when they are several days or weeks older. There is also a significant difference in price, especially this time of year. Oranges in Florida cost about $.40 per orange, while those same oranges cost about $1.50 each when purchased in Western New York.

For all of these reasons, our average American decided to do something nice and send a couple of dozen freshly picked oranges up north. That’s when he had his first encounter with the federal government. It turns out that what he was attempting to do was extremely dangerous and therefore prohibited by USDA regulations. According to the USDA website,

Under current federal regulations, all shipments of fresh citrus are prohibited from leaving Florida unless they meet certain requirements, including:

• Inspection of the grove within 30 days of harvest;

• Treatment of the fresh fruit with a special decontaminant;

• Issuance of a federal limited permit that must accompany the fruit. The limited permit confirms that the inspection and treatment have been carried out; and

• Clear marking on the packages to indicate the fruit is prohibited from being delivered to other citrus-producing states.

The reason given for these regulations is that they are “designed to prevent the spread of citrus canker to other citrus-producing states while preserving Florida’s fresh fruit citrus market.” Surely the reader is familiar with citrus canker – that pandemic scourge that rivals swine flu in its danger to all of humanity if not for the federal government and its regulations.

There are a few consequences of this legislation that the government would have us believe are purely coincidental. The first is that the federal government is now authorized to collect a tax, which is all the fee for the “limited license” really is. The second is that citrus growers are effectively insulated by law from any out-of-state competition. Ironically, the federal government supposedly derives its authority to impose such a regulation from the commerce clause of the Constitution – which was written to prevent protectionism by the states!

The effect of these regulations is that consumers everywhere – in citrus producing and non-citrus producing states – pay higher prices for oranges. For those states without citrus growers, the licensing costs and higher costs due to limited shipping options are passed on to consumers. This is what explains Western New Yorkers paying $1.50 per orange. Even in citrus producing states, consumers pay a higher price than they otherwise would if their in-state growers had to compete with out-of-state growers freely shipping their products into the market. Of course, the government and its “progressive” supporters would have us believe that these are merely necessary costs of public safety. It couldn’t be that large, corporate citrus producers had anything to do with lobbying for and perhaps even writing these regulations, could it? Surely, the additional profits and insulation from competition are purely coincidental, aren’t they?

Having resigned himself that he could not ship the oranges himself without the federal license, which was not cost-effective for two dozen oranges, our subject acquiesced to send the oranges directly from an orchard licensed to ship out of state (at a premium price) and moved on to his next order of business. He needed a furnace for one of his rental properties. Being a small businessman who owned or managed approximately 100 properties, it was his responsibility to repair or replace any home appliances that ceased functioning. As a furnace is a significant cost for a small business, he consulted a well-known internet resource to see if he could get a deal on purchase and installation. He found several vendors advertising low-cost installations for home furnaces.

The cost of the home furnace that he selected was about $800. The cost to have a licensed HVAC contractor install the appliance was approximately $1,700 (remember this is New York), for a grand total of $2,500. The vendor on the internet worked for one of the established HVAC contractors that sell and install these appliances. He was offering to sell the furnace at the advertised price of $800 and install it for $300. This represented a savings of $1,400 – significant for a small property management company. When the small businessman offered to accept the offer and pay by credit card, the internet vendor educated him on what was going on. The transaction would have to be executed in cash, because it would be in violation of federal regulations. Not wishing to run afoul of the law, the small businessman declined and acquiesced to pay the $2,500.

It should be remembered that the vendor was not offering to sell stolen goods. He was selling the actual furnace at the same price that the HVAC contractor was selling it at. The internet vendor was merely offering to do the installation labor at what amounted to a real market cost of about $300. Why can the HVAC contractor charge $1,700 to send the exact same technician to install the exact same furnace? Only because it belongs to a cartel that is created by federal regulation and licensing requirements. Again, the reason given is public safety. We can’t have just anyone installing HVAC equipment or we would all be blown up within a week. It couldn’t be that large, corporate manufacturers and HVAC contractors associations lobby the government to pass these competition-stifling regulations, could it?

What did our average American businessman do next to garner the attention of the federal government? Nothing. Frustrated and having spent an inordinate amount of time on two seemingly simple activities, he decided to call it a day. However, the fact that he was sitting in his home doing nothing does not necessarily mean that he was free from federal intrusion. While reading some personal e-mails, one popped into his inbox from his financial advisor. It concerned his IRA.

A few years earlier, he had decided to take a portion of his retirement savings out of his traditional 401K and put it into an IRA with a company that specialized in foreign stocks. His strategy was to protect his savings from the ongoing depreciation of the U.S. dollar and the structural weakness of the U.S. economy in general, which was and is based almost purely on consumption and borrowing. The firm with which he opened his account invested his retirement money in foreign companies with strong balance sheets that were paying dividends. Overall, the investment strategy was sound and relatively conservative. In any case, it was his money to do with as he saw fit. Or so he thought.

It seems that since “the crisis,” the federal government had taken an interest in him in this respect as well – as always for his “protection.” His broker informed him that a “Client Profile” that he had been required by federal law to fill out upon opening his account had to be filled out again. However, since the company that he opened the IRA with specialized in foreign stocks, he now had to mark “Speculation” on his risk profile. The company had to have this signed affidavit on file in order to legally continue to manage his account. This was all designed to protect him from unscrupulous fund managers who might buy foreign stocks with his retirement money without telling him how risky said foreign investments might be.

Absurdity abounds in this regulation. The stocks in our subject’s portfolio all had strong balance sheets (modest debt-to-equity ratios) and were paying dividends. To invest in these, according to our government, is “speculation.” However, to invest in U.S. Treasury bonds – the bonds of an enterprise that is currently losing $1.6 trillion per year, has over $12 trillion in debt, and over $60 trillion in unfunded liabilities – would qualify as “low risk.” However, there is more to this story than pure government incompetence.

Consider the effects of a regulation such as this. There is some percentage of people who wisely got out of U.S. stocks and U.S. dollar-denominated assets in general over the past several years. However, after the misinformed propaganda campaign by our government against speculators as the cause of the recent financial and economic crises, there are a number of reasons that those people might not want to be labeled as “speculators” themselves. They might erroneously perceive speculation as unpatriotic or even evil, given what they have heard. The less gullible might fear more onerous federal actions against them once they are officially identified as speculators. In any case, this regulation is going to cause some people to close their accounts with companies that deal in foreign stocks or at least shift their assets back to U.S. stocks.

This is going to have the effect of raising the price of those U.S. stocks that these “speculators” decide to buy. That price increase does not represent real market forces at work, because without the regulation, the investors would have left their money in the foreign companies. Again, this is supposedly the unintended consequence of a regulation that is nevertheless necessary to protect the public. Who just happens to benefit? As usual, it is the large corporations whose stock prices will appreciate and who also just happen to fund the campaigns of the people who passed the regulation in the first place. Doesn’t anyone see a pattern here?

None of these regulations actually benefit the public. The citrus and furnace consumers pay exorbitantly higher prices and are certainly no safer from danger because the corporate cartel member filled out a government form and paid a licensing fee. How many people have to die from FDA-approved drugs (or from the unavailability of unapproved drugs) before this is sufficiently clear to average Americans? In the case of the foreign stock investor, he is actually harmed by the regulation if as a result of it he takes his money out of safe, foreign investments in viable companies and puts it into shaky U.S. corporations or soon-to-be-downgraded U.S. Treasury debt.

Progressives supposedly support these regulations in order to protect average Americans from the large corporations that they vilify at every opportunity. As we have seen ever since their hero, FDR, instituted this fascist regulatory structure in the 1930’s, they achieve exactly the opposite result. With each new set of regulations, large corporations grow richer, more influential, and more insulated from competition – all at the expense of the “little guy” that the regulations supposedly protect. To quote another progressive hero from the 1960’s, “When will they ever learn?”

Michael Moore Wants to End the Fed (He Just Doesn’t Realize It)

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“You keep on using that word. I do not think it means what you think it means.”

– Mandy Patinkin as Inigo Montoya in The Princess Bride (1987)

It is ironic that Michael Moore’s latest movie, Capitalism: A Love Story features two appearances by writer and comedic actor Wallace Shawn. There is even a clip of Shawn exclaiming “Inconceivable!” in his hilarious turn as Vezzini in The Princess Bride. However, the most appropriate clip from that movie would have been Inigo Montoya uttering the words quoted in the prologue of this article. Using one of Moore’s staple filmmaking techniques, he could have cut to the clip immediately after one of his own pronouncements about capitalism. For although Moore says the word over and over throughout the movie, it is apparent that it “doesn’t mean what he thinks it means.”

The closest thing to a definition of capitalism that Moore provides to his audience comes early on when he remarks, “Capitalism: a system of giving and taking – mostly taking.” He goes on to show a half dozen or so clips of people extolling capitalism for providing “the freedom to succeed and to fail” or hailing the virtues of competition. However, the common mistake made by both Moore when attacking capitalism and the Republican politicians he depicts defending it is their mutual failure to recognize the central tenet of capitalism: property rights.

True capitalism is based upon one simple principle: that all exchanges of property are made with the voluntary consent of all parties. Private ownership of property and competition – the other two components of capitalism in most traditional definitions – are actually results of this foundational principle. As all governments are institutions of coercion, there is no way for them to acquire property through voluntary exchange. Further, with all exchanges being voluntary, sellers must by definition compete with one another in order to sell their products. So, the foundation of “capitalism” is really the non-aggression principle applied to property. Capitalism requires that no one’s property can be taken from them without their consent.

However, Moore’s film does not examine anything close to that system, which Adam Smith called “a system of natural liberty” (the word “capitalism” was not coined until nearly a century later). There is a good reason for that – it doesn’t exist. What Moore mistakes for capitalism is really the soft fascism that has been increasing in intensity in the United States since the Federal Reserve and income tax were created and property rights were destroyed. He makes the same mistake that Republican voters make when they vote Republican politicians into office. They believe the politicians when they say that they support “free markets,” despite the fact that they go on to govern in exactly the opposite way.

The injustices that Moore depicts in his film are without exception caused by government. Not one can be traced to people voluntarily exchanging their goods and services with one another. What Moore represents as “capitalism” is really what Thomas Dilorenzo described as “Hamilton’s Curse” in his 2008 book of the same name. Without attempting to reduce Dilorenzo’s treatise to a few sentences, he generally describes the economic system whereby the government allies itself with the wealthiest segment of society in order to plunder the wealth of everyone else in pursuit of “national greatness” or “the common good.” The hallmarks of the system are corporate welfare, deficit spending by government, protectionist tariffs, and most importantly, a central bank with a government-granted monopoly on the creation of money.

This system purports to benefit society by encouraging the growth of domestic industry and thereby increasing the power and standing of the nation as a whole, as well as providing employment for the working class. However, like socialism, it must achieve “societal goals” by violating the fundamental principle of capitalism. It must violate the non-aggression principle by taking property away from people without their consent and redistributing that property to others. Some of this is accomplished through taxation. A much greater part is accomplished through monetary inflation.

It is astounding that most people are able to ignore the fact that the central bank is an instrument of theft and thereby completely antagonistic to capitalism. It takes an incredible dearth of healthy skepticism not to question the reason for legal tender laws, which force people to use the central bank’s currency. There is only one reason for these laws: without them no one would choose to accept an un-backed paper currency in exchange for their real goods or services. People are forced to use Federal Reserve Notes so that the government and its corporate allies can use inflation (expansion of the money supply) to transfer wealth from everyone in society to the privileged few who benefit from the transfer. The beneficiaries include corporate defense contractors, large farming corporations, Wall Street banks, and other “pillars of the economy.” It is inflation more than anything else that widens the gap between rich and poor. It is the chief vehicle for what Bastiat described as “the few plunder the many.”

However, Michael Moore does not recognize the right to the fruits of one’s labor and so he is completely blind to the difference between capitalism and the system promoted by Republican politicians (in deed if not in word). He fails to see that every aspect of our financial meltdown was caused by some violation of property rights, representing a departure from capitalism.

The money needed to extend all of those “deceptive mortgages” was created by the Federal Reserve out of thin air, thus diluting the value of all existing U.S. dollars. This was a theft from the holders of those existing dollars. Most of the loans themselves were guaranteed by Fannie and Freddie Mac, which uses the coercive power of government to force taxpayers to put up their money as collateral for people who would either not receive those loans or who would pay a much higher interest rate without it. Again, this is not capitalist voluntary exchange but instead wealth redistribution and a distortion of the free market. Similarly, the hundreds of billions paid out to defense contractors and other beneficiaries of President Bush’s wars in the Middle East were also funded by inflation, which the Republicans overtly flaunted by cutting taxes while skyrocketing government spending.

Since he fails to recognize that it was violation of property rights that truly caused our economic meltdown, he doesn’t recommend the restoration of property rights as the solution. Moore blindly accepts the traditional “progressive” fallacy that free market participants can only benefit at someone else’s expense, instead of recognizing that people who exchange voluntarily do so to their mutual benefit. As a result, he accepts government’s role as plunderer of property and merely suggests dividing up the loot differently. He promotes the bogus idea that the government can grant rights to people, and suggests that the coercive power of government no longer be used to redistribute to the wealthy, but instead be used to redistribute to everyone else. He objects to a system wherein the few plunder the many, but suggests it be replaced with a system where “everybody plunders everybody.”

Moore asserts that FDR had the answer when he proposed a “Second Bill of Rights,” granting Americans the right to a reasonable wage, health care, a pension, and other entitlements. Again, as the concept of property rights is foreign to him, Moore is able to ignore the fact that granting a right to these things means that those who provide them have no rights. He extols the “justice” of labor unions, but ignores the fact that it was the unions that destroyed the U.S. automakers by claiming exactly these rights. It was actually an alliance between government and these unions – identical in principle to the alliance between government and Wall Street – that turned his beloved Flint into a ghost town. He suggests that we should set these forces loose upon all of society. His ability to ignore reality is, to quote Mr. Shawn, “inconceivable.”

Like all of his movies, Capitalism: A Love Story is very well made. Moore is exceptionally good at what he does, bringing wit, comedic timing, and emotional power to the screen. Also like all of his movies, he identifies real injustices and expresses appropriate outrage at them. However, throughout his distinguished career he has made the classic mistake of misidentifying the cause of the problems he depicts so poignantly on the screen.

He compares the United States to Rome and points to the similarities between our problems and theirs. He correctly identifies half of the cause of Rome’s decline and ours: the government’s unholy alliance with a landed aristocracy that plunders the wealth of the people for redistribution to the privileged few. However, he fails to recognize his solution as the other half of the cause of both Rome’s decline and ours: the rest of society attempting to share in the plunder by means of majority vote (democracy). It was both of these forces acting together which destroyed Rome’s currency and led to her eventual collapse. Like Rome, we are also afflicted with both of these ills.

The only real solution to our predicament is to implement a system that supports Bastiat’s third alternative – “where nobody plunders anybody.” It is only by following this principle that justice can truly prevail. The most significant step in achieving such a system would be to eliminate the Federal Reserve System. Neither the Republican system of plunder for the wealthy nor the Democratic system of plunder for everybody is possible without monetary inflation. There is no way that government could ever achieve either through direct taxation.

I believe that Michael Moore’s intentions are good. At the end of his film, he asks Americans to join him. I have an alternative proposition for him. If he truly wants to see justice restored in America, along with equal opportunity for all Americans to pursue their happiness, he should call off his misguided attack on capitalism and join us to End the Fed.

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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