Tag Archives: natural law

>Central Banking Doesn’t Work – Just Ask the Fed!

>It is still a tiny minority who understand that central banking is a collectivist institution that is completely hostile to liberty. It is, by definition, an instrument of theft that purports to stabilize economic conditions for the collective by controlling the supply of money and credit. The fact that its only means to do so is to steal from savers to finance well-connected borrowers is a seldom-mentioned detail. That people only use the central bank’s currency because they are forced to do so by legal tender laws is spoken of even less. In this late stage of the Age of Government, the rights to liberty and property are expendable as our rulers “get the work of the American people done.”

Hopefully, the question of whether there should be a Federal Reserve will be on the table soon. However, once one concedes the existence of the Fed, there is a further question to ask: Can it do what it purports to do?

According to the Federal Reserve’s website, its mission is as follows:

Today, the Federal Reserve’s duties fall into four general areas:

• conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates

• supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers

• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system[1]

Of these four stated goals, the first is the most expansive in its scope. Let us leave it until last. The second, to ensure the soundness of the banking system, seems to have been answered by history. Since the Fed’s launch in 1914, the nation has suffered banking crises in every generation that have dwarfed the Panic of 1907 or any of its predecessors. In addressing the Great Depression, the Savings and Loan Crisis, and the 2008 Meltdown, the Federal Reserve’s only answer has been, “Without the Fed, it would have been much worse.” History is not on the Fed’s side. Only a general ignorance of the facts allows the Fed to keep fooling most of the people most of the time.

Refuting the third stated goal is so easy it’s almost embarrassing. For those not trying to regain their seats after falling on the floor laughing, I need only to point out 30-1 leveraging, $60 trillion (or more?) in derivatives [2], or the subprime mortgage disaster. I believe that to go any farther would be, to borrow a football analogy, “piling on.”

In fact, Alan Greesnpan’s now famous (or infamous) mea culpa on the “flaw” in his beliefs about the self-regulating nature of financial markets effectively amounts to the Fed admitting that it has failed in goals two and three. If the “Maestro” himself doesn’t speak for the Federal Reserve, then who does?

Regarding that fourth goal, one is tempted to give this one to the Fed. The important objection would be of the “should they” rather than of the “can they” variety. The fact that the Fed provides these services with an exclusive monopoly and claims only that it will play a “major role,” rather than a positive one, makes this the least significant of the four.

That leaves the first goal, which is stable prices, full employment, and moderate long term interest rates. There can be no doubt that the promises of stable prices and full employment in particular are now the principle justifications for the existence of the Federal Reserve. Almost exclusively, when the subject of the Fed comes up, these two goals are discussed. Even the Fed chairmen themselves, when testifying before Congress, often state these two goals exclusively in describing the Fed’s overall mission.

It should not be forgotten that until the late 1970’s, full employment was not part of the Fed’s mandate. Even using the logic of central banking proponents, these two goals are mutually exclusive of one another. Since the only means the Fed has at its disposal to try to achieve full employment is expansion of the supply of money and credit, which puts upward pressure on prices, the Fed must balance these two goals to try to find the optimum level of money and credit where everyone is employed but prices remain stable.

Ironically, the best source of information on the Fed’s performance in terms of its principle goal for the first sixty years of its existence (price stability) is the Fed itself. Among the collections of historical data on the Federal Reserve of Minneapolis website, there can be found a table documenting price inflation rates for every year since 1800 (Appendix A of this article). There, one can see for oneself whether or not the Fed provided price stability during any period in its existence.

The first fact that jumps off of the page is the stark difference in the trends before and after the creation of the Fed. For the period from 1800-1913, the general price level (a statistic that Austrian economists object to) was cut almost in half. In other words, products that on average cost $100.00 in 1800 would only cost $58.10 in 1913 (Appendix A). While there were some years where prices rose, prices generally fell overall during the entire 19th century.

This would probably be a startling revelation to most modern Americans. There isn’t an American alive whose parents or grandparents haven’t remarked at current price levels and gone on to say, “When I was your age, I only paid a dime for that.” As unbelievable as it might seem, that conversation would have been exactly the opposite in 1890. Grandpa would instead be saying, “When I was your age, I had to pay a lot more for that.” Today, Americans resign themselves to constantly rising prices as a fact of life. However, that is a phenomenon that has only occurred since the creation of the Fed.

In contrast to the century preceding the Fed, the century following has seen exactly the opposite result. Those same products whose average price had fallen from $100.00 in 1800 to $58.10 in 1913 rose to $1,265.14 in 2008. That is an increase of over 2,000%!

Without addressing the subject of which result is “better for society,” inflation or deflation, the data speak directly to the question of “price stability.” From 1800-1913, the average annual fluctuation in price was 3.4%. From 1914-2008, the average annual fluctuation in price was 4.5%, a 33% increase over the previous period. In fact, the numbers for the Fed would be far worse if the same methods used to calculate the price inflation rate were used for the entire period from 1914-2008. In the 1990’s, several changes were made to the methodology used to calculate the Consumer Price Index. They all have the effect of lowering the price inflation rate given a particular set of price data.

Regarding the goal of “full employment,” the Fed’s results are also poor. Similar to that of the CPI, the methodology for calculating the unemployment rate was also changed in the 1990’s. These changes in methodology, which include no longer counting “discouraged workers,” lower the unemployment rate from what it would be for the same data if calculated using the old methodology. Despite this handicap, the Fed still fails to achieve positive results. The average annual unemployment rate in the U.S. between 1948 and 1978 was 5.1% (see Appendix B). Even without compensating for the changes in methodology during the 1990’s, the average annual unemployment rate in the U.S. between 1979 and 2009 was 6.1%. So, unemployment was almost 20% higher during the period that the Fed actively tried to manage it than it was during the prior 30 years.

Once you undo the methodological changes in calculating price inflation and unemployment that were put in place in the 1990’s, the Fed’s results on price stability and unemployment get much uglier. Nevertheless, even after the Fed fudges its own numbers it still comes out a failure. Everyone can remember the ne’er-do-well from school that cheated on tests and still couldn’t pass. Would we want that kid managing the entire economy?

The arguments that the Fed makes to justify its existence are fraught with false assumptions. One is that “stable prices” are a good thing. Remember, the industrial revolution occurred amidst steadily falling prices. It was this period of steady deflation (gasp!) that saw the common people become the prime market for society’s output – for the first time in human history. It was this period that saw the United States transform itself in a matter of decades from an indebted hodgepodge of former colonies to a world economic power. The natural result of economic progress and increased productivity is falling prices. That is what raises the standard of living for the great majority of society.

However, the most absurd assumption underlying the arguments for the Fed is one common to all collectivist arguments: that there is some strange entity called “society” whose needs outweigh the rights of every individual that comprises it. Every citizen surrenders his right to liberty to legal tender laws because being forced to use the Fed’s worthless notes as currency supposedly benefits “society.” He surrenders his right to property in letting the Fed steal his savings through inflation for the same reason. In the end, however, the Fed fails to achieve its “societal” goals of full employment and stable prices, so he gives up his rights for nothing. Isn’t time he took them back? There is a way: End the Fed.

Appendix A – Price Inflation Rates 1800-2008 (Federal Reserve Bank of Minneapolis)

Appendix B – Unemployment Rate (Monthly) 1948-2009 (Bureau of Labor Statistics)

[1] https://www.federalreserve.gov/aboutthefed/mission.htm

[2] https://www.newsweek.com/id/164591

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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>The Government Bubble Heads for a Blow-Off Top

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It’s going to be great.

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

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How Can Conservatives Support Sanctions Against Iran?

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Many have decried that the so-called “liberal left” has abandoned its anti-war stance and thrown its support behind President Obama’s intent to impose sanctions on Iran. As the reason for the sanctions is Iran’s supposed pursuit of nuclear weapons, the left actually remains more philosophically consistent than the right. Liberals have always attacked the natural right of self defense, usually as it manifests itself in the individual right to keep and bear arms. They have also traditionally supported large-scale warfare, as long as the war was started by a member of their party. Remember that U.S. involvement in WWI, WWII, the Korean War, and Viet Nam was initiated in each case by a liberal Democratic president with the support of a Democratic majority in Congress. There is nothing out-of-character about liberals supporting President Obama’s war agenda with Iran.

What is harder to understand is how conservatives can defend the 2nd Amendment and still support these sanctions, given the stated reason for their imposition. As a sovereign nation, Iran could make all of the same arguments regarding their right to develop nuclear weapons as conservatives make regarding the individual right to keep and bear arms. Iran lives in a world in which many of its neighbors possess nuclear weapons. In the event of a nuclear attack against Iran, there is nothing the “international community” can do until it is too late, just as there is nothing the police can do for an individual at the moment he is attacked by an aggressor. Like any potential mugging victim, Iran is much safer armed with a deterrent than at the mercy of those who wish her harm.

Liberals often argue for gun controls or bans based upon what an armed civilian might do with a weapon. Conservatives correctly argue there is not justice in using government force against people because of “what they might do.” Until an individual actually commits some form of aggression, conservatives argue it is no one’s right to infringe upon another’s right to keep and bear arms. This certainly applies equally to nations in relation to one another. How can conservatives deny this right to Iran?

Liberals make the argument that the world is safer without handguns and so oppose them indiscriminately for everyone except government employees. Conservatives correctly argue an armed citizenry is much safer against criminals than an unarmed one. They remind us that every known statistic shows neighborhoods under stricter gun controls have a higher incidence of violent crime, because the criminals still have guns and know law abiding citizens are helpless. Conservatives understand this implicitly in terms of individuals, but it completely eludes them when applied to the relationships between nations. They also fail to recognize that history supports this argument: the only nuclear attack in human history was perpetrated by a nuclear-armed nation against one that did not possess nuclear weapons.

Conservatives make the argument that to deny Iran the right to develop nuclear weapons is not the same as disarming them. They would still be “allowed” to retain a conventional military force. How ironic this argument is coming from conservatives, who become red in the face when liberals argue that they are not violating the 2nd amendment by limiting the types of firearms that civilians can carry or by banning “assault weapons (is there another kind?).” Conservatives recognize that the word “allow” has no place in the same conversation when discussing a right, including the right to keep and bear arms.

Denying one individual or group the right to keep weapons relatively equal to those possessed by his peers nullifies his ability to effectively defend himself. Conservatives routinely make this argument, saying law abiding citizens need weapons of comparable fire power to the average gang-banger. Otherwise, the poorly armed citizen is still at a disadvantage against the well-armed criminal.

Their reasoning is sound. Why does it not apply to Iran? To deny Iran’s right to possess weaponry equal to that of any other sovereign nation – especially those that habitually threaten her – is to deny Iranians their right to provide for their own defense.

Conservatives respond that Iran is a “rogue nation” and therefore cannot be trusted with nuclear weapons. This is nothing more than cultural bias which is flatly refuted by reality. During the past 200 years, Iran has never invaded another country or initiated military force against anyone. Beyond the 1979 hostage crisis, they have burned a few U.S. flags and said some very nasty things about the U.S. and Israel. Otherwise, they have been content to screw up their own country and leave the rest of the world alone.

In contrast, the United States has invaded doezens of nations in just the past 50 years and has committed direct acts of war against Iran, including overthrowing their democratically-elected government and installing an American puppet in its place. When Iran responded by deposing the Shah and taking U.S. hostages, the U.S. waged a decade-long proxy war against Iran through another of its puppets, Saddam Hussein.

This is not to condone Iran’s seizure of civilian hostages in 1979. Violence against civilians is never justified. But given that the hostages were returned relatively unharmed just over a year after their capture, the U.S. government’s conduct at Guantanamo Bay, Abu Ghraib, and secret prisons throughout the world seems to overshadow Iran’s “rogueness” in this area rather considerably. Using the “rogue nation” standard, there is a long list of nations that should be sanctioned ahead of Iran, starting with our own.

Conservatives recognize the right of self defense is the foundation of freedom and equality. They understand that if all men are created equal, there is no justification for one person to deny to another the right to defend themselves, nor to deny another person the right to determine for themselves what weapons are necessary to that end. In order to defend themselves against aggression by other nations, individuals delegate that aspect of self defense to their government’s military force. Based on the same principles as our own Constitution, this is as much their right as the individual right to keep and bear arms. As in the case of individuals, no nation has a right to decide for another what weapons it will keep for that purpose.

The people of Iran as a sovereign nation have all of the same rights that the people of the United States. It is not for the United States to decide what weapons Iran possesses any more than it is Iran’s place to decide what weapons the United States possesses. One would have to employ the most convoluted logic imaginable to arrive at any other conclusion.

The United States was born defending the right to keep and bear arms, a fact glossed over when American history is taught in public schools. Despite the “intolerable” taxes, quartering of troops, monetary manipulation, and a host of other offenses by their government, the American colonists did not fire upon their own troops until those troops attempted to disarm them. The colonists recognized that if they were disarmed they were no longer free. Why would Iran think any differently?

The United States government claims to be promoting freedom in the Middle East. These sanctions demonstrate it has forgotten about what freedom really is. In order for Iraq, Iran, or any other Middle Eastern nation to be free, they must be recognized as equals by the other nations of the world, with all of the same rights that equals are entitled to. The most important right is the right of self preservation, often called the “first law of nature.” Until we recognize Iran in this way, we will be in a perpetual state of war with her, with nothing to gain and so much to lose. It is time to stop playing emperor with Iran and start practicing what we preach. Liberals have always been confused about the relationship between self defense and freedom, but conservatives should know better than to deny Iran’s right to keep and bear arms.

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

The U.S. Constitution: The 18th Century Patriot Act

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Continental_Congress_prayer At some point in the past, the American ethos was centered on suspicion of government –whether liberal, conservative, or otherwise. For most of America’s first two centuries, Americans were taxed less, regulated less, and left more alone by their government than any other people in the world. These conditions resulted in an explosion of innovation, wealth, and culture unsurpassed at any time in human history.

As that trend seems to have reversed, Americans look to their past to try to establish where we have gone wrong and what we can do to solve our problems. Increasingly, some Americans point to the U.S. Constitution and our abandonment of its “limits on government” as the reason for our downfall. It is generally argued by “strict constitutionalists” that the purpose of the U.S. Constitution was to limit the power of the government. Nothing could be further from the truth.

Don’t get me wrong. If our government were limited to the powers granted it in that document, the United States of America would be far freer, far more prosperous, and likely not facing any of the monumental problems that it is facing now. However, that does not change the facts about why the Constitutional Convention was called or why the Constitution itself was created. If you are astounded that any Republican can still claim that George Bush was “pro-freedom” or that any Democrat can claim that Barack Obama is “anti-war,” you should be equally surprised that anyone can claim that the U.S. Constitution limited the powers of the central government.

Remember that there was already a federal government of the United States prior to the U.S. Constitution. It was defined in a document called the Articles of Confederation and had been in existence since 1778. Under the Articles, the young nation had defeated the mightiest military empire in human history to win its independence. Acknowledging the true meaning of the words “federation” and “federal,” the document defined the relationship between the states as “a firm league of friendship with each other.” There was no implication that the United States was one nation and the several states merely subdivisions within it. There was no president to usurp power. There was no Supreme Court to legally sanction tyranny. There was no IRS. While the federal government would pay for any war fought by the federation out of a common treasury, the Articles left the actual act of taxation to the States.

“The taxes for paying that proportion shall be laid and levied by the authority and direction of the legislatures of the several States within the time agreed upon by the United States in Congress assembled.”[1]

Compared to the overtaxed, overregulated society that is America today, the America of the 19th century was one of astounding liberty and prosperity. However, even America after 1787 had much more government than America in its first decade. We are taught that this was a grave problem and that the Constitution was necessary to avoid imminent destruction from any number of horrors, including invasion by a foreign power, civil war, or economic upheaval as a result of protectionism by the states. We accept these assertions as facts because of the reverence we hold for the founders of our country. However, how different was the atmosphere surrounding the Constitutional Convention from that surrounding the Patriot Act, the TARP bailout, or the current efforts to expand government power in the name of environmentalism? Despite the pure heresy of the idea, there was really no difference at all.

By 1787, there were two dominant parties in America. Unlike the two dominant parties today, the Federalists and what would later become the Democratic-Republicans of that time really were diametrically opposed on fundamental issues. Led by Alexander Hamilton, the Federalists sought a much more powerful central government with a central bank, a standing army, and an alliance with big business that would control the economy. In opposition to them were Thomas Jefferson, Patrick Henry, and their followers that believed that the central government’s powers should be limited, and that power should be concentrated locally (and mistrusted generally). They opposed a central bank and a standing army and supported a truly free market.

It was not Thomas Jefferson or Patrick Henry that led the effort to call the Constitutional Convention, which neither even attended. It was Hamilton and his Federalists that wanted it. As superbly documented in his book, Hamilton’s Curse, Thomas Dilorenzo reminds us that Hamilton actually wanted even more power for the central government than he eventually got into the Constitution.

“At the convention, Hamilton proposed a permanent president and senate, with all political power in the national government, as far away as possible from the people, and centered in the executive. He also wanted “all laws of the particular states, contrary to the constitution or the laws of the United States [government], to be utterly void,” and he proposed that “the governor…of each state shall be appointed by the general government, and shall have a negative [i.e., a veto] upon the laws about to be passed in the state of which he is governor.”[2]

Read the rest at LewRockwell.com…

[1] Article VIII, Articles of Confederation

[2] Dilorenzo, Thomas Hamilton’s Curse Crown Publishing Group (Random House) New York, NY 2008 Pg. 16

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.

Make Obama Watch Ghostbusters

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

>The Democrats Privatize Wealth Redistribution

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Are we there yet?

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

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>A Familiar Strategy?

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>Where the people fear the government you have tyranny. Where the government fears the people you have liberty. [1]

– John Basil Barnhill (1914)

Americans should be experiencing “déjà vu all over again” as Congress prepares for another weekend incursion into their rights via another two-thousand page bill that must be voted on before anyone has had a chance to read it. This time, it is H.R. 3962 “To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.” The next law that should be passed is that legislators and bureaucrats shall not be allowed to work on weekends.

That working Americans will rise early on Monday to begin another week with less protections of their rights and more of their property stolen is not all that should seem familiar. If anyone can remember as far back as the Bush administration (this new regime has been so bad that I am afraid people have forgotten most of the outrages of the last), a very similar dynamic played out. The very first bailout – of the banking industry – met with resistance similar to that against the proposed government takeover of the health care industry. The first attempt to pass the TARP bill failed.

For those watching the statements made by their representatives while opposing that bill, one thing should have been obvious. Those representatives feared their constituents. It was in their eyes and in their voices as they explained their opposition. I do not mean that they feared violence. They feared for their jobs and they feared whatever other consequences there might have been if they deliberately defied the wishes of those thousands of voters who had angrily called their offices. For a moment, our government worked as it was designed to work. The people spoke and their representatives heeded their wishes, however reluctantly.

Then, the uproar died down. President Bush emerged from his long, unnatural silence during the financial crisis and gave a speech designed to put that fear back into the hearts of the citizens, where our government prefers that it permanently reside. If the banking bailout wasn’t passed, Americans could lose their homes, their jobs, or their retirement savings. Financial Armageddon awaited if the bankers were not saved – for it is really the bankers that provide those things to everyone. Henry Paulson and Ben Bernanke joined the chorus to help paint the terrifying picture of unspeakable horrors that awaited us if we did not give almost $800 billion to the Treasury Secretary to be redistributed to his friends on Wall Street.

It is unclear if Americans really believed the government or if they just ran out of energy to protest. Either way, the bill passed the second time it came up for a vote. Those same representatives who only days before were too afraid to pass it were now somehow emboldened and it sailed through with barely a whimper from the victims. What was different the second time around?

Hopefully, Americans took notice of the fact that their representatives do not possess the courage to pass a bill that they actively oppose, even if that opposition amounts to nothing more than angry phone calls. It is difficult to ascertain what reassured those congressmen enough to vote for the bill the second time. Perhaps the calls to their offices changed after the government’s scare campaign intensified. Perhaps some of the people who had called before the first vote called back and told those congressmen that they had changed their minds.

However, there is another possibility that is infinitely more disturbing. Perhaps by the time of the second vote, the pressure had died down out of sheer inertia. After all, there is probably some limit to just how long Americans can make calls, march in protests, or write letters while trying to do their jobs, raise their families, and live their lives. If I were trying to develop a strategy to pass a bill that most Americans oppose, I would consciously plan for exactly what happened during the banking bailout bill in 2008. I would let them scream, let them march, let them carry signs and write letters, and even let the bill fail to pass. And once the citizenry was sufficiently exhausted or had turned their attention to something else, I would put it up for another vote.

Personally, I would be surprised if this were truly a conscious strategy by most of our representatives, although I am sure that the dynamic has not escaped the notice of the most devious of the professional political crowd. However, whether intentional or not, this is exactly what happened with the banking bailout and it is exactly what is about to happen with so-called “health care reform.” All summer long, Americans called their representatives, marched in the streets, and even showed up in the capitol city itself in numbers far too large to support the claim that it was some sort of Republican PR campaign. At one point, the idea of a government-run public option was all but pronounced dead on non-arrival by media outlets, whether conservative or liberal in their bias. It has found new life.

The American Revolutiony War was by no means encouraging for the Americans for the great majority of the time that it was being fought. The Americans lost almost every battle, constantly outclassed by the greatest military force in the history of the world at that time. However, there was one advantage that the Americans had over the British – they were relentless. No matter how many battles they lost (and they lost most of them), the American army would not go away. After being repeatedly schooled by superior British generals at New York, Brandywine, and elsewhere, Washington showed up at Monmouth and fought the British to a standstill. In the end, it was he and the Americans that emerged as the victors.

This weekend, the British are back. However, this time they are not wearing red coats but instead masquerading as representatives of the people. They are bringing with them the same tyranny that they did in the 18th century – unjust taxes, illegitimate government power, and violations of the rights of every individual American. It is imperative that Americans once again refuse to go away. Millions have sacrificed time, money that they could ill afford to spend, and days, weeks, and months of their lives to write, call, march, and shout with all of their might against the destruction of our liberty that this government has accelerated with increasing brazenness over the past few years (under presidents from both major parties). It all goes for naught if our representatives learn that they need only wait for us to exhaust our energy before ignoring our wishes and trampling upon our rights as they please.

There is a disturbing sound in the air – silence. There is a feeling that the outrage has subsided and that the coast is clear for another weekend theft of our liberty and property. Let us not let last summer’s tremendous demonstration of the American spirit go to waste. If you opposed this bill the first time, if you traveled to Washington, spent money you didn’t have, took time away from your job or family to be sure that your voice was heard, it will have all been for nothing if they pass this bill this weekend.

Now is the time for Americans to be relentless. Call your representatives and let them know that what happened in New Jersey and Virginia a few days ago has nothing to do with Republicans or Democrats – it is the fate of all incumbent politicians, from any party, that abandon their duty to protect the rights of the people. From now until Saturday evening, we must shout louder, march longer, and get angrier than we have ever been before. Do not underestimate the power that you wield and do not let this government monster outlast you. As we said over two hundred years ago to a government that had marched against our liberty, let us shout to our representatives as loudly and for as long as it takes – this far shall you go and no farther.

[1] Barnhill, John Basil (1914). “Indictment of Socialism No. 3” (PDF). Barnhill-Tichenor Debate on Socialism. Saint Louis, Missouri: National Rip-Saw Publishing. pp. p. 34. Retrieved on 2008-10-16.

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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The Myth of the Christian Nation Divides Us

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While our politicians get on with the work of plundering our wealth, planning our lives, and preparing their next war of aggression, they remain comfortably insulated from criticism of any of these substantive actions because they have successfully distracted average Americans with issues that should not involve government at all. There is none more divisive than religion.

The left reads into the First Amendment of the Constitution an active role for government in prohibiting the acknowledgment of religion or God in any public setting. The right reads into our Declaration of Independence a requirement of belief not only in God, but in the Christian God, in order for one to claim the unalienable rights that are “endowed by our Creator.” Neither position is correct.

If there was one thing that our founders made clear, it was their belief that each person’s inner life belonged wholly to him or her. They referred to this as the “right of conscience,” and they revered it above all other rights. They believed that each human being had the right to answer for himself the questions of whether there is a God and what the nature and will of God might be. They believed that reason was the means for man to do so. Regardless of the conclusions that any individual might reach, he was still entitled to all of the same unalienable rights. This is the true meaning of “religious freedom.”

Among the growing minority that has recognized our loss of liberty and the importance of regaining it, there are many who mistakenly say that the United States was “founded as a Christian nation,” and that only returning to Christian principles will solve our problems. Others may not require that one believe in Christ, but do insist that belief in God is necessary in order to give authority to the law of nature and the natural rights. These positions not only alienate atheists, who are admittedly a small minority, but also a large contingency of Christians and other believers in God who do not want government – which is an institution of force – to play any role in their inner lives. This is an unnecessary division among people who might otherwise unite to fight for their liberty.

It is long past time to answer some fundamental questions about our history once and for all. Did the founders of the United States believe in God? Was the United States founded as a “Christian nation?” Was the Constitution based upon Christian or Judeo-Christian laws as found in their scriptures? Did the founders believe that belief in God was necessary to claim the unalienable rights?

The answer to the first question is a resounding “yes.” Even Jefferson, arguably the most “liberal” of the founding fathers, believed in a supreme being, despite the accusations of atheism made against him by political rivals. He also revered Christianity as the greatest religion in human history, as did his “conservative” counterpart, John Adams. However, neither Adams nor Jefferson believed that Jesus Christ was the son of God or even a divine being. Most people are familiar with Jefferson’s bible, which he cut apart and reorganized to eliminate all of the miracles. However, John Adams, a Unitarian, was even more hostile towards the idea that Jesus Christ was God. In a letter to Jefferson, he wrote,

“They all believe that great Principle which has produced this boundless universe, Newton’s universe and Hershell’s universe, came down to this little ball, to be spit upon by Jews. And until this awful blasphemy is got rid of, there never will be any liberal science in the world.”[1]

Neither Adams, Jefferson, Washington, nor Franklin believed that Jesus was literally the son of God or otherwise a divine being in any way. Rather, they admired most of the moral principles of Christianity, although not all of them. For instance, they disagreed with Jesus’ doctrine to “turn the other cheek.” They believed that self defense of one’s life, liberty, and property was not only a right, but a duty. However, it was the Christian principles of love and non-aggression that are espoused in virtually all religions that inspired John Adams to say, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”[2] This will become even more apparent shortly.

In any case, the answer to the first question is “yes.” Most of the founders believed in God. They revered the moral teachings of Christianity, although most of the philosophical leaders among them did not believe in the divinity of Jesus Christ.

Our second question is, “Was the United States founded as a Christian nation?” In 1796, the United States signed a treaty with Tripoli, promising a monetary gift in return for a cessation of hostilities. That treaty was unanimously ratified by the senate and signed by President John Adams. Among its articles resides the answer to our second question.

“Art. 11. As the Government of the United States of America is not, in any sense, founded on the Christian religion; as it has in itself no character of enmity against the laws, religion, or tranquillity, of Mussulmen; and, as the said States never entered into any war, or act of hostility against any Mahometan nation, it is declared by the parties, that no pretext arising from religious opinions, shall ever produce an interruption of the harmony existing between the two countries.”[3] [emphasis added]

Thomas Jefferson confirmed this statement in his autobiography when commenting on a Virginia bill to establish religious freedom.

“Where the preamble declares, that coercion is a departure from the plan of the holy author of our religion, an amendment was proposed by inserting “Jesus Christ,” so that it would read “A departure from the plan of Jesus Christ, the holy author of our religion;” the insertion was rejected by the great majority, in proof that they meant to comprehend, within the mantle of its protection, the Jew and the Gentile, the Christian and Mohammedan, the Hindoo and Infidel of every denomination.”[4]

Next, there is the question of the philosophical basis for the Declaration of Independence, Constitution, and original system of laws of the United States. According to Thomas Jefferson, that philosophical basis was most directly the enlightenment philosophers, specifically John Locke and Algernon Sydney. In 1825, Jefferson actually got a resolution passed by the Board of the University of Virginia to make this point clear.

“Resolved, that it is the opinion of this Board that as to the general principles of liberty and the rights of man, in nature and in society, the doctrines of Locke, in his ‘Essay concerning the true original extent and end of civil government,’ and of Sidney in his ‘Discourses on Government,’ may be considered as those generally approved by our fellow citizens of this, and the United States.”[5]

Despite this and other unqualified statements by the founders regarding the philosophical basis for our founding principles, there are many that claim that the founders drew their philosophy from Judeo-Christian scriptures or teachings. While there is much common ground between these teachings and the enlightenment philosophers, the founders were clear that where scripture or dogma conflicted with the enlightenment philosophy of liberty, it was the non-aggression philosophy of liberty that prevailed. Regarding the scriptures, Jefferson wrote,

The whole history of these books is so defective and doubtful that it seems vain to attempt minute enquiry into it: and such tricks have been played with their text, and with the texts of other books relating to them, that we have a right, from that cause, to entertain much doubt what parts of them are genuine. In the New Testament there is internal evidence that parts of it have proceeded from an extraordinary man; and that other parts are of the fabric of very inferior minds. It is as easy to separate those parts, as to pick out diamonds from dunghills.[6]

The founder’s skepticism about man’s knowledge of the will of God was not confined to the scriptures themselves. John Adams makes clear that at least he recognized that human beings had no ability to definitively determine the will of God.

“That there is an active principle of power in the universe, is apparent; but in what substance that active principle resides, is past our investigation. The faculties of our understanding are not adequate to penetrate the universe.”[7]

Finally, there is the most important question. Did the founders assert that belief in God was necessary to claim the unalienable rights? As with the other questions, they answered this one quite unambiguously. In a letter to Peter Carr, Thomas Jefferson advised his young friend,

“Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear.”[8]

“Do not be frightened from this enquiry by any fear of its consequences. If it ends in a belief that there is no god, you will find incitements to virtue in the comforts & pleasantness you feel in its exercise, and the love of others which it will procure you. If you find reason to believe there is a god, a consciousness that you are acting under his eye, & that he approves you, will be a vast additional incitement; if that there be a future state, the hope of a happy existence in that increases the appetite to deserve it; if that Jesus was also a god, you will be comforted by a belief of his aid and love. In fine, I repeat that you must lay aside all prejudice on both sides, & neither believe nor reject anything because any other persons, or description of persons have rejected or believed it.” Your own reason is the only oracle given you by heaven, and you are answerable not for the rightness but uprightness of the decision.”[9] [emphasis added]

There are those who argue that without God, there is no authority to base the natural rights upon. This was not the assertion of our founders and it directly contradicts our Declaration of Independence, which reads,

“We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness…” [emphasis added]

While the founders believe that our rights came from our Creator (whomever or whatever the Creator might be), they explicitly said that these truths are self evident. They are truths that can be observed directly. This is directly inspired by Locke’s empiricism. While he, too, believed in God, he based his philosophy only upon what he could directly observe in nature or reasonably conclude from those observations. Therefore, his philosophy recognized the existence of God but did not depend upon it for its validity.

Consider a useful analogy. If a priest and an atheist were both to consider a rock lying upon the ground, both would agree that the rock exists. They could see it, touch it, and hear its sound if they picked it up and then dropped it from their hand. The priest would say that the rock was created by God. The atheist would explain its existence with scientific theories. They may disagree vehemently on this point, but no third party would have to decide who is correct. All can see that the rock exists, for its existence is self evident. The same is true of our natural rights. Our Declaration of Independence says so explicitly.

The only authority that the founders recognized as the basis for our laws was the non-aggression principle, which they recognized as the fundamental law of nature. The beauty of this idea is that it transcends religion and thus welcomes members of all religions, as well as those with no religious beliefs at all. The non-aggression principle allows each individual to use his reason to answer the most important philosophical questions of life for himself, without being forced to assent to any beliefs that he does not hold. It allows people to believe in God voluntarily, or to not believe, as their reason dictates. The only restriction upon them is that they commit no aggression against anyone else, regardless of their beliefs. Jefferson expressed this beautifully when he wrote,

“The legitimate powers of government extend to such acts only as are injurious to others. But it does me no injury for my neighbor to say there are twenty gods, or no god. It neither picks my pocket nor breaks my leg.[10]

If all of America’s founding principles, including freedom of religion, could be summed up in two sentences, no better than these could be found anywhere. If we could agree to live by this one statement alone, the number of people no longer divided along partisan lines would be staggering. Our politicians are wasting trillions of our dollars and assuming un-delegated powers over us that apply to believers and non-believers alike. We must grant each other the ability to exercise the right of conscience freely within the boundary of non-aggression. Only then will we see clearly where the true source of our crisis lies – in a government whose every act contradicts the reason for its existence and perpetuates a state of war with its people. We must unite together to eliminate this earthly threat in order to resume the pursuit of our happiness, both in this world and the next.

[1] Adams, John Letter to Thomas Jefferson January 22, 1825 from The Works of John Adams Second President of the United States Vol. X Charles C. Little and James Brown Boston, MA 1851Pg. 415

[2] Adams, John To the Officers of the First Brigade of the Third Division of the Militia of Massachussetts 11 October 1798 from The Works of John Adams Second President of the United States Vol. IX Charles C. Little and James Brown Boston, MA 1851Pg. 229

[3] Treaty of Peace and Friendship between the United States and the Bey and Subjects of Tripoli of Barbary June 17, 1797 from The Avalon Project Yale Law School Lillian Goldman Library https://avalon.law.yale.edu/18th_century/bar1796t.asp. There has been some debate on whether the language in Article 11 was translated correctly from the original Arabic in which the treaty was written. However, this is irrelevant. It was the English translation containing these exact words that the Senate reviewed and ratified, making the question of translation irrelevant on this point.

[4] Jefferson, Thomas Autobiography from Jefferson Writings edited by Merrill D. Peterson, Literary Classics of the United States, New York, NY 1984 pg. 40

[5] Thomas Jefferson, Writings, ed. Merrill Peterson (New York, N.Y.: Library of America, 1984), p. 479

[6] Jefferson, Thomas from The Writings of Thomas Jefferson, Vol. 14 edited by Albert Ellery Bergh and Andrew A. Lipscomb The Thomas Jefferson Memorial Association 1904 pgs. 71-2

[7] Adams, John Letter to Thomas Jefferson January 22, 1825 from The Works of John Adams Second President of the United States Vol. X Charles C. Little and James Brown Boston, MA 1851Pg. 414

[8] Jefferson, Thomas Letter to Peter Carr August 10, 1787 from Jefferson Writings edited by Merrill D. Peterson, Literary Classics of the United States, New York, NY 1984 pg. 902

[9] Jefferson, Thomas Letter to Peter Carr August 10, 1787 from Jefferson Writings edited by Merrill D. Peterson, Literary Classics of the United States, New York, NY 1984 pg. 903-4

[10] Jefferson, Thomas Notes on Virginia from Jefferson Writings edited by Merrill D. Peterson, Literary Classics of the United States, New York, NY 1984 pg. 285

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

Next They’ll Have Us Salivating

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“Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.”

– Frank Sinatra as Major Bennett Marco in The Manchurian Candidate (1962)

For anyone who has seen the film classic, The Manchurian Candidate, the quote in the prologue should bring back the subtle horror of the premise of the film. Using experimental methods of operant and classical conditioning, the villains of the film – the intelligence community from the eastern communist bloc – were not only able to control the actions of their subjects, but their thoughts and feelings as well. While the most horrific scenes in the film are those in which Raymond Shaw is forced to kill people he loves or respects, the control exerted over the other members of Shaw’s unit is equally disturbing and much more relevant to our political discourse today.

For those who have not had the opportunity to see the film, Marco and the other characters who repeat the adoring words about Raymond Shaw only do so because they are conditioned to for the purpose of covering up the massive plot that constitutes the story line of the movie. Marco later says, “It’s not that Raymond Shaw is hard to like. He’s impossible to like!” He tells his superior officer that while praising Shaw he really believed what he was saying, even though deep down he knew it wasn’t true. He had been trained to respond emotionally in a way that contradicted his reason. A more appropriate metaphor for American politics is hard to imagine.

The United States of America was born during the Age of Reason. Its founders believed that reason was the law of nature itself, and that the inalienable rights to life, liberty, and the pursuit of happiness were logical conclusions based upon observable facts. Further, they believed that reason was a duty and a prerequisite of those rights – one could only be entitled to liberty if one followed the law of nature, which requires non-aggression in return for the natural right to do as one pleases. This is why children do not have a natural right to liberty. They must first develop their reason sufficiently to be able to responsibly claim that right. As Locke said,

“The power, then, that parents have over their children, arises from that duty which is incumbent on them, to take care of their off-spring, during the imperfect state of childhood. To inform the mind, and govern the actions of their yet ignorant nonage, till reason shall take its place, and ease them of that trouble, is what the children want, and the parents are bound to: for God having given man an understanding to direct his actions, has allowed him a freedom of will, and liberty of acting, as properly belonging thereunto, within the bounds of that law he is under. But whilst he is in an estate, wherein he has not understanding of his own to direct his will, he is not to have any will of his own to follow: he that understands for him, must will for him too; he must prescribe to his will, and regulate his actions; but when he comes to the estate that made his father a freeman, the son is a freeman too.”[1]

So, it is not surprising that an absence of reason has accompanied the loss of liberty, for it is only the former that makes possible the latter. No one would logically conclude they would benefit by placing their life, liberty, or property under the arbitrary power of anyone else, for to do so is profoundly illogical. Yet, every generation, Americans have surrendered more of their rights to a government that has grown into the most pervasive institution of power that has ever existed in human history. They have done so for the most part because they have allowed their passions to replace their reason. Until we recognize this, every “change” we make is going to be for the worse.

Third parties and other tiny constituencies aside, American political discourse is dominated by our two major political parties. Their primary goal in any debate is not to reach the truth, but to enlarge their voting base. Having discovered long ago that appealing to the voters’ feelings is more effective than appealing to their reason, there is little more to most political dialogue coming out of politicians and activists than ad hominem attacks against their opponents and empty jingoism that similarly appeals to conditioned emotional responses rather than any rational position or argument (and once in a while, they cry). Perhaps this has always been true in politics; perhaps it will never change.

However, what is truly frightening is how successfully these parties have been able to train average Americans to think and act as they do, and ultimately to cast their votes likewise. For anyone that has given their allegiance to either of the major parties, no dissent or even discussion of that party’s platform is permissible.

If you are talking with someone who identifies him or herself as a Republican or a “conservative,” the mere suggestion that the United States government should consider decreasing military spending or changing their nation-building foreign policy results in a vitriolic, ad hominem assault of the most vicious nature. Often, the response will reference positions that you not only did not take but were not remotely related to the discussion you were having before you questioned party dogma. You may criticize the war in Iraq and find yourself attacked as “godless” or an atheist or even a traitor, while your subject goes on to tell you why you are so wrong about supporting amnesty for illegal aliens, regardless of the fact that the subject of illegal aliens was never heretofore mentioned and you happen to oppose amnesty for illegal aliens.

Similarly, when talking with someone who identifies him or herself as a Democrat or a “liberal,” any mention of support for a free market will elicit a similar attack. You may be called a racist, a fascist, selfish, or greedy amidst a blustering diatribe about the importance of the separation of church and state and religious tolerance, which are likewise subjects that heretofore were not part of your conversation and which you may well agree with wholeheartedly.

One must recognize at this point that you are not engaged in a debate. The person you are talking to is no longer reasoning, but instead giving conditioned responses to words he or she has been trained to react to with abhorrence and intolerance. In most cases, you can expect no chance to redirect the person back to the discussion you were having nor any chance to make a further point, as your opponent will likely continue to cut you off and ultimately withdraw from the conversation, having heard nothing beyond the trigger word(s) that set the absurd reaction in motion.

If the whole encounter seems bizarre, consider the associations that were likely revealed during it. Anti-war equals godlessness (is God pro-war?). Free market equals racism. Property equals greed. Neither Orwell nor Burgess could have imagined a victory over reason so complete. Soon, like the iconic Dr. Pavlov, our masters will need to do no more than ring a bell to direct our thoughts, feelings, and actions.

Without reason, there can be no liberty. Reason – the law of nature – is what allows us to discover the natural, non-aggression limit to human action. It is what defines liberty and distinguishes it from the state of war. It is doubtful that any one of us has not been guilty of abandoning reason at one time or another, although there are some that are certainly guiltier than others. It is also clear that there are those who would go on exhorting our passions in order to cloud our reason and therefore rob us of our liberty, for their own gain at our expense.

There is only one way that we can regain our freedom. We must “pull out the wires,” as Major Marco said to Raymond Shaw. We must break the links that we have allowed others to implant within our minds and begin to listen to one another again, even when we disagree. Pacifism is not communism, freedom is not racism, and property is not greed. These associations are as insane as “War is peace, freedom is slavery, ignorance is strength.”[2] We should be disgusted with our political class for manipulating us this way and ashamed of ourselves for allowing them to train us like dogs.

Until we break free from this irrational partisanship, we are like the children that Locke describes above, without the understanding that qualifies us for liberty. There are plenty in our political class that prefer us this way, so that they may “will for us” in regard to every aspect of our lives. However, unlike wise and loving parents, they have demonstrated throughout all of history that they will teach us nothing but nonsense and guide us nowhere but to war and economic destruction. Even a small child will stop touching the stove after he has burned his hand a time or two. Are we not even as intelligent as this?

There are a few simple things to keep in mind as you attempt to fight the good fight. If you are conscientiously arguing a position that you believe in but find yourself being called a racist, a satanist, a right-wing extremist, or a traitor, keep doing what you are doing. You are very likely winning. On the other hand, if it is you that is resorting to calling your opponent names, ask yourself, “Why am I attacking my opponent? Am I unable to refute his argument?” Maybe it is time to consider the other side.

If you find yourself saying anything that you heard a politician or any of the politicians’ lapdog media hounds say, think very carefully about whether you really agree with it or not. It is likely that further thought will change your mind.

Finally, if you hear a bell ring and find your mouth starting to fill up with water, be aware that there is something very, very wrong.

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[1] Locke, John Second Treatise of Government Hackett Publishing Co. Indianapolis, IN (1980) pg. 32

[2] Orwell, George 1984 New American Library (Penguin Group) New York, NY (1961) pg. 4

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