[Originally published in the Front Range Voluntaryist, article by Mike Morris]
That Americans have become concerned with global affairs, as well as political issues between their neighbors, is a testament to how far the American Empire has expanded in the last century, abroad and domestically. There was a time when the American people wanted little to do with funding an institution which would be the world’s policeman.
The government, if thought to be necessary at all, was to be strictly limited to the provision of protecting individual rights. Much less was it thought to be needed to engage in economic interventionism, or run massive, unsustainable welfare programs.
Relative to today, few would have called for it to engage in military excursions around the world, “to fight them over there so we don’t have to fight them here.” Few would have thought the government should run retirement programs, monopolize the service of health care, tax and regulate everything, or anything else which has become its accepted scope in these times. It was to be virtually non-existent.
Hazlitt’s World
I want to quote, to humble the reader, the reflections of economist Henry Hazlitt at seventy years of age. The world produces few men like him today, and his straightforward and logical journalistic work, among his other writing, feels like it’s from another age when men thought more clearly without crony statist-intellectuals to warp their thinking.
He puts things into a perspective that is not at all familiar to any currently living man, and it gives context to some changes we will highlight. Hazlitt recalls his early years:
“My first 20 years were spent
before the outbreak of World
War I in 1914. Looking back at
it, it seems now an idyllic world.
There had been no major
international wars for a century.
There were no revolutions every
week and riots every day. People
could even trust their currency.
There was no nuclear bomb
hanging over us. There was no
Communist government and not
even an important organized
Communist movement. Even
socialism was merely a matter
of academic discussion.
It was an age of innocence. How
innocent it was, I well remember.
At that time none of us knew, or
needed to care, what was happening
in such far-off places as China, or
Vietnam, or the Congo. In fact, to tell
the truth, we didn't pay much
attention to anything that was
going on outside of our own
borders.”
Hazlitt’s life spanned a time when governments—communist and not—would kill tens of millions of people, in large part due to disregard for economic teachings. He lived in a time when the world would undergo great changes, where the grounds that the ever-intrusive State would need to grow were laid.
I find this quite profound. Kids growing up today are only acquainted with what we might call the post-911 world. The massive government we’re burdened with is taken more or less for granted and inevitable, as well as what has came with it: the surveillance state, police officers in the public schools, school shootings, endless wars, reduced opportunities, etc. That the government spies on us, for one, is no longer fringe conspiracy, but widely accepted and ignored.
Is the State and its future inevitable?
We might ask, does it have to be this way? It would then be worthy to note, though we might be shocked to have lived through world wars and decades-long economic depressions as Hazlitt did, that many changes will happen to us by the time we reach old age. Shaping this future will depend on the promotion of good ideas, in economics and ethics.
The future is not certain, and the world is not static, but ever changing. What we know today can scarcely be permanent. Democracy, more specifically, almost considered to be the grand and final stage of government, can scarcely be thought of as the last age in history.
This isn’t to take a deterministic view, as Marx and others have. There is no guarantee of freedom nor of the State. It is on us to shape these ideas and continue our work so the mistakes of the past are not repeated. We could, with enough work, make it a lifetime of liberty. This would indeed require a dramatic change in the mindset of the people away from such socialistic ideas as government and toward liberty and individualism, but it is possible.
Thus, nothing says the State is inevitable or a fixed law of nature; it is a product of ideas too, albeit very bad and destructive ones. Nothing says, either, that economic depressions are necessary. This is not some built-in feature endemic of the market economy, as Keynesians and Marxists have pitched it, but a result of government intervention in the economy. In a free-market, there’s no reason to think that, out of the blue, systemic failure has occurred among businessmen. Clearly, something more is going on here.
The things that most have come to take as inevitable then—rising prices, taxation, recession, unemployment, or war, even—really are not. We know that our life is impermanent, but none of these other things must accompany one’s life. They are necessarily features of economic interventionism. There is not a natural tradeoff between generally rising prosperity and intermittent setbacks we must accept, and it’s not true that “taxation is the price we pay for civilized society.”
Conversation today with anyone elderly is likely to include a reference to what the price of something used to be. But sadly, rather than to champion sound money and to have accurately discovered, for example, the cause of rising prices (monetary inflation), the older generations have resigned to thinking prices rising are “normal.” Anyone living one-hundred years ago in the 19th century—where prices were generally falling—would not have thought so.
Involuntary unemployment is another problem. Why are their willing laborers who can’t find work? Yet this is too a feature of government meddling in the labor market, and not of a free market in labor (which we don’t have). Again, rather than for the cause to be identified, a solution is readily thought up for the State itself to act: subsidize unemployment, erect “jobs programs,” “have a universal basic income,” etc. One problem is layered on another when the effects of interventionism are taken for granted and necessary.
So who are all these enemies?
Any users of social media or followers of the mainstream media might have saw recently how Trump bragged, in what has been rightfully likened to a big-dick contest, how much more capable the U.S. government is than the North Korean one at effectively reigning down nuclear terror. Such talk has almost become casual among the ruling-elite, and the people desensitized to it. Perhaps if we had known the world of a teenage Hazlitt, the age of innocence, such statements would be all the more shocking.
How did we get ourselves here, where there are seemingly enemies all around the world who want to attack the United States? Why isn’t the world safer if the State is bigger than ever? Why did these wars, said to be securing Americans, seemingly make us more vulnerable?
The U.S. government has, for no less than a century, been a bully around the world. Hundreds of military bases are spread around the world in seemingly every country. Aircraft carriers cruise the waters. No soldier nor politician could begin name all the places U.S. military personnel are deployed to. Far from skepticism of standing armies, we have today an utmost support for them among the people, with the military ranking high as an institution deserving of praise.
Most of these “enemies,” however, as mean as they might be, shouldn’t be of concern for the American taxpayer. Average men should be, and for the most part are, concerned with rather peaceful and worldly affairs. Only owing to an identification with the State have their interests, different than our own, become ours. The endless framing of enemies is in large part to justify the existence of the State itself, our alleged protector. If there weren’t all these enemies, what would be their excuse of expanding?
North Korea, a component of the “axis of evil,” is a specific target of the Trump regime. But are we to believe the North Koreans have it out for Americans for no reason? That “they hate us for our freedom,” as Bush might tell us? What has happened might fall under the theory of “blow-back,” the idea that killing people will only create more enemies, which is probably best playing out in the Middle East today.
The North Korean issue has not emerged from nowhere. In fact, they have not forgotten that the Korean War was a time where the U.S. government essentially sought to wipe their whole population off the face of the planet, completely bombing the whole country. Some one-fifth or more of their population or more were killed, and the policy, in the words of the top generals, was seemingly to kill every one of them.
Not even bringing back the nuke was off the table. Such a horrendous weapon, which apparently we can casually speak of using today, has only ever been used by the U.S. government in what was perhaps the greatest terrorist attack in history. Thousands upon thousands of civilians were killed.
While the Kim Jong-Un regime is certainly bad, I wouldn’t think they’ve came anywhere close to killing the amount of people the U.S. government has. Directly through war, and indirectly through economic sanctions, starvation, or toppling democratically-elected governments to install dictators in which the country falls into civil war, the U.S. government is responsible for millions of deaths.
Anyone who truly wishes to “Make American Great Again” should want to restore the older American idea of minding our own business, but of course this tone of national greatness from Trump is to continue in the U.S. government’s aspiration to maintain current hegemony and rule the world. Despite spending more than many other top spenders combined, we’re told by Trump there’s a need to “rebuild our military,” and that plundering no less than one-trillion dollars annually is in our interests.
As one looks throughout history, the U.S. government can be seen prolonging wars rather than bringing them to a shorter end. This appears to be the goal today: Wars are not to “win,” but to keep going indefinitely—that is to keep the contracts going and money flowing to the warmakers and the warlords.
In these wars, as Eisenhower would warn on his way out, the beginnings of a military-industrial complex were built. Today these companies—Boeing, Lockheed Martin, Raytheon, General Dynamics—receive billions in subsidies from taxpayers, and they are an entrenched interest in the government to keep such wars going. The world in terms of the size and scope of government is, as Hazlitt noted, very different today than before.
Skepticism of power
Comments like Trump’s should be an awakening to both “sides” of the political spectrum—who have been, by design, torn against each other—that power is too great. You can see either one of them shriek when their enemies make it into power, knowing how this power can be used. The political-Left, who otherwise love the State and passively approve of its warring in exchange for social welfare, of course when done by a democrat, were horrified at Trump’s ascendancy; and the political-Right before them were horrified when Obama took the wheel; Bush, of course, did nothing but grow the State for Obama to come pick up where he left off.
The presidency will probably get progressively worse. Seeing how “The Rock,” “Kid Rock,” “Oprah,” and a host of other famous folks intend on running for office, it appears we’re well on our way to Idiocracy. Hollywood and celebrity-culture is making its inevitable transformation into the State itself. Who could have saw it coming! In the democratic age, politicians must come to resemble celebrities rather than to appear as statesman working for the people. That’s what gets the people, no longer good on the issues of liberty, all riled up. The corrupt nature of government demands that they be populists, demagogues, liars, if they ever hope to ascend the ranks. The honest are ineligble for public office, or are weeded-out once in there.
While some mild dissident thinking isn’t completely on the right track, many are at least considering the sham that it all is, though they can’t yet place their finger on it. Skimpy arguments such as “the two party system needs to be replaced” can be heard, though “independent” often refers to a socialist of a different flavor. They don’t yet question whether we need a State whatever, but nonetheless it has some average people questioning the legitimacy of the State, and this is a good thing.
Half the population doesn’t vote, which makes Boomers think “the kids just don’t care anymore.” But I think it’s fabulous. Did they ever consider it might mean, “we don’t approve?” Elections are a formalistic procedure to justify the government on the grounds that the people approved of it because they put on a circus show for us. This is where the State’s power resides, and to attack this is the best we can do. Election euphoria is a prime event for the holy State.
Most people, however, haven’t connected the dots to see through the whole system, and are stuck maintaining a sort of “reformist,” rather than abolitionist, position. They see the State as in need of more activism than ever, as opposed to admitting its failures and calling for its end. This is why, in addition to their discontent, we might help to imbue the politically apathetic with the philosophy of liberty.
Legitimacy
It’s always an important reminder that States rest on legitimacy, and not merely force. Force is necessary to compel the actions they desire of us, but most fall into line without coercion needing to turn into physical violence because they—in a double-standard for the rest of society—accept the State’s use of violence as legitimate. Most send in their tax bill, rather than to make the guys with guns come and collect them. Their compliance, however, as some mistake it for, is no proof of consent. It only demonstrates a preference of life, and living outside the cage, to an inevitable death should one resist the State’s robbers in a home invasion.
What we might hope for is that the joke that is Donald Trump, who himself helps to turn the State into a shit-show, would show people for the first time that that the State is a joke. This is not to say it is not a threat; it surely is. But that the idea of a State—a monopolist of violence funded by taxes that tells all the rest of us what to do—is ludicrous.
The mentality
While true cooperation and “working together” is the voluntary society and the market economy, we have in its place an “us versus them” mentality to create division. It is a competition of the unhealthy sort. Whereas we could all be exchanging goods with each other, we’re told there must be expensive standing armies instead, in addition to restrictions on foreign trade (tariffs, quotas) said to protect the domestic consumers.
Hostility, rather than peace, is fostered between people of different nationalities, and it won’t be uncommon for “you’re either with us, or with the terrorists” claims to be heard coming down from atop. An increasing identification with the State will come about under this system too, where individualism and freedom are reviled and where “the nation” becomes the center of political life.
The “us vs. them” that is bred under the State is not only external, i.e., state-to-state, but it is also internal: those who support “their” State come to dominate over the ones who want nothing to do with States whatever. A man who wants to be free and left alone is a dissident terrorist, while all the real terrorists—supporters or members of the State—are called “heroes.” Taxpayer-producers, who fund the State, are the underappreciated scum of the earth, while the tax-consumers and non-producers (the military, etc.) are to be glorified and thanked for consuming our output, but adding nothing to it themselves.
Americans at large used to be non-interventionist. It wasn’t the responsibility of American taxpayers to change people around the world in their image, to make the Middle East democratic or modern, to intervene in European conflicts, etc. The term “isolationist” has been used as pejorative against these people. We should reject this characterization though as it seems to imply that we don’t wish for peaceful cooperation, i.e., exchange of goods and services with the rest of the world, but an autarkic, self-sufficient economy.
Libertarians are often told to leave for the woods, as if the success of the market economy should be attributed to the State. This is backwards: the State subsists on the productivity of the market and the people in it. To have something to steal, something must first be produced. Without this preceding production, the State would have nothing to take.
Such an anti-statist position then shouldn’t imply that one must choose between States and trade, or no States and no trade. It must not mean that we wish to give up the division of labor and social order because we wish for the State to be abolished. The State, after all, is not the source of civilization.
The Shift
Social changes will abound in a democracy, too. The democratic-state opens up the opportunity to steal your neighbor’s property and redistribute it, whereas this possibility didn’t exist before. Additionally, where fewer were so unashamed to assert a right to steal from and hurt others, as democracy and voting imply, today people openly speak of these acts, as democracy has helped to make theft moral in their eyes. Everything is up for grabs, and nothing is off limits.
This is considered to be “progressive” and the source of civilization to have our enlightened overlords stand above us and redistribute our property, but this can only be a means of creating conflict, not peace. If for an act to be virtuous it must be voluntary, we cannot consider “forced altruism” to have bred good feelings and harmony. We cannot call this charity at all, but creating from it resentment and antagonism.
It was the turn of the century, known as the Progressive Era (1890-1910), that ushered in the modern democratic-state as we know it. It was around this time that Americans, fooled by the intellectuals who helped to push this change, gave up on their old generally free-market tendencies to accept the State as necessary in all areas of life. A phony intellectual case was built for why the State must intervene, not just in its normal areas of defense and law, but in the economy itself. Later cronies, such as J.M. Keynes, would come along to give further economic rationale for this interventionism.
While the story is popularly told as a time when the workers, the people, etc., through the government, all rose up to check the wildcat capitalists running amok in the market, in fact it was the inception of an alliance between industry and the State itself, headed up not by “the people,” but by those who the people thought would be the regulated ones. Regulations are far and wide protectionism for the protected producers, not the consumers. Of course, the “experts” to head these agencies would not be the people, but the bankers, the railroad men, etc.
These businessmen, not the people, sought the protectionism. In industry after industry, from railroads, agriculture, farm equipment, oil, banking, etc., these interests took to the government to secure special economic privileges or protectionism—that is, protection from competition—that they were unable to achieve voluntarily in the market. The railroads, for instance, wanted to prop-up or fix prices, but under intense competition found themselves repeatedly unable to do so. The internal method of undercutting the cartel agreement was the secret rebate or secret price-cutting, which always allowed for cheating. And so they sold it to the public under the idea that they were “discriminating” in prices, and discrimination in pricing is bad.
Contrary to the popular story of the State squashing “free market monopolies” or breaking up cartels on behalf of the interests of the people, it was precisely the opposite: the businesses had sought monopolies through the assistance of the violence of the State. Only could their goals be achieved with the assistance of the law, and never were they successful in the market.
It was a veritable turning point in American history that has given us an alliance that is much larger today than it was then. We’re dominated today by government-created privileged monopolies and cartels in every industry, from medical and pharmaceutical companies to insurance and banking firms.
Whereas Americans knew the issues before, and the issues were necessarily economic (such as opposition to taxation, monopoly, paper money, central banking, wars), people today are clueless, and the scope of debate has been reduced to a small, what we might call, allowable spectrum.
Things that could surely be a private matter have become political issues, and everyone’s an expert. And in another sense, things that used to be matters everyone was concerned with, such as money being free from control, have become matters conducted behind closed doors, where again the “experts” are essential to conducting so-called “monetary policy.” This is characteristic of the Progressive Era.
In these times, someone is liable to vote for an outright communist simply because they don’t appear interested in attacking marijuana; or for a sketchy man like Trump because he’s not a Clinton. Freedom of economy and exchange is hardly on the table, and rather minor “issues,” all which could be solved in a decentralized society, are instead discussed and said to be an issue the central government must resolve. We are apparently in need of a separation of state-and-bathroom, even. Every issue is up for being discussed in the political arena.
Both parties over this course of time have become more center-statist, and today are more so indistinguishable from one another. The Democratic or Republican parties can hardly be considered parties that support laissez-faire; these days are long gone. Now we’re into “bipartisanship,” the idea that the State getting one over on us should be more welcomed because they’re all in unanimous agreement about it.
Another side-effect of these center-statist politics (i.e. democratic socialism), not to be placed on the “extreme left” or “extreme right,” which are not mutually-exclusive from each other in the popular conception (communism vs. fascism), is to adopt what they see as “safely in the middle,” or “moderate,” approach toward a “mixed economy.” This has kept liberty off the table, and statism in the game.
Democracy
As Hans Hoppe shows in his essay On Time-Preference, Government, and the Process of Decivilization, in addition to increased negative economic effects, a transformation in political thought arises altogether in a move toward democracy, which rose in its modern form in the U.S. (and around the world) in the beginning of the 20th century.
Whereas the distinction of rulers and ruled is more clear under a monarchy, though this is not to assume a monarchy is not a State either, such is completely blurred in a democracy. Murray Rothbard made this point in his popular essay Anatomy of the State, calling democracy’s ability to cause the people to conflate themselves and the State an “ideological camouflage” that has been “thrown over the reality of political life.”
If the State rests on legitimacy, this change is profound. Once this distinction is lost, and the people begin to identify themselves as being the State (using such language as “the State is us,” or “we are the government”), then this long distinction between rulers and the ruled is diminished, and the path to the total, all-out-state is found. A doctrine of positive rights begins to set in, as the idea of democracy is inherently egalitarian. The State can come into its full-being.
Time preference refers to the varying preferences of people to maintain various proportions of consumption/savings. A lower time-preference denotes an increased farsightedness, where one, by abstaining from more consumption in the present, decides (or prefers) to saves more and invest further into the future. A high time-preference refers to a higher level of consumption to that of savings.
Perhaps most importantly in a democracy, what is a system that allows for legal theft, a phenomenon of heightened time-preference, what is contrary to the civilizing factor of increased farsightedness, will begin to set in.
The logic of Hoppe runs roughly as follows when applying economics to this historical analysis: As an a priori economic truth, (1) taxation will cause relative impoverishment as it heightens the cost of production, and production is the source of increased consumption; (2) taxation (and other “bads”) will increase in a democracy where entry into the State is expanded to all; and thus, (3) democracy will increase the rate of relative impoverishment, relative to that of other, more restricted governments (e.g. a monarchy).
This is not to advocate monarchism; a King’s monopoly is still a monopoly, after all. But it is to show what the State has become relative to what it used to be. There was no such thing as any of these programs in the innocent times Hazlitt speaks of. The monster was more limited in scope at that point, which isn’t to say it committed no evil; far from it.
Economically, all this is to say that, if the State had not grown as large as it is today, that is, if its size were frozen in time from any given earlier point in history (say, 1900), that we would be many times richer than we are now. Not to be confusing; the economy is richer than it was back then in absolute terms. The simple, and incorrect, analysis is to just assume a correlation in the rise of wealth with the rise of democracy. This is probably what many have done. But rather, knowing economic theory, we must frame this as not because of democracy—and the increased government it entails—but in spite of it.
If we know taxation cannot make us richer, the rise of government cannot be responsible for the increase in wealth; and an increase in government will surely diminish the prospects for creating more of it.
And government’s rise is supported empirically, too. There is no such thing as “limited government.” Every government will attempt to be a maximum government, and such has been the case in the American experiment too, where a supposedly modest government was erected which has become the world’s largest Empire today. The more democratic it is, the more it will be hard to restrain this growth, as again all property is on the table to be controlled by the force of the law.
What changed?
We can describe just some of the changes in the government structure from the entering of the democratic age: Whereas taxation was around 5% in the monarchical age, and most went to the ruling elite and the military, taxes are well around 50% today and property is redistributed for virtually any cause. The State today is a massive drain on economic productivity, and it’s only reaffirming of the resiliency of the market economy that they can pull it off.
Where government employment was limited to a small ruling-elite, state governments are the biggest employers in some states today, and millions of worthless people work for the government. Having a market income of zero, they are consumers of tax money. The state employees themselves are deluded that “we pay taxes too.” But on net, they are of course tax-consumers. This, again, doesn’t bode well for wealth creation.
While currency was debased and coin-clipping practiced, the last ties to gold were severed in the 1970’s, and we have today indefinitely inflationary paper-money. The people are further in debt and live beyond their means as a result of it. This has encouraged consumption of capital, and discouraged the savings needed to expand or maintain it. Whereas direct taxation has some tolerance level among the people, governments have been able to raise extra funds to do the bad things they do by simply creating more money. Thus, too, a mass deterioration of money has occurred under democracy.
Whereas Kings did not necessarily “make” law, but in general were bound to follow the common law applied to everyone else, we have a massive legislative-state today that works to produce ever more law, regulations, codes, that are all virtually impossible to even follow. The State is thought of as “lawmakers,” rather than any sort of protector of rights. In other words, it isn’t seen as essential to make negative actions of the “thou shalt not” type, but is to initiate positive rights to other people’s stuff, as well as their own arbitrary decrees.
Rather than be “equality before the law,” then, the law will become arbitrary and treat everyone differently. And the longer and more enduring a State is, the more the people will come to look at it as the very embodiment of law, i.e., to conflate its legislative decrees with law and assume that no natural law precedes its existence.
Likewise, the more property the State redistributes, under the guise of providing for the poor or some other “collective good,” the harder it will be for anyone to see a way out of the cycle of oppression. Admitting it is a failure would be to give up your current, short-term benefits from it, and few current recipients are so uninterested as to allow that to happen.
Whereas debts were accrued in war time and paid down in peacetime, they are forever increasing and unpayable now. No longer are they associated with the King, either, but the illegitimate contract of a “national debt” expects future taxpayers to foot the bill. This incentivizes government managers to spend as much as possible, as quickly as possible. It’s not like G.W. Bush must come up with the trillions to pay for his wars, but if he couldn’t launch them while in office, he won’t get a chance to later. They can thus externalize the cost of war onto the hapless taxpayers.
The nature of war will be changed, too. Wars became ideological. In the First World War, the slogan was to “make the world safe for democracy,” and the seeming paradigm was that democracy and freedom are compatible ideas. Everyone else who didn’t adopt this way was to be forced to change. The failed and flawed “containment policy” (containing the spread of communism) is another aspect that comes to mind in the turning of wars into ideological battles, which gives them all the more energy.
Under a democracy, small, territorial wars between rulers will come to become all out total wars against everyone. The distinction between civilians and military eroded. The World Wars, a product of the democratic age, helped to initiate this shift. These were the times of bombing whole populations, as was the case in Germany, Japan, Korea, etc.
In the democratic age, it is all the more likely that the whole economy will turn into a “war effort” to support the war. This was seen in WWII, which saw rationing and price controls among other acts to pay for War. No longer can the people be left alone, but everyone must pay for the State’s wars. Surely, a moral conundrum for many hapless taxpayers. War was a collective effort, and propaganda worked to secure the needed patriotism.
Contrary to the conventional view then that “democracy will end all wars,” democracy—and the enlarged State that comes with it—will increase the tax-base of the rulers in which to launch wars against more people. The U.S. government has a massive economy to parasitically suck wealth from, and a huge military as a result. It is thus spread around the world.
This isn’t inevitable of capitalism either, as deterministic anti-capitalists might see it, but it was more so the result of Progressive Era work, where Americans threw away their old widespread spirit of free markets and free people for a system of state administration of things, which came about only because the intellectual bodyguards of the State successfully sold it to the people.
Without this, without the State to offer a political platform that attracts cronyists and allows them to subvert market forces such as competition, there would have been no way to achieve the America we have been given today. The State, and the legitimacy that comes with it, is needed to push such measures.
These changes are all relevant, I believe, because whereas the old U.S. government hadn’t invaded all areas of life yet, but was something more of a cigar smoking lounge, today it is the center of life, and it’s hard for anyone, anywhere across the country, to avoid the boisterous character that presently presides in the white house. One couldn’t really imagine a Trump or a Bernie Sanders as a King. Phonies like this are products of democracy.
Effects on wealth
There will no doubt be thieves in a free world. But doing theft on their own, they will assume all risks, and we shouldn’t expect such crime to be regular or reoccuring. People would have a means of dealing with, and preventing, criminals. That they exist doesn’t justify a State.
It is when theft becomes institutionalized (in a State) that major problems begin to arise, economically and socially. Theft becomes systematic and permanent in a democracy rather than isolated incidents of crime. States, in addition, leave their victims defenseless. They have, for one, monopolized the means of security, threatening punishment for anyone who doesn’t comply with them; and they often restrict gun ownership, too. One isn’t free to resist their aggressive extractions of wealth from the economy, as the monopoly is coercive and compulsory. Plunder becomes a way of life in a democracy, as government is the legalization of criminal acts.
Monopoly theory can tell us that things must get worse under a monopoly: (1) prices will rise, while (2) the quality of service will fall. Is this not evident in the local police, who are essentially worthless to call, have not prevented crime from rising (but indeed, their own “civil asset forfeiture” exceeds private theft), and need ever more money to satisfy their budget each election season?
Yet most look to the State and its agencies as being in need of “reform” rather than in need of being abolished. It isn’t a problem that there’s a monopolist of force, but that they’re just not functioning how they “should.” More “laws” need to be passed to make the police—an inherently coercive agency—good. It was all “supposed to” work out different.
But nothing has changed in a democracy as far as the fundamentals of the State, except the view that it is no longer a particular group of people, but potentially open to everyone to engage in politics. The smoke screen has thus been thrown over this monopoly which allows people to pick at it from weaker angles. As a result, they will tend not to challenge the idea of a monopolist, but the persons in power. It isn’t the presidency that should go; it’s only the president, like Trump, whose character isn’t “fit for office.”
Since democracy thus leads people to believe they are the government, the door is then wide open to expand property distribution; and this property redistribution reduces incentives on both sides: for the stolen-from to produce any more, and for the tax-recipients to produce at all. Relative wealth will decline overall.
Since we know, as economists, that increased taxation must mean relative impoverishment, a democracy will lead any people down the road to poverty in the long-term. Its high time-preference adherents will be glad to accept the short-term gains at the expense of the future, and they won’t concede until the whole things goes bust; when pensions are no longer paid, when government can no longer operate, when the handouts come to an end.
And so we have it, an ever larger production of legislation, regulations, taxes, public debts, and transfers of property which must amount to an increased cost in production. Democracy’s increased legitimation of the State makes its depredations all the more pervasive, uncontrollable, and tolerable by the masses. People become less skeptical of power in a democracy, and instead more keen on making use of its power themselves.
No longer is the stated purpose of government to protect people’s natural rights, as we stated, but a culture of positive rights is bred, and promises backed by other people’s money will become a campaign norm, in elections which of course are a prime showing in maintaining this legitimacy. The whole purpose of government will become nothing more than a great property redistributor. Democracy, being simply legalized plunder, will open the door to the people to plunder each other through the state apparatus, rather than seek protection of property rights through the law.
This new option of legalized theft, rather than a strict enforcement of natural rights, will help to increase the demand for present goods. There will be more consumption of capital than before and at a higher rate. This is to say that time-preference, that when lowered gives rise to civilization, will be systematically heightened. Rewarding non-producers can only come at the expense of punishing the producers, which in turn will only help to defeat the goal of aiding the welfare of non-producers: having more things to actually consume.
Since in a democracy, legal instability is brought about (whereas the old law of private property is no longer enforced, but “law” has become the positive law of legislation), such a mere mention of threatening [nuclear] war could impact the people’s time-preferences. That is, if their investment is to be turned to dust, they will become less farsighted in regards to the future. But more generally, since any new government could come in (e.g. a Bernie Sanders for nationalized everything), and the government is more rapidly subject to vast change, increased uncertainty is brought about.
The future is always uncertain enough as it is naturally, but entrepreneurs who invest into the future will now have to begin to anticipate future government actions in addition to future market conditions. Savers and investors don’t need the increased risk or prospects for legal penalty, be it taxation, regulations, or a nuclear war.
Less savings and investment, and thus a shortened structure of production (the longer or further out production is from consumer end-goods stages, which also roughly relates to an increase in production), will mean less output; and since produced goods are definitive of increased income or the ability to consume, the standard of living will fall, too. Less savings will be devoted to higher-order capital goods, and more consumption of capital will take place.
It is no coincidence that rising taxes, rising laws, rising debts, rising prices, rising crime, rising public employment, more intense business cycles etc., have coincided with the growth of democracy, which was essentially ushered in around the First World War, when the age of fascism—a merger of the State and business—began to take hold in American life succeeding the Progressive Era. The National Recovery Act, for instance, was nothing but a cartelizing device, sold to the people under the guise of bringing back the economy.
The large welfare state that arose into the 20th century, accompanied by the large warfare state, has been a massive drain on production which would be the true source of welfare for the people. Rather than to allow capital to accumulate, to encourage savings and future orientedness, they have done just the opposite. Keynesian economics precisely denigrates savings, calling this lack of present consumption, which they see as the cause of the recession, the “paradox of thrift.” It is a high time-preference “economic” prescription which can only mean reduced prosperity.
Politics and its widespread effects on “society” is inescapable, and this is due in large part to the rise of social democracy, perhaps the most enduring legacy of statism where other ideas as communism and national socialism have largely faded. This is the “safe” position most everyone has adopted today, and the masses are of some strain of this thinking. Unfortunately, this has only helped to make people think they’re in a good position here, rather than to revile the idea for the cause of liberty instead.
Economically, however, it doesn’t matter what the political system calls itself. Socialism takes many forms, and is a matter of degree. But as long as a [socialist] policy implies a transfer of property from homesteaders, producers, and contractors to non-homesteaders, non-producers, and non-contractors, and inter-territorial redistribution that will increase under a democracy, then this must mean relative impoverishment. Costs are created for producers, who make the things, and costs are lowered for non-producers to take from them, who create no supply themselves in which to trade for other goods and services.
The end game
We cannot pretend to predict the future or the timing of such events, but we can know that they have been setup to occur. Using economic theory we can be furnished with insights on what must happen, given what has already occured (government intervention). The past decades, congruent with the nature of government, have seen unprecedented growth in the beast, in the areas already explained.
What libertarians must be prepared to do is explain the causes—namely, government interventionism in its many forms—of the eminent “correction,” to say the least, as the phony economy begins to be revealed and reverse course.
Lastly, and perhaps of the greatest insight relevant to us, this credit creation and meddling in the market, specifically with the rate of interest which is representative of the real time preference in the economy, kicks off the boom-bust cycle known today as the “recession.”
Briefly on the business cycle, interest rates, like any prices, mean something. They convey information about the people’s time-preference (that is, their consumption/savings ratio). Pushing them down—lowering the rate—will encourage the launching of more capital projects. Yet this does not mean that there is really any more savings in the economy in order to warrant an economic expansion. Eventually the misallocation, or “malinvestment,” is found-out; the expansion was unjustified, and the economy makes the not-so-painless contraction.
Since the government’s debts are unpayable, they will probably have to be defaulted on. Along with it, all the other things the government funds will have to admit their insolvency, including the inherently insolvent fractional reserve banking system.
We can expect again that, once this presently rigged economy sees its day of reckoning, the State will surely not abdicate and say: “We’re out of tools, and all our measures failed. We’re going to try liberty now.” Most certainly, like they did after the Great Recession, and the Great Depression long before it, there will be massive intervention once again, taken to an even highly level. Such a miserable situation could very well be used to reinforce the State. Only through jobs programs and such, the people will begin to think, could things possibly get moving again. Strains of free-market thinking could be squashed again, when it was only the lack thereof that led us here.
This time, since they really are out of tools, we might be even more drastic (and harmful) measures, such as switching to a one-world paper-money and central bank, ushing in the global monetary system that the power elites have always dreamed of.
Government employment, paid for in taxes, will have to eventually come to an end too. Since government is not a producer, but is a non-producer (a taker), an increase in government employment, which has of course grown with the rise of government—and even grew during the Great Recession as private sector employment fell—can only come at the expense of private wealth creation. More government employees means more non-producers, means less incentive to produce.
Those cozying up with their multi-thousand-dollar monthly checks for having “served” a short, worthless career in one of the State’s departments, say in their prisons or with the police, will one day have to get real jobs and produce something again. Working people cannot pay for non-working people forever, if to express, albeit simplified, the essense of socialism.
Taxes have risen dramatically in the last one-hundred years, and taxation discourages production, as Henry Hazlitt titled a chapter in his classic book devoted to this topic. For the economy to ever come roaring back will require massive and genuine tax cuts, and not the petty “reforms” they speak of.
It is capital accumulation in the social order of private property that gives rise to wealth, and the social order of statism based on aggression against property rights which, rather than to maintain and increase output through more capital investment, causes capital to be depleted, worn, diminished in value, and never maintained again.
The Western world of social democracy will probably see an end just as the Soviet Union did in the late 1980’s, as it is but a softcore variety of total socialism, having the same effects albeit in a different degree.
Will we return to sound money, or will they have their way? Will we default on the debt, or will we be debt-slaves forever? Will we end interventionism, or will the next crash call for a bigger intervention? Will people give up on government programs, or will there be more of them, and more employment in government? Will we be able to reverse the seeming trend of democracy towards fascism, or will they win?
It all remains to be seen. But may we hasten the day that the average man distinguishes himself from that heinous institution, the State, reclaiming his own life for himself and prying it from the grips of fear. What the government had touted as a policy of creating self-reliance has led to a parasitic class of those dependent on the government. Such a path is not sustainable, and a massive reduction in government, or better, its complete abolishment, will be necessary to restore any hope for freedom and prosperity.