Rand Paul May Stop Marvin Goodfriend's Nomination

Rand Paul May Stop Marvin Goodfriend's Nomination

02/08/2018Tho Bishop

I'm not a fan of Marvin Goodfriend. His views are dangerous, and he has been blatantly dishonest in order to hide them. Ron Paul even personally introduced a bill back in 2000 targeted directly at his idea of taxing cash

Today, Goodfriend received the endorsement of the Senate Banking Committee with a 13 to 12 vote down partisan lines. While it's not surprising to see a nominee driven purely by party preference, it is worth noting that Jay Powell managed to get Democratic support when he went through the nomination process. Multiple reports from Washington indicate that Democrats will stand opposed to Goodfriend when his vote comes before the full Senate.

That is when things could get interesting. John McCain has yet to make a Senate appearance yet due to his health, meaning a single Republican dissenter could stop Goodfriend's nomination. Today, following the Committee's approval, Rand Paul has said he will oppose Marvin Goodfriend's nomination.

Of course, bad ideas have a way of never truly going away. It is likely that Senator Paul will be tempted with a deal - perhaps another vote on Audit the Fed - to turn his no to a yes. Of course, since a majority of Senators still cling to the absurd notion that a Fed audit would erode the Fed's mythical "independence", this vote would be purely symbolic and end in defeat. Considering the very real danger Mr. Goodfriend poses, particularly with tremors rumbling in US and global markets, this would be a terrible deal. 

There is also the risk that John McCain could be rolled back to Washington in order to push the nomination through. Hopefully the handful of other Senators who occasionally talk a good game about the Fed, including Ted Cruz and Mike Lee, can be convinced that the last thing America needs is an economist more radical than Ben Bernanke on the Fed. 

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Media Accuses Rand Paul of Hypocrisy for Visiting Canadian Hospital: Turns Out It's a Private Hospital

01/14/2019Tho Bishop

Kentucky Senator Rand Paul recently announced he was receiving hernia surgery as a result of being blindsided in an attack from his neighbor. While a senator undergoing common surgery is of questionable newsworthiness, one may expect that the reminder that the Senator is still suffering from the 2017 incident as cause for sympathy. Instead, major media outlets decided to try to use the news as an example of hypocrisy on the part of Paul due to the fact he is receiving treatment at a Canadian hospital.

As published in USA Today:

Kentucky Sen. Rand Paul, one of the fiercest political critics of socialized medicine, will travel to Canada later this month to get hernia surgery....

He is scheduled to have the outpatient operation at the Shouldice Hernia Hospital in Thornhill, Ontario during the week of Jan. 21, according to documents from Paul's civil lawsuit against Boucher filed in Warren Circuit Court....

Paul, a Republican, often argues for private market solutions to American's health care woes.

In Canada, medical care is publicly funded and universally provided through the country's Provincial Ministry of Health, and everyone receives the same level of care.

Paul has called universal health care and nationalized options "slavery."

Of course, if the author had decided to do a two second internet search for “Shouldice Hernia Hospital,” they would have found that it is one of few private hospitals that were grandfathered in prior to the government’s takeover of Canadian healthcare.

Oops.

Of course, the same media outlets that jumped to cry "hypocrisy" at Senator Paul are also guilty of ignoring the very real consequences of Canada’s socialist healthcare system. For example, patients dying due to a lack of access to basic medical supplies such as hospital beds

For more on the disaster of Canada's socialized healthcare system, check out this series by (Canadian author) Lee Friday:

1. The Myth They Used to Pass Canada's Universal Healthcare

2. Universal Health Care in Canada: A Colossal Government Failure

3. The Solution to Canada’s Failed Universal Health Care System: Consumer and Physician Freedom

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Discussion: Austrian Economics in America

This month’s Liberty Matters forum is a discussion of the American economist Frank Fetter. Though he is neglected today, Fetter made vital contributions to Austrian economics and was a major force in spreading the ideas of the early Austrians in the United States (see here and here). In my contributions to the discussion, I explain why Fetter’ work is important and how it can continue to provide fresh insights to contemporary economists. So far, the focus of the essays has been on key elements of economics, especially foundational concepts like price, market, equilibrium, capital, and rent. I’m joined in the conversation by Joseph Salerno, Peter Lewin, and Geoffrey Hodgson.

The first essays and responses in the discussion have now been published, and the forum will remain open for the rest of the month for short rejoinders by all the participants. I hope you’ll take a few minutes to read through some of the contributions. Here is the abstract for the discussion:

Matthew McCaffrey, assistant professor of enterprise at the University of Manchester, explores the economic and political work of the “forgotten giant” of economics, the Indiana-born Frank Fetter. At the height of his career in the early 20th century, Fetter was one of the most respected, cited, and debated economists in the United States. He taught for over 40 years at prestigious universities, including Stanford, Cornell, and Princeton, and his research appeared in practically every major publication in economics and political science. Yet today he is virtually forgotten outside a small group of Austrian economists. In his opening essay, McCaffrey explores two aspects of his thought in particular: his contributions to theoretical economics and their relationship to Austrian ideas, and his political views as they relate to the philosophy of classical liberalism. He is joined in the discussion by Geoffrey M. Hodgson, Research Professor of Business Studies in the University of Hertfordshire, Peter Lewin is Clinical Professor in the Jindal School of Management, University of Texas, Dallas, and Joseph T. Salerno, professor of economics in the Finance and Graduate Economics Department in the Lubin School of Business of Pace University in New York.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Trump's "Gut Feeling"

01/12/2019Doug French

Speaking to the Washington Post, President Trump said, “My gut tells me more sometimes, than anybody else’s brain can ever tell me.” This comment generated scoffs aplenty, as people imagine the receptacle of a daily intake of gallons of Diet Coke and multiple Big Macs somehow provides anything intelligent. However, this classic Trump quip has some merit after reading John Coates’s The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind.

Part II of the book is titled “Gut Thinking,” and the book’s thesis is that our minds and bodies are connected in our actions. Coates focuses his story on treasury bond traders who successfully act by instinct gained from experience. He writes, “Thinking, one could say, is something we do only when we are no good at an activity.”

“There are few phenomena in finance more remarkable, even mysterious,” Coates writes, “than this close linkage between market and body.”

The fact is, our bodies react to news and risks quicker than our brains do. Conscious thought is left in the dust when we react and especially when we take risks. Of course neoclassical economists would poo-poo the notion of our bodies reacting to threats and risks, after all, we’re all rational beings, doing what’s rational at all times. Yeah, right.

While the above is essentially Coates’s contention, he later writes,

Lifting the hood of our brain does not reveal the netherworld of Kant’s unsayable, nor the volcanic will of Nietzsche’s superman, nor yet the hellish subterranean den of Freud’s subconscious. It reveals something that is a lot closer to the inner workings of a BMW.

Not everyone’s brain is of BMW quality, not to mention the various levels of body quality. Traders, Coates contends, must have IQs that are “high enough,” but more important is “a hearty appetite for risk and a driving ambition.” Also important is physical stamina. He points out that many traders are ex-athletes.

Certainly, the president, has the ambition and risk appetite. His gut feelings, as Coates describes gut feelings generally, “act powerfully,” and “are not only real; they are essential to rational choice.”

The author contends the gut “has its own ‘brain.’ The vagus nerve, the main nerve in the rest-and-digest nervous system, links the brain stem, voice box, lings, heart, pancreas and gut. In total, 80 percent of its fibers carry information back to the brain, mostly from the heart and gut.”

As the book progresses, the focus turns to dopamine, testosterone, and cortisol. Dopamine modulates levels of motivation, how eagerly humans (or animals) want things. Dopamine drives humans to try new things and solve F.A. Hayek’s knowledge problem. “The knowledge of the circumstances of which we must make use never exists in concentrated or integrated form,” explained Hayek, “but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”

Trying new things involves taking risks and that’s where testosterone comes in. Traders and entrepreneurs are driven by testosterone. Coates worries that testosterone lowering obesity, “may be dimming the gut feelings and entrepreneurial drive upon which our prosperity and happiness depend.”

Winning trades increase testosterone while market crashes deplete the hormone, sometimes for years. Testosterone feedback, unfortunately, can lead to traders and entrepreneurs to believe themselves invincible. And thus, rallies turn into bubbles. Coates mentions ill-conceived takeovers and record-breaking skyscrapers, providing biological support to Mark Thornton’s work on The Skyscraper Curse.

Cortisol is testosterone’s opposite. As markets crash, cortisol is released “causing [the] body and brain to hunker down for a long term.” Cortisol essentially immunizes the body against trauma, suppressing testosterone production, while being a powerful anti-inflammatory.

Cortisol levels rise with volatility. Coates speculates that this hormone forms “the physiological foundation of the derivatives market.”

Cortisol and CRH (a chemical produced during stress) lead traders (and everyone else one can assume) to be vulnerable “to rumor and suspected conspiracy.” Coates writes, “Each rumored catastrophe is now given as much credence, and has as much effect on markets, as hard economic data.”

“Cortisol is the molecule of irrational pessimism,” explains Coates. Older folks are especially susceptible because they stop producing testosterone and produce high levels of cortisol.

While professional traders and investors have high amounts of testosterone flowing through them, amateurs have “chronically raised cortisol levels.” The constant anxiety forces them to bail out of what could be winning trades.

The November 30th edition of the Elliott Wave Financial Forecast cited examples of the financial press attempting to keep individual investor spirits high. This was before the December downdraft in stock prices. For example, “Ignore the Gloom,” USA Today said.

Trump’s gut has it right. The stock market is in trouble and he knows he needs to blame someone — Fed Chair Jerome Powell — early and often.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Still Fighting the Last War Against Socialism

01/11/2019Jeff Deist

Why does support for socialism persist?

The short answer may be simple human nature, our natural tendency toward dissatisfaction with the present and unease about the future. Even in the midst of almost unimaginable material comforts made possible only by markets and entrepreneurs—both derided by socialists—we cannot manage to conclusively defeat the tired but deadly old arguments for collective ownership of capital. We're so rich that socialists imagine the material wealth all around us will continue to organize itself magically, regardless of incentives.

It's a vexing problem, and not an academic one. Millions of young people across America and the West consider socialism a viable and even noble approach to organizing society, literally unaware of the piles of bodies various socialist governments produced in the 20th century. The fast-growing Democratic Socialists of America, led by media darlings Rashida Tlaib and Alexandria Ocasio-Cortez, now enjoy cool kid status. Open socialist Bernie Sanders very nearly won the Democratic Party's 2016 nominee for president before being kneecapped by the Clinton machine. New York City mayor Bill de Blasio helpfully announces "there is plenty of money in this city, it's just in the wrong hands." He freely and enthusiastically champions confiscation and redistribution of wealth without injury to his political popularity.  

Rand Paul and Thomas Massie are outliers on the Right. Ocasio-Cortez and de Blasio are not outliers on the Left.   

How is this possible, even as markets and semi-capitalism lift millions out of poverty? Why does socialism keep cropping up, and why do many well-intentioned (and ill-intentioned) people keep falling for something so patently evil and unworkable? Why do some battles have to be fought over and over?

The Soviet Union collapsed and the Berlin War fell decades ago. The Eastern Bloc discovered western consumerism, and liked it. Bill Clinton declared the era of Big Government over, and Francis Fukuyama absurdly pronounced that Western ideology had forever won the day. Even China and Cuba eventually succumbed to pressure for greater economic freedoms, not because of any ideological shift but because it became impossible to hide the reality of capitalist wealth abroad.

Yet economic freedom and property rights are under assault today in the very Western nations that became rich because of them.

Today's socialists insist their model society would look like Sweden or Denmark; not the USSR or Nazi Germany or Venezuela. They merely want fairness and equality, free healthcare and schooling, an end to "hoarded" wealth, and so forth. And they don't always advocate for or even know the textbook definition of socialism, as professors Benjamin Powell and Robert Lawson learned by attending socialist conferences (see their new book Socialism Sucks: Two Economists Drink Their Way Through the Unfree World). In many cases young people think socialism simply means a happy world where people are taken care of. 

Never mind the Scandinavian countries in question insist they are not socialist, never mind the atrocities of Stalin or Mao or Pol Pot, and never mind the overwhelming case made by Ludwig von Mises and others against central economic planning. Without private owners, without capital at risk, without prices, and especially without profit and loss signals, economies quickly become corrupted and serve only the political class. Nicolás Maduro feasts while poor Venezuelans eat dogs, but of course this isn't "real" socialism.

History and theory don't matter to socialists because they imagine society can be engineered. The old arguments and historical examples simply don't apply: even human nature is malleable, and whenever our stubborn tendencies don't comport with socialism's grand plans a "social construct" is to blame.

These most recent spasms of support for the deadly ideology of socialism remind us that progressives aren't kidding. They may not fully understand what socialism means, but they fully intend to bring it about. Single-payer health care, "free" education, wealth redistribution schemes, highly progressive income taxes, wealth taxes, gun bans, and radical curbs on fossil fuels are all on the immediate agenda. They will do this quickly if possible, incrementally if they have to (see, again, the 20th century). They will do it with or without popular support, using legislatures, courts and judges, supranational agencies,university indoctrination, friendly media, or whatever political, economic, or social tools it takes (including de-platforming and hate speech laws). This is not paranoia; all of this is openly discussed. And say what you will about progressivism, it does have a central if false ethos: egalitarianism.

Conservatives, by contrast, are not serious. They have no animating spirit. They don't much talk about liberty or property or markets or opportunity. They don't mean what they say about the Constitution, they won't do a thing to limit government, they won't touch entitlements or defense spending, they won't abolish the Department of Education or a single federal agency, they won't touch abortion laws, and they sure won't give up their own socialist impulses. Trumpism, though not conservative and thoroughly non-intellectual, drove a final stake through the barely beating heart of Right intellectualism, from the Weekly Standard to National Review. Conservatism today is incoherent, both ideologically and tactically incapable of countering the rising tide of socialism.

Generals always fight the last war, and politics is no different. We all tend to see the current political climate in terms of old and familiar divisions, long-faded alliances, and obsolete rhetoric. We all cling to the comfortable ideology and influences that help us make sense of a chaotic world. As one commenter recently put it, liberal Baby Boomers still think it's 1968 and conservative Baby Boomers still think it's 1985. Generation X and Millennials will exhibit the same blinders. It may be disheartening to keep fighting what should be a long-settled battle against socialism, but today we have no other choice.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Mark Thornton Joins Glenn Beck to Talk Skyscraper Curse

01/10/2019Mark Thornton

Dr. Mark Thornton joined Glenn Beck for an interview on how Austrian economists have predicted every major crisis of the last century. 

The interview begins at the 44:50 mark.

The Skyscraper Curse is available now as a hardback, paperback, e-book, and audiobook at the Mises Store.

The book and audiobook are also available for free in the Mises Library

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Trump's Neocons Reverse His Syria Withdrawal Plan

01/10/2019Ron Paul

I’m starting to wonder whether President Trump has any power over US foreign policy at all. Many people believe that the US president is just a figurehead, with actual foreign policy firmly in the hands of the deep state. Trump’s latest dramatic U-turn on pulling troops from Syria certainly feeds such theories.

When President Trump announced just a couple of weeks ago that the US was removing its troops from Syria and possibly reducing troops from Afghanistan, the neocons, the media, the military-industrial complex, and the left-wing “never-Trump” people were livid. They were silent when President Obama made the horrible decision to overthrow Assad in Syria and sent weapons to jihadists to do so. They never said a word when billions of dollars were committed to this immoral and dangerous “regime change” policy. They weren’t interested in the rule of law when President Obama thumbed his nose at Congress and sent troops into Syria.

But when President Trump declared the obvious – that ISIS was effectively defeated and that we had no business being in Syria – these above groups in unison declared that actually bringing US troops home was a “gift to Russia.” They said bringing US troops home would create instability in the regions they left. Well, is there any proof that occupation by US troops actually brings stability?

No sooner did President Trump announce our departure than his neocon advisors began walking his words back. First he had to endure a lunch with Sen. Lindsey Graham reading him the riot act, where, according to the Senator, Trump agreed to no timetables for departure. Then his National Security Advisor, John Bolton, and his Secretary of State, Mike Pompeo, began to tell the world that President Trump’s statements on troop pullout were just empty words, not US policy.

While Syrian Christians newly liberated from the rule of US-backed extremists celebrated Christmas for the first time in years, John Bolton dusted off the old warning to Assad that the US would attack if he “again” gassed his people. With the Syrian president personally taking part in some of the Christmas celebrations, does anybody really believe he’d go back to his office and order a gas attack?

Bolton then claimed that the US would shift troops from Syria to Iraq to continue fighting ISIS and that the US fully backs Israeli airstrikes on Syrian territory. Did President Trump even agree to any of this?

Even worse, Secretary of State Pompeo is embarking on a Middle East tour where he will essentially tell leaders in the region that the US president is a liar. According to one State Department official quoted in a report on Sunday, Pompeo’s message to the Middle East will be, “Despite reports to the contrary and false narratives surrounding the Syria decision, we are not going anywhere. The secretary will reinforce that commitment to the region and our partners.”

Calling the US president’s actual words on Syria “false narratives”? How is this not insubordination?

Will President Trump stand by and watch this coup taking place under his nose? Does he realize how his credibility suffers when he boldly announces a US withdrawal and the does a U-turn days later? Has he noticed recent polls showing that the majority of the American people agree with him? Why is he so intimidated by the neocons?

Reprinted with permission.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

The Democrats' Opposition to the Electoral College Reveals Their Distaste for Real Democracy

01/04/2019Ryan McMaken

That didn't take long. Now that the Democrats hold a majority in the House of Representatives, Democratic Rep. Steve Cohen (Tenn.) introduced a constitutional amendment to abolish the electoral college.

Cohen surely doesn't expect the legislation to pass. But now that the Democrats have the Speakers' chair and committee chairmanships, Cohen can now get more political mileage out of the bill rather than have it immediately "disappeared" by a Republican House leadership.

The bill does little more than revive the longstanding claim among leftwing populists that the US presidency ought to go to whichever candidate wins a majority of all the votes from all the states added together.

The effect would be to lopsidedly favor heavily urbanized coastal regions over other regions of the US. Without an electoral college, it becomes far more economical for candidates to focus their views and election efforts on a small number of highly-populated regions, while ignoring the rest of the country.

In an age when politicians continually decry how the US is so "divided," abolishing the electoral college would only serve to further drive apart politically distinct regions of the US by eliminating a political institution that encourages candidates to take positions more likely to appease voters outside the areas with the most heavily-concentrated populations.

Moreover, in an age when we're told to decry populism, and embrace a politics of "compromise," a rejection of the electoral college seems rather odd indeed.

After all, the purpose of the electoral college is to ensure that a successful presidential candidate appeals to a broader base of voters than would be the case under a simple majoritarian popular vote.

This, by the way, is a big reason that Hillary Clinton lost, and why the Democrats are convinced the electoral college is stacked against them.

The electoral college makes it harder to win by doing what Clinton did during the 2016 campaign: focus on a thin sliver of rich Hollywood and business elites, coupled with urban ethnics.It's true that those two groups can offer a lot of votes and a lot of campaign dollars. But they also tend to be limited to very specific regions, states, and metro areas.

The groups Clinton ignored: the suburban middle class and working class make up a much larger, more geographically diverse coalition. This can be seen in the fact that Trump won such diverse states as Alabama, Pennsylvania, and Wisconsin.

In 2016, the electoral college worked exactly as it's supposed to — it forces candidates to broaden their appeal. Or as a cynic like myself might say: it forces politicians to pander to a broader base.

There's Nothing "Undemocratic" About the Electoral College

The party-line on the electoral college, of course, has long been that it's undemocratic. In its coverage on Cohen's bill, the Huffington Post editorialized:

Another bill would get rid of the Electoral College, an archaic system of electing presidents that allowed Trump to win the presidency despite his rival, Hilary Clinton, receiving millions more votes.

The conclusion you are supposed to draw here, of course, is that the electoral college works against what we can all see is common sense: that the candidate with the most votes ought to win.

Unfortunately, many supporters of the electoral college adopt this line of thinking as well, and many think the primary benefit of the electoral college is that it's undemocratic. These claims are often accompanied by tiresome bromides about how the United States is allegedly "a republic not a democracy."

The truth, however, is not that the electoral college is undemocratic. It is, in fact, more democratic.

It's true that the electoral college prevents Clinton-style demagoguery. But 50 separate presidential elections (plus DC and the territories) is not somehow less democratic than holding one big national election. It's simply a democratic method designed to ensure more buy in from a larger range of voters, not less. Other similar tactics include "double majorities" as used in Switzerland. And for all these reasons, as I note here, the electoral college should be expanded:

Double-majority and multiple-majority systems mandate more widespread support for a candidate or measure than would be needed under an ordinary majority vote.

Unfortunately, in the United States, it is possible to pass tax increases and other types of sweeping and costly legislation with nothing more than bare majorities from Congress which is itself largely a collection of millionaires with similar educations, backgrounds, and economic status. Even this low standard is not required in cases where the president rules via executive order with " a pen and ... a phone ."

In response to this centralization of political power, the electoral college should be expanded to function as a veto on legislation, executive orders, and Supreme Court rulings.

For example, if Congress seeks to pass a tax increase, their legislation should be null and void without also obtaining a majority of electoral college votes in a manner similar to that of presidential elections. Under such a scheme, the federal government would be forced to submit new legal changes to the voters for approval. The same could be applied to executive orders and treaties. It would be even better to require both a popular-vote majority in addition to the electoral-vote majority. And while we're at it, let's require that at least 25 states approve the measures as well.

These sorts of measures mean more voting, more debate, and more public buy-in. It prevents knee-jerk policies designed to attack unpopular minority groups. Eliminating the electoral college, on the other hand, moves in exactly the opposite direction.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

When Democratic Compromise Fails: Kosher Slaughter Outlawed in Belgium

01/04/2019Ryan McMaken

On January 1 this year, a new law in the Flemish region of Belgium went into effect, effectively banning kosher slaughter of animals "after regional parliaments introduced prohibitions for animals that have not been pre-stunned."1

According to The Jewish Chronicle:

Shechita is banned in Flanders as of January 1, while similar restrictions will be in place in the French-speaking Walloon region from September 2019.

Local rabbis said it was in direct contradiction to Jewish law, which requires that an animal be uninjured and in optimal health before slaughter.

One added that the Belgian measures were putting Jewish lives “at risk.”

The motivation behind the new laws comes in part from concerns over animal welfare. Thus, Belgian lawmakers had to choose between religious freedom for Jews and animal welfare. They chose the animals.

Clearly, there is a fundamental conflict of values here between those motivated by animal welfare, and those motivated by religious freedom.

We see similar conflicts between advocates for religious freedom and those who oppose male circumcision, and between the two sides in the abortion debate. We see it in debates over bans on Muslim head coverings. In democratic political systems — including those with strong constitutional protections for minorities — the majority opinion eventually wins out. Constitutions can be changed, and what the majority considers to be "right" will eventually become the position of all institutions.

Moreover, in cases like kosher slaughter, the activities being targeted are no mere preferences. They touch on fundamental values, and they present a clear conflict with other value systems. In cases such as these, where there is no apparent room for compromise. And if there is no "middle ground," whose values ought to prevail?

Democracy Doesn't Always Work

Throughout most of the West, of course, we're all taught from an early age that "democracy" will allow everything to work itself out. The parties in conflict will enter into "dialogue," will arrive at a "compromise" and then everyone will be happy and at peace in the end.

But, that's not how it works in real life. While there are some areas for compromise that can be found around the edges of issues such as moral values and ethnic identity, the fact is that in the end, kosher meats are either legal or they're not. Circumcision is either legal or it's not. Abortion is either legal or it's not. Muslim head coverings are either legal or they're not.

After all, if one group of people believes that a 3-month-old fetus is a parasite that has trespassed against the mother, those people are going to find little room for compromise with a group of people who think the same fetus is a person deserving legal protection.

Indeed, we see the shortcomings of democracy at work every time this latter issue comes up. One side calls the other killers who are complicit in the killing of babies. The other side calls their opponents rubes and barbarians, probably motivated by little more than crazed misogyny. Similar dynamics, of course, are present in cases involving animal rights, circumcision, and headscarves. One side thinks that their side is the only acceptable option for virtuous people. "Virtue," of course, can be defined any number of ways. Some are so blinded by their cultural biases, in fact, that they even conclude that no "civilized" person could possibly believe that, say, circumcision is anything other than a barbaric practice.Those who continue to believe in such things must therefore be forced "into the 21st century" by the coercive power of the state. Their religious beliefs, as Hillary Clinton demanded in 2015, "have to be changed."

These problems also exist under authoritarian, non-democratic regimes. But anti-democrats usually admit that the state is using force to support one side over the other. Democrats, on the other hand, often prefer to indulge in comforting fictions. What many supporters of democracy refuse to admit is that there is no peaceful debate that will solve this conflict. The conflict is philosophical and moral in nature. And, so long as both sides are forced to live under a single legal system, any "compromise" will take the shape of one side imposing its position on the other by force. In the end, the losing side will be taxed to support the regime that disregards its views and forces compliance with laws made by the winning side.

Those on the winning side, of course, don't see any problem here. What the minority thinks of as "oppression" is really — according to the winners — just "modernization," "progress," "decency," "common sense," or simply "the will of the majority." The fact that the enforcement of that will of the majority is founded on state violence is of little concern.

The Solution: Secession and Decentralization

Ludwig von Mises, who was himself a democrat, offered a solution to the problem of democratic majorities: self-determination through secession and decentralization.

For Mises, populations must not be forced perpetually into states where they will never be able to exercise self-determination due to the presence of a more powerful majority. On a practical level then, populations in regions, cities, and villages within existing states must be free to form their own states, join other states with friendlier majorities, or at least exercise greater self-government via decentralization.

Moreover, in order to accommodate the realities of constantly-changing populations, demographics, and cultures, borders and boundaries must change over time in order to minimize the number of people as members of minority populations with little to no say in national governments controlled by hostile majorities.

In Mises's vision, there is no perfect solution. There will always be some minority groups that are at odds with the ruling majority. But, by making states smaller, more numerous, and more diverse, communities and individuals stand a better chance of finding a state in which their values match up with the majority. Large unitary states, however, offer exactly the opposite: less choice, less diversity, and fewer changes to exercise self-determination.

The Option of Decentralized Confederations

Nor do all political jurisdictions need to be totally independent states. Mises himself advocated for the use of confederation as a solution to problems of cultural and linguistic minorities. Confederations might be formed for purposes of national defense and diplomacy, Mises noted. But in any country with a diverse population, in order to maintain internal peace, self-government of domestic affairs must be kept localized and so as to minimize the ability of a majority group to dominate a minority group.

Mises didn't invent this idea, of course. This sort of confederation was justified on similar grounds by the founders of the Swiss Confederation and the United States. Moreover, while not planned out ahead of time, the government of Austria-Hungary was by necessity decentralized to minimize internal conflict. In cases such as these, matters of language, religion, education, and even economic policy must be handled by the local majority, independent of any nationwide majorities. Or else democracy becomes little more than a tool for the winning coalition to bludgeon the losing coalition.

For decades, this worked at various times in the United States. On the matter of abortion, for instance, Americans agreed prior to Roe v Wade to allow abortion laws to be determined at a local level and be kept out of the hands of the national government. Public schools — and what was taught in them — were governed almost exclusively by local school boards and state governments. Even immigration policies and linguistic issues were decided by local majorities, and not by national ones. So long as these matters remained local matters they were irrelevant to national politics. Under these conditions, a victory for one party or another at the national level has little impact on the daily practice of one's religion, moral values, or schooling.

As localized democracy turns into mass democracy, however, majorities exercise increasing power over minority groups. Each election becomes a nationwide referendum on how the majority shall use its power to crush those who pose a threat to the prevailing value system. Even worse, when there is one nationwide "law of the land" there is no escape from its effects, save to relocate hundreds of miles away to a foreign land where the emigrant must learn a new language and a new way of life far from friends and family.

Needless to say, as this sort of democratic centralization increases, the stakes become higher and higher. The potential for violence becomes greater, and the disenfranchisement of minority groups becomes ever more palpable.

Mises understood well what the end game to this process is. It's political and social unrest — followed by political repression to "restore" order. War may even follow. For Mises, the need to guarantee localized self-determination was no mere intellectual exercise for political scientists. It was a matter essential to the preservation of peace and freedom. We would do well to take the matter as seriously as he did.

  • 1. The law also bans "halal" slaughter, which is basically the Muslim version of kosher slaughter, and is extremely similar. Not surprisingly, the law's passage was motivated in part by anti-Muslim sentiment in Belgium, although antimale welfare was the most-often used justification for the legislation.
Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Rough Times Ahead, But Liberty Can Still Win

01/02/2019Ron Paul

While Congress and the president fight over funding a border wall, they continue to ignore the coming economic tsunami caused by the approximately 22 trillion dollars (and rapidly increasing) federal debt. President Trump may not be troubled by the debt’s effect on the economy because he believes he will be out of office before it becomes a major problem. However, the crisis may come sooner than he, or most people in DC, expects.

The constituency for limited government, while growing, is still far outnumbered by those wanting government to provide economic and personal security. From lower-income Americans who rely on food stamps, public housing, and other government programs, to middle-class Americans who live in homes they could not afford without assistance from federal agencies like Fannies Mae and Freddie Mac, to college students reliant on government-subsidized student loans, to senior citizens reliant on Social Security and Medicare, to billionaire CEOs whose companies rely on bailouts, subsidies, laws and regulations written to benefit politically-powerful businesses, and government contracts, most Americans are reliant on at least one federal program. Many programs are designed to force individuals to accept government aid. For example, it is almost impossible for a senior citizen to obtain health insurance outside of Medicare.

The welfare state is fueled by the Federal Reserve’s easy money policies, which are also responsible for the boom-and-bust cycle that plagues our economy. The Federal Reserve’s policies do not just distort our economy, they also distort our values, as the Fed’s dollar depreciation causes individuals to forgo savings and hard work in favor of immediate gratification. This has helped create an explosion of business and individual debt. There has been a proliferation of bubbles, including in credit card debt, auto loans, and student loans. There is even a new housing bubble.

An economy built on fiat currency and public and private debt is unsustainable. Eventually the bubbles will burst. The most likely outcome will be the rejection of the dollar’s world reserve currency status due to government debt and the Federal Reserve’s monetization of debt. When the bubbles pop, the result will be an economic crisis that will likely dwarf the Great Depression.

The fall of the dollar and the accompanying economic downturn will make it impossible for the government to continue running up huge debts to finance a massive welfare-warfare state. Thus, Congress will be forced to raise taxes and cut benefits. Cowardly politicians will likely outsource the job of raising taxes and cutting benefits to the Federal Reserve. This will cause a dramatic increase in the most insidious of taxes: the inflation tax.

As the Federal Reserve erodes the value of the dollar, thus reducing the value of both earned paychecks and government-provided welfare benefits, a large number of Americans who believe they are entitled to economic security will react by engaging in acts of violence. Politicians will use this violence to further crack down on civil liberties. The resulting economic and civil unrest will further the growth of authoritarian political movements.

Fortunately, the liberty movement continues to grow. This movement counters the authoritarian lies with the truths of Austrian economics and the non-aggression principle. While the years ahead may be tough, if those of us who know the truth work hard to educate others, the cause of liberty can prevail.

Reprinted with permission.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Hopes and Fears for 2019

For the third year in a row, Dan Mitchell offers his list of things he "Hopes and Fears" from the new year. Topics include Trump, Latin America, and the resolution of Brexit. 

We’ll start with things I hope will happen in the coming year.

  • Hard Brexit – There is a very strong long-run argument for the United Kingdom to have a full break with the European Union. Unfortunately, the political establishment in both London and Brussels is conspiring to keep that from happening. But the silver lining to that dark cloud is that the deal they put together is so awful that Parliament may vote no. Under current law, that hopefully will lead to a no-deal Brexit that gives the U.K. the freedom to become more free and prosperous.
  • Supreme Court imposes limits of Washington’s power – I didn’t write about the fight over Brett Kavanaugh’s nomination to the Supreme Court because I don’t know if he believes in the limits on centralized power in Article 1, Section 8. But I’m semi-hopeful that his vote might make the difference in curtailing the power of the administrative state. And my fingers are crossed that he might vote with the Justices who want to restore the Constitution’s protection of economic liberty.
  • Gridlock – Some people think gridlock is a bad thing, but it is explicitly what our Founders wanted when they created America’s separation-of-powers system. And if the alternative to gridlock is politicians agreeing to bad policy, I will cheer for stalemate and division with great gusto. I will be perfectly content if Trump and House Democrats spend the next two years fighting with each other.
  • Maduro’s ouster – For the sake of the long-suffering people of Venezuela, I’m going to keep listing this item until it eventually happens.
  • Limits on the executive branch’s power to impose protectionism – Trade laws give a lot of unilateral power to the president. Ideally, the law should be changed so that any protectionist policies proposed by an administration don’t go into effect unless also approved by Congress.

Here are the things that worry me for 2019.

  • Recession-induced statism – If there’s an economic downturn this year, then I fear we might get an Obama-style Keynesian spending orgyin addition to all the things I just mentioned.
  • More protectionism – Until and unless there are limits on the president’s unilateral power, there is a very real dangers that Trump could do further damage to global trade. I’m particularly concerned that he might pull the U.S. our of the very useful World Trade Organization and/or impose very punitive tariffs on auto imports.
  • Fake Brexit – This is the flip side of my hope for a hard Brexit. Regardless of the country, it’s not easy to prevail when big business and the political elite are lined up on the wrong side of an issue.

Sadly, I think my fears for 2019 are more likely than my hopes.

And I didn’t even mention some additional concerns, such as what happens if China’s economy suffers a significant downturn. I fear that is likely because there hasn’t been much progress on policy since the liberalization of the 1980s and 1990s.

Or the potential implications of anti-market populism  in important European nations such as Germany, Sweden, and Italy.

Last but not least, we have a demographic sword of Damocles hovering over the neck of almost every nation.

Demographic-Samuelson-Table.jpg

That was a problem last year, it’s a bigger problem this year, and it will become an even-bigger problem in future years.

We know the right answer to this problem, but real solutions are contrary to the selfish interests of politicians.

Facebook icon
LinkedIn icon
Twitter icon
When commenting, please post a concise, civil, and informative comment. Full comment policy here
Shield icon power-market-v2