Monday, July 02, 2012

Why Don't People Get It?

Even now, people think nothing of professing their attachment to socialist ideology at cocktail parties, at restaurants serving abundant foods, and lounging in the fanciest apartments and homes that mankind has ever enjoyed. Yes, it is still fashionable to be a socialist, and — in some circles within the arts and academia — socially required. No one will recoil. Someone will openly congratulate you for your idealism. In the same way, you can always count on eliciting agreement by decrying the evils of Walmart and Microsoft.

Isn't it remarkable? Socialism (the real-life version) collapsed nearly 20 years ago — vicious regimes founded on the principles of Marxism, overthrown by the will of the people. Following that event we've seen these once-decrepit societies come back to life and become a major source for the world's prosperity. Trade has expanded. The technological revolution is achieving miracles by the day right under our noses. Millions have been made far better off, in ever-widening circles. The credit is wholly due to the free market, which possesses a creative power that has been underestimated by even its most passionate proponents.

What's more, it should not have required the collapse of socialism to demonstrate this. Socialism has been failing since the ancient world. And since Mises's book Socialism (1922) we have understood that the precise reason is due to the economic impossibility of the emergence of social order in the absence of private property in the means of production. No one has ever refuted him.

And yet, even now, after all this, professors stand in front of their students and decry the evil of capitalism. Bestselling books make anticapitalism the theme. Politicians parade around telling us about the glorious things that the government will accomplish when they are in charge. And every evil of the day, even those directly caused by the government (airline delays, the housing crisis, the never-ending crisis in public schooling, the lack of healthcare for everyone) are blamed on the market economy.

As an example, the Bush administration nationalized airline security after 9/11, and hardly anyone even questioned that this was necessary. The result was an amazing mess that is visible to every traveler, as delays pile on delays and humiliation became part of the rubric of travel by flight. And yet who gets the blame? Read the letters to the editor. Read the mountains of copy written by journalists covering this issue. The blame is heaped on the private airlines. The solution follows: more regulation, more nationalization.

How can we account for this appalling display? There are two primary factors. The first is the failure of people to understand economics and its elucidation of cause and effect in society. The second is the absence of imagination that such ignorance reinforces. If you don't know what causes what in society, it is impossible to intellectually grasp the proper solutions or imagine how the world would work in the absence of the state.

The educational gap can be overcome. To think in economic terms is to realize that wealth is not a given or an accident of history. It is not bestowed on us like rain from above. It is the product of human creativity in an environment of freedom. The freedom to own, to make contracts, to save, to invest, to associate, and to trade: these are the key to prosperity.

Without them, where would we be? In a state of nature, which means a dramatically shrunken population hiding in caves and living off what we can hunt and gather. This is the world in which human beings found themselves until we made something of it, and it is the world we can slip back into should any government ever manage to take away freedom and private property rights completely.

This seems like a simple point but it is one that evades vast swaths of even the educated public. The problem comes down to a failure to understand that scarcity is a pervasive feature of the world and the need for a system that rationally allocates scarce resources to socially optimal ends. There is only one system for doing so, and it is not central planning but the free-market price system.

Government distorts the price system in myriad ways. Subsidies short-circuit market judgments. Product bans cause the ascendance of less desirable goods and services over more desirable ones. Other regulations slow down the wheels of commerce, thwart the dreams of entrepreneurs, and foil the plans of consumers and investors. Then there is the most deceptive form of price manipulation: monetary management from the Federal Reserve.

The larger the government, the more our living standards are reduced. We are fortunate as a civilization that the progress of free enterprise generally outpaces the regress of government growth, for if that were not the case, we would be poorer each year — not just in relative terms, but absolutely poorer too. The market is smart and the government is dumb, and to these attributes do we owe the whole of our economic well-being.

The second part of our educational task — imaging how a market-run world would function — is much more difficult. Murray Rothbard once remarked that if the government were the only producer of shoes, most people would be unable to imagine how the market could possibly produce them. How could the market accommodate all sizes? Wouldn't it be wasteful to produce styles for every taste? What about fraudulent shoes and poor quality producers? And shoes are arguably too important a good to turn over to the vicissitudes of market anarchy.

Well, so it is with many issues today, such as welfare. Among the first objections to the idea of a market society is that the poor will suffer and have no one to care for them. One response is that private charity can handle it, and yet we look around and see private charities handling only comparatively small tasks. The sector just isn't big enough to pick up where government leaves off.

This is where imagination is required. The problem is that government services have crowded out private ones and reduced private-sector services beyond what they would be in a free market. Before the age of the welfare state, charities in the 19th century were a vast operation comparable in size to the largest industries. They expanded according to need. They were mostly provided by the churches through donations, and the ethic was there: everyone gave a portion of the family budget to the charitable sector. A nun like Mother Cabrini ran a charitable empire.

But then in the progressive era, ideology changed. Charity came to be considered a public good, something to be professionalized. The state began to encroach on territory once reserved to the private sector. And as the welfare state grew throughout the 20th century, the comparative size of the private sector shrank. As bad off as we are in the United States, it is nothing compared with Europe, the continent that gave birth to charitable services. Today, few Europeans donate a dime to charity, because everyone is of the belief that this is a government service. Moreover, after high taxes and high prices, there isn't much left over to donate.

It is the same in every area the government has monopolized. Until FedEx and UPS came along to exploit a loophole in the letter of the law, people couldn't imagine how the private sector could deliver mail. There are many similar blind spots today in the area of justice provision, security, schooling, medical care, monetary policy, and coinage services. People are aghast at the suggestion that the market should provide all these, but only because it requires mental experiments and a bit of imagination to see how it is possible.

Once you understand economics, the reality that everyone sees takes on a new significance. Walmart is not a pariah but a glorious achievement of civilization, an institution that has finally put to rest that great fear that has pervaded all of human history: the fear that the food will run out. In fact, even the smallest products dazzle the mind once you understand the incredible complexity of the production process and how the market manages to coordinate it all toward the end of human betterment. The achievements of the market suddenly appear in sharp relief all around you.

And then you begin to see the unseen: how much more secure we would be with private security, how much more just society would be if justice were privatized, how much more compassionate we would be if the human heart were trained by private experience rather than government bureaucracies.

And what makes the difference? The socialist and the advocate of free markets observe the same facts. But the person with economic knowledge understands their significance and implications. It is that bit of education that makes the difference. This is why we must never underestimate the central role of teaching about economics. Facts will always be with us. Wisdom, however, must be taught. Achieving a culture-wide understanding of liberty and its implications has never been more important.



Another Great Society Joins the Trash Heap of History

While the exact date of the fall of the Roman Empire is disputed — there are even some of us, myself included, who say Rome never fell — many, if not most, historians accept English historian Edward Gibbons’ date of Sept. 4, A.D. 476.

He chose that date in his seminal work, “The History of the Decline and Fall of the Roman Empire,” which, ironically, was published in six volumes, the first at the beginning of the American Revolutionary War and the last just before ratification of the current U.S. Constitution. The date was the day when Emperor Romulus Augustus was deposed by the German Odoacer, leader of the Foederati, or foreign mercenaries.

Odoacer, for his part, refused to take the title “emperor” though he essentially ruled as one. A few years later, the Roman Senate officially dissolved the Western Empire, though the Eastern Empire would exist for another millennium.

Choosing the date of the fall of the Roman Empire is really an academic exercise. If you were to borrow my time machine and go back to that fateful Sept. 4 day and talk to average Romans in the streets, they would tell you the empire had not fallen. Indeed, Odoacer and his successors maintained most of the Roman administrative state and all its trappings.

Sometimes it seems as though people believe that one day the Roman Empire was there and the next day, everything was gone.

In reality, what had fallen on that date was the “essence” of what made the Roman Empire the Roman Empire.

If you once again borrow my time machine and travel two millennia into the future and ask historians when the American empire fell, most will probably say it occurred on June 28, A.D. 2012, or the equivalent in whatever dating system is in place in 2,000 years.

That is the date that U.S. Chief Justice John Roberts and four of his colleagues declared the federal government no longer has any limitations to its power over our daily lives. That is not hyperbole. NFIB v. Sebelius will go down in legal history as the worst Supreme Court decision since 1857’s Dred Scott v. Sandford.

However, and for this you need no time machine, very few Americans today will agree that the American empire has fallen. Similar to their Roman counterpart of the fifth century, the average American will fail to recognize the significant change that occurred.

That is the typical way empires fall. There is no huge crash. They just gradually die from within until historians begin debating when the collapse took place. Just as in the Sept. 4, 476, date for the fall of Rome, June 28, 2012, is when the essence of America ended.

The American experiment was one that entailed limited and specifically enumerated powers for its central government. Now, with Roberts’ linguistic gymnastics and sophomoric logic turning a penalty into a tax, there are no limits to what the federal government can do.

If, for example, the U.S. Congress wished to mandate that everyone buy anything from electric cars to broccoli, or zoot suits to jelly beans, it can now do so. The only limitation, really, is that Congress can’t use the Commerce Clause to do so but, instead, will have to rely on its taxing authority. That, of course, has no significance to anyone outside the legal profession. The result is the same: A federal government with unlimited power to control our daily lives.

That, my friends, is, for all intents and purposes, the end of the American experiment. The Constitution is now meaningless because the idea of the Enumerated Powers Doctrine, already weakened by 80 years of Commerce Clause abuse, is now dead. Congress can do what it wants, when it wants. Only politics stands in the way. And politics is no protector of liberty.

To be sure, the decision, in the end, will be a victory for Republicans. I have no doubt that it will result in a huge GOP win in November. And the GOP might even actually repeal Obamacare because, despite its unconstitutionality, it is simply bad law. It is unaffordable, irresponsible and unaccountable. It is overly expensive at $1.76 trillion and will increase taxes by $500 billion in the next 10 years. It puts bureaucrats between doctors and patients and ultimately will decrease the quality of care in the United States, just as similar measures in other countries have done.

It is also simply wrong in a free country.

The idea that the central government (I doubt we can even call it a “federal government” anymore) can force Americans to purchase a product is repugnant to those who value living in a free country, or at least what used to be a free country.

Even so, the long-term damage is done. Recall, Dred Scott led to a war and took a constitutional amendment to cleanse. I doubt even that can salvage the former American empire.



The Obamacare decision also imposed some limits on the Feds

Some concerns from the Left below

The Supreme Court’s decision in National Federation of Independent Business v. Sebelius—the healthcare cases—was a tremendous political victory for the Obama administration and, more importantly, the tens of thousands of Americans who will be saved from illness and death by the law. But make no mistake: the decision could also be a significant legal victory for the political forces committed to limiting the state’s ability to care for the weak and fragile among us.

In the hours after the health care decision was handed down, many commentators crowed over Chief Justice John Roberts’s statesman-like craft in putting together a moderate opinion that, in different parts, managed to unite the left and the right of the Court. They are half right. The opinion may be statesman-like, but it’s ultimately radical, endorsing a view of Congress’s power that had few, if any, takers until it was embraced by the Republican Party and its Tea Party flag-bearers. Indeed, it may even contain a seed that could unravel important benefits of the Affordable Care Act.

The immediate effect of the decision, of course, is that the law’s implementation can proceed. But on the one hand, Roberts, with four liberal justices, held that the individual mandate was constitutional as an exercise of Congress’s taxing power. On the other hand, Roberts joined the four conservative justices in stating that he believed that the same mandate could not be upheld under Congress’s Commerce Clause power. This should not to be overlooked. The Commerce Clause is the central plank of Congressional authority, employed to support everything from the Environmental Protection Agency to the civil rights laws. Flouting the usual rule that judges must avoid addressing unnecessary constitutional questions, Roberts made it clear that his new limitation on the Commerce Clause power was necessary to his opinion, and hence arguably binding on future courts.

In the second part of his opinion, Roberts and a coalition of six justices invalidated one aspect of the Medicaid expansion. Medicaid is one of many important “conditional spending” programs, in which Congress uses its spending power to give money to the states, but attaches conditions to the grant. The Court had never invalidated such a program on constitutional grounds. Yesterday, though, the Court held that although the federal government could condition the Medicaid expansion on the specific funding assigned to that expansion, it could not defund a state’s Medicaid program entirely if the state refused to expand the program. In effect, the Court viewed the states as akin to Methadone addicts, so dependent on their ongoing fiscal fix that the federal government had a constitutional obligation to hook them up.

Remember, there were two key points of constitutional controversy before the Court in the health care cases: first, whether the mandate is valid under the Commerce Clause, and second, whether the Medicaid expansion is a use of federal spending that improperly coerces the states.

But it is the spending clause part of the opinion that may have the more significant ramifications. While the Court has previously invalidated rules related to federal grants to states with strings attached on the ground that those strings were not articulated clearly enough, it has never before struck down a conditional spending effort as coercive—until yesterday. Apart from the puzzling question of how a non-natural entity such as a state can be “coerced,” Roberts’s explanation of this holding is unclear. Provided a federal grant is large enough and has continued for long enough, he might be read to say, the states acquire a right to it in perpetuity.

The reason this portion of the opinion is ground for concern is that it opens the door to extensive new litigation by the states to fight off regulatory mandates in other policy areas, from education to highway maintenance. The federal government often uses conditions on federal grants to pressure states into complying with important legal and policy mandates. Now it’s unclear how many of those conditions are good law. Precisely because it cannot be clearly understood, Roberts’s opinion invited new challenges by the states and new judicial decisions unraveling the regulatory net that keeps states in compliance with many important mandates on everything from civil rights to the environment.




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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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