Archive for the ‘F.A. Hayek’ Category

It would seem that no advanced civilization has yet developed without a government which saw its chief aim in the protection of private property, but that again and again the further evolution and growth to which this gave rise was halted by “strong” government.

Governments strong enough to protect individuals against the violence of their fellows make possible the evolution of an increasingly complex order of spontaneous and voluntary cooperation.

Sooner or later, however, they tend to abuse that power and to suppress the freedom they had earlier secured in order to enforce their own presumedly greater wisdom and not to allow “social institutions to develop in a haphazard manner” (to take a characteristic expression that is found under the heading ‘social engineering’ in the Fontana/Harper Dictionary of Modern Thought (1977)).

- F.A. Hayek, The Fatal Conceit: The Errors of Socialism

Hayek

He begins this discussion in Chapter 2 of the book and references classical antiquity and the trading societies surrounding the Mediterranean as a prime example of nations that went through that rise and decline, but as noted, modern society is going through much the same thing.  The Anointed, to borrow Thomas Sowell’s phrase, know better and begin to “nudge” society where they want it to go.  As Jonah Goldberg noted, American totalitarianism and government control comes with a smiley face, though they’re making pseudo-erudite academic arguments for more outright thuggery.

“The natural progress of things is for liberty to yield, and government to gain ground.”

- Thomas Jefferson

It’s a little break from blogging the relentless assault on Second Amendment rights.  It’s worth noting the same people who hate the free market are typically the same ones who hate firearms rights, or any citizen freedoms.

From Forbes & ZeroHedge:

President Barack Obama managed to overtake Republican challenger Mitt Romney on the exit poll question “Who is better for the economy?” and a strong majority of Obama voters felt that the economy is better off than four years ago. Indeed, anyone (particularly Bernanke) would concede that without the Fed’s zero interest rate policy we would be experiencing a far worse economy—the true Obama-Keynesian economy.

The danger here, as we have seen in every other bust for a century or more, is that we can only suspend the laws of economics for so long. And in general we are only good at considering immediate consequences, while being very, very bad at considering later consequences. As 19th century French economist Frédéric Bastiat observed, “The bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.”

In the short run (and this is what is so insidious about the Fed’s artificially low interest rates), all we are seeing is an illusion of economic progress. Specifically, the Fed has manufactured a distortion intended to trap both consumers into spending more and entrepreneurs into investing more, or lengthening their production periods (becoming more “roundabout,” as the Austrian School economists said), as if savings were more plentiful. This combination would never occur in an unhampered, noninterventionist economy for the simple fact that higher consumption would mean higher interest rates (from less savings), which would discourage longer production.

Thus, investment in this illusory economy is malinvestment, or investment that always unravels with the intervention’s inevitable end, due to either untenable credit levels (such as today’s corporate debt-to-asset ratio, still at historic highs) or a resource crunch (rising commodity prices) that eliminates any advantage from printing money; and one or both of these scenarios is unavoidable.

Economic progress requires a chain reaction from lower time preferences: foregone current consumption and a higher pool of savings lowers interest rates and triggers a natural entrepreneurial response, greater productivity, and subsequent economic growth. (The “Paradox of Thrift” that warns of the hazards of higher savings is the nonsensical stuff of the ivory tower.) By circumventing this process, as we have today, we have built but a temporary façade.

Worth reading more highlights at ZeroHedge or the whole thing at Forbes.

Long story short, we’re kicking the can down the road.  There will be very hard times ahead financially due to this.

Also worth revisiting:

From MSNBC:

German police officers fired a total of 85 bullets in 2011, 49 of which were warning shots, the German publication Der Spiegel reported. Officers fired 36 times at people, killing six and injuring 15. This is a slight decline from 2010, when seven people were killed and 17 injured. Ninety-six shots were fired in 2010.

Meanwhile, in the United States, The Atlantic reported that in April, 84 shots were fired at one murder suspect in Harlem, and another 90 at an unarmed man in Los Angeles.

I love these kinds of stories because they’re so simple in what they’re trying to imply, yet how quickly they fall apart as a narrative.  The clear objective of them is to show how wonderfully marvelous Europe, European government control, and enlightened Europe is, and how backwards and gun-oriented we are in the US.

People are free to make bad decisions in the US.  And once deadly force is used it’s deadly force, whether it’s one round fired or one hundred.

“Our police officers are no thugs in uniform,” Lorenz Caffier, interior minister of Mecklenburg-Vorpommern, said at a press conference Tuesday.

“It is gratifying that the use of firearms by police officers against people is declining,” Caffier added.

It’s gratifying only if there is a lack of crime that necessitates fewer violent encounters.  Otherwise the police could be running away or ignoring crime, especially in Gastarbeiter neighborhoods.

There’s a joke about the difference between heaven and hell.  They’re the same, except different nationalities have different professions.  In heaven, the English are the cops, the Germans are the engineers, the Italians are the cooks, the French are the lovers, and the Swiss run everything.  In hell, the Germans are the cops, the English are the cooks, the Italians are the engineers, the Swiss are the lovers, and the French run everything.

Thing is, there’s little comparison in those statistics.  The German police deal with a mostly homogenous, aging society that for the most part doesn’t have that much crime.  There’s also the argument that they lost a lot of alpha males and their genes in WWI and then WWII, so they don’t even have the risk-taking types who end up skirting the line and becoming criminals anyway.   The US has a naturally more volatile society, but we have a more free society.  We have multiple ethnic groups (and as posted recently, we even have illegal criminal invaders), we have a vast, free country that leaves people to their own ends to a greater degree than Germany.

Ultimately, a few criminals and the regrettable, tragic losses of life that come from conflicts with the law that aren’t resolved well are a small price to pay.  See, there’s a reason the “Germans are the cops” line applies to hell.

F.A. Hayek dedicated entire chapters in The Road To Serfdom explaining why the worst get on top in a socialist system (slightly less so in other systems) – because ultimately, such a system is totalitarian, and desires control.  A system which makes for a pacified society ultimately leads to the violence at the hands of government authorities and police as per in Germany’s not-too-distant past.  Otto von Bismarck’s socialist state that began offering government benefits set the stage for a government with more and more and more control.

Ultimately, many of the instruments of government control were already in place by the time things got far worse.

American law enforcement, where some 150+ officers were killed in 2011, and a greater number of criminals were killed, even when spread out over 300 million people, looks like a large number.  Assuming that American cops kill ten times the number of officers killed, we could guess there are some 1500 people killed by law enforcement each year (a few internet searches couldn’t pull up a real number, so I’m just making that up based on a 10:1 ratio).

Just because I’m making numbers up, let’s assume it’s more like 5,000 per year.  Totally made up number.  It will still take 1200 years of 5,000 per year to equal Germany just from their famous years, and that’s with Germany’s lowest estimate.  More than likely it’d take some 2400 years, and that’s not including East Germany’s actions for 40 years, the actions of the Kaiser or Bismarck before a decidedly anti-freedom Austrian made Germany’s police famous.

Over at the Daily Beast, David Frum has this piece:

Read This Book, Obama!
by David Frum Apr 15, 2012 4:00 PM EDT

Emerging from JFK’s shadow, Lyndon Johnson wielded power ruthlessly—and delivered big results for liberals. In this week’s Newsweek, David Frum on what Obama could learn from Robert Caro’s new biography.

A great work of history is never only about the past.

The fourth volume of Robert Caro’s great biography of Lyndon Johnson—The Passage of Power—tells a story from seemingly long ago. Page after page conjures up a vanished world: a world in which labor unions had clout and lunch counters were segregated. Yet it’s also a world deeply familiar to us: a world in which urgent national problems go unaddressed year after year, and Americans despair over the paralysis of their government.

But no, we don’t.  We despair over government acting too much, spending too much money, printing money to create inflation to sustain itself, and we despair over government creating perpetual recipient-class voter blocs.  We despair over government that’s run amok, spending and spending and spending with no end in sight.  We despair over government’s absurdities, not society’s.  And in the 1960s, the labor unions had clout through government power, and the segregated lunch counters were being desegregated not through government force, but by people sitting down and demanding to be served.

This lunch counter isn’t famous because of government, it’s famous because of a sit-in.

For nobody, perhaps, is this turn of history more challenging than for Robert Caro himself. Over more than 2,500 pages of powerful prose, Caro has summoned Lyndon Johnson to vivid, intimate life. We come to know him better, thanks to Caro’s remorseless research, than almost any of Johnson’s contemporaries could have hoped to do. It’s not an attractive picture. Caro’s Johnson is a bully and braggart, a wheedler and manipulator, a man of bad personal morals and worse business ethics.

And it is this, frankly, monstrous character who realized more of Caro’s liberal ideals than any politician in modern times, Franklin Delano Roosevelt very much included—and vastly more than the charming, winning, but domestically ineffectual JFK.

In a story already rich with drama, this tension between author and subject—between Caro’s loathing of Johnson and his reverence for Johnson’s accomplishments—is the tensest drama of all.

How did Johnson do it?

Here is Caro’s disconcerting message: Johnson didn’t do it by inspiring or exhorting. He did it by mobilizing political power, on a scale and with a ruthlessness that arguably surpassed all other presidents, before or since.

The ends justify the means.  Hayek had something worth noting on this:

Advancement within a totalitarian group or party depends largely on a willingness to do immoral things. The principle that the end justifies the means, which in individualist ethics is regarded as the denial of all morals, in collectivist ethics becomes necessarily the supreme rule. There is literally nothing which the consistent collectivist must not be prepared to do if it serves “the good of the whole,” because that is to him the only criterion of what ought to be done. Once you admit that the individual is merely a means to serve the ends of the higher entity called society or the nation, most of those features of totalitarianism which horrify us follow of necessity. From the collectivist standpoint intolerance and brutal suppression of dissent, deception and spying, the complete disregard of the life and happiness of the individual are essential and unavoidable. … To be a useful assistant in the running of a totalitarian state, therefore, a man must be prepared to break every moral rule he has ever known if this seems necessary to achieve the end set for him. In the totalitarian machine there will be special opportunities for the ruthless and unscrupulous.

Meanwhile, LBJ had this to say:

"I'll have those n*ggers voting Democratic for the next 200 years." -- Lyndon B. Johnson to two governors on Air Force One according Ronald Kessler's Book, "Inside The White House"

The monstrous character realized leftist, socialist, Modern Liberal ideas through ruthless force.  The left has found the moral equivalent of war and ruthless application of force appealing since the Progressive Era of the early 1900s.  The end justifies the means.  They find the means “monstrous” but choose them because they really want the ends.  So why does something “good” have to be achieved at the cost of massive applications of force, corrupt men of “monstrous character”?  Because it’s the tyranny, stupid.

The lunch counter sitters and protest marchers were winning the hearts and minds of the public.  Civil disobediance won the day.  It showed the noble character of the both the mission and the people.

Johnson, by contrast, was the same ruthless monster the left loves to be ashamed of, but emulates and desires to be again and again.

It’s hard not to detect in these pages an unspoken critique of Barack Obama. Yes, certainly, Obama shares Lyndon Johnson’s gift for driving opponents crazy, if it is a gift. But the use of power Caro so vividly describes is not something that comes naturally to our current president. The constant searching for opportunities; the shameless love-bombing of opponents; the endless wooing of supporters; the deft deployment of inducements and threats—these are the low arts that led to Johnson’s high success.

Obama is fundamentally opposed to the success of the nation.  He doesn’t “drive opponents crazy”, he infuriates his opponents because they don’t find the US to be a cruel nation in need of “fundamental transformation”.  We have been a classic liberal representative republic focused on liberty.  What about that needs changing?

LBJ’s successes were ultimately at the cost of the nation.  Thomas Sowell often writes of what the black family was like in the 1950s and 1960s, and did a specific piece on black-owned businesses in California which were destroyed by LBJ’s “Great Society”, he often notes that political rhetoric never matches the effects in reality.

LBJ cared about power.  He is respected by the left for his use of power.  They find it “monstrous” but so appealing.  It’s as though they can get something done… their programs always need more money, more regulations, more authority; their campaigns always need more votes – no matter how they cheat to get them; they always need more power, power to control…

Hayek & Keynes Revisited

Posted: April 12, 2012 by ShortTimer in Economics, F.A. Hayek, free markets, Music

Posted this a while back in two parts, but it’s worth going back to:

Part 1: Fear The Boom and Bust

Part 2: Fight of the Century

Milton Friedman discussing Friedrich Hayek’s the Road To Serfdom back in 1994.  As relevant again today as ever.

Part 1:

Part 2:

Part 2 is perhaps the more interesting of the two, especially around the 12 minute mark on.  Friedman points out that experience may be more important than the influences of books or television; and how people have seen the failures in the former Soviet Union and the successes in Asia and the Pacific where unfettered economies succeeded.  Arguably the internet and the 24 hour news cycle has become even more important, because it shortens the memory and lessens experience, but as he mentions, it’s a sophisticated question not easily answered.

Some important quotes:

If an experiment in private enterprise is unsuccessful people lose money and they have to close it down.  If an experiment in government is unsuccessful, it’s always expanded.

Particularly relevant to the health care debate:

The founders of our country believed in individual freedom, believed in leaving people be, letting them be alone to do… whatever they wanted to do.  But our government has been increasingly departing from those Constitutional principles.  You know there’s a provision in the Constitution that congress shall not interfere with interstate commerce.  That provision had some meaning at one time.  But it has no meaning now at all.  Our courts have ruled that anything you can think of is interstate commerce and so the government exercises extensive control over things that it has no business interfering with.

Around the 17 minute mark, Friedman begins dissecting the Federal Reserve.

At the 19 minute mark, Friedman discusses the collapse of the nation under debt.  His belief was that the changes in public perception were going to allow the people to halt the expansion of government.

In response to why socialists would be happier about the history of the last 50 years (before 1994, though it works the same today) at the 21 minute mark:

Because the story they tell is a very simple story – easy to sell.  If there’s something bad, it must be an evil person who’s done it.  If you want something done, you’ve got to do it – you’ve got to have government step in and do it.

The story Hayek and I want to tell is a much more sophisticated and complicated story.  That somehow or other there exists this subtle system in which without any individual trying to control it there is a system in which people in seeking to promote their own interests will also promote the well being of the country – Adam Smith’s invisible hand.  Now that’s a very sophisticated story.  It’s hard to understand how you can get a complex interrelated system without anybody controlling it.  Moreover the benefits from government tend to be concentrated.  The costs tend to be dispersed.  To each farmer the subsidy he gets from the government means a great deal.  To each of a much larger number of consumers it costs very little.  And consequently those who feed at the trough of government tend to be politically much more powerful than those who provided the wherewithal.

Eloquently stated and encapsulating the relationship between people and government very succintly.

Afterwards he breaks down what parties mean what – bringing up liberalism as classical liberalism, and states he’s libertarian in philosophy, though not party.  He mentions Hillarycare in passing as incredibly socialist.  The EIC that he mentions at the end he supported as a replacement for all welfare programs with the EIC, a “negative income tax”, that helps to establish a baseline income.  He ended up fighting against it, because as we all know, the EIC just became another welfare program, not a replacement for the patchwork of welfare that was already in place.

Well worth watching.

And as a reminder:

No, the other Hayek.

From Chapter 11: The End of Truth

The most effective way of making everybody serve the single system of ends toward which the social plan is directed is to make everybody believe in those ends.  To make a totalitarian system function efficiently, it is not enough that everybody should be forced to work for the same ends. It is essential that hte people should come to regard them as their own ends.  Although the beliefs must be chosen for the people and imposed upon them, they must become their beliefs, a generally accepted creed which makes the individuals as far as possible act spontaneously in the way the planner wants.  If the feeling of oppression in totalitarian countries is in general much less acute than most people in liberal countries imagine, this is because the totalitarian governments succeed to a high degree in making people think as they want them to.

This is, of course, brought about by the various forms of propaganda.  Its technique is now so familiar that we need say little about it.

Choice architectureNudge.  A velvet glove on the iron fist.

Hayek elaborates on pg 174:

The most effective way of making people accept the validity of the values they are to serve is to persuade them that they are really the same as those which they, or at least the best among them, have always held, but which were not properly understood or recognized before.  The people are made to transfer their allegiance from the old gods to the new under the pretense that the new gods really are what their sound instinct had always told them but what before they had only dimly seen.  And the most efficient technique to this end is to use the old words but change their meaning.  Few traits of totalitarian regimes are at the same time so confusing to the superficial observer and yet so characteristic of the whole intellectual climate as the complete perversion of language, the change of the meaning of the words by which the ideals of the new regime are expressed.

The worst sufferer in this respect is, of course, the word “liberty.”  It is a word used as freely in totalitarian states as elsewhere.  Indeed, it could almost be said – and it should serve as a warning to us to be on our guard against all the tempters who promise us New Liberties for Old – that wherever liberty as we understand it has been destroyed, this has almost always been done in the name of some new freedom promised to the people.  Even among us we have “planners for freedom” who promise us a “collective freedom for the group,” the nature of which may be gathered from the fact that its advocate finds it necessary to assure us that “naturally the advent of all planned freedom does not mean that all [sic] earlier forms of freedom must be abolished.”  Dr. Karl Mannheim, from whose work these sentences are taken, at least warns us that “a conception of freedom modelled on the preceding age is an obstacle to any real understanding of the problem.”  But his use of the word “freedom” is as misleading as it is in the mouth of totalitarian politicians.  Like their freedom, the “collective freedom” he offers us is not the freedom of the members of society but the unlimited freedom of the planner to do with society what he pleases.  It is the confusion of freedom with power carried to the extreme.

A simple example is universal single-payer health care.  It’s to provide freedom from the evil insurance companies.  It provides “freedoms” as quoted here in remarks by a speaker at a press conference by Nancy Pelosi:

The new law has not only given me the freedom to stay covered, but has also freed me and my family from the fear that an insurer could drop me at any moment or limit me to go without treatment.

The “freedom to stay covered” is at the expense of someone else – at the expense of the individuals who make up an insurance company, or at the expense of the individual taxpayer.  Their freedom is traded for this patient’s priviledge.  Being “free” from “fear” that he could be dropped means that the insurer, or taxpayer, is now enslaved to his treatment.  He is now a guaranteed recipient of the labor of individuals, whether those individuals who also purchase insurance from a company, and now face increased premiums because of this government-protected claimant, or he is dependant on the taxpayer to cover his bill.  Ultimately, he is “free” only insomuch as he takes from someone else.

He is not free to choose a less expensive company, or free to go to a non-profit charity that would look out for his special case and would desire to help him – he is “free” by shackling others to his needs.  That is not freedom – that is parasitism enforced by the state.  Person A now must pay for Person B’s medical needs because Person B is “free” from the costs.

Hayek continues on pg 175:

In this particular case the perversion of the meaning of the word has, of course, been well prepared by a long line of German philosophers and, not least, by many of the theoreticians of socialism.  But “freedom” or “liberty” are by no means the only words whose meaning has been changed into their opposites to make them serve as instruments of totalitarian propaganda.  We have already seen how the same happens to “justice” and “law,” “right” and “equality.”  The list could be extended until it includes almost all moral and political terms in general use.

This is a major, major point.  This is why “liberals” today are intolerant, closed-minded people.  Virtually every aspect of who they are is the exact opposite of what they are.  They fight for “social justice” which is just redistribution, they fight for “human rights” that include health care, and even food – which cannot be rights – as they come at the expense of others.  They call themselves progressives, but they don’t progress towards greater liberty for the individual, they progress towards greater power for what the state “must do on your behalf“.  This is regressive, towards the totalitarianism of dictatorships and kings, not towards the greater well-being of the individual.  Liberal in Hayek’s day meant closer to what libertarian or even conservative means today.  Not what libertarian or conservative is demonized as by the political left/progressives, but what they actually are.

It is for this reason that conservative author/radio host Mark Levin refers almost exclusively to the left as statists, as their main function is to expand government to their own ends.  Also note that there are right-wing, or socially traditionalist/conservative statists, who are often simply a different brand of moralist from the leftist statist.  The leftist statist wants you to stop drinking and smoking for your health and because it’s good for you, the rightist statist wants you to stop drinking and smoking because it’s “fiend intemperance”.  The leftist statist will force you to drive a hybrid car because of his Gaia-worship, the rightist statist will force businesses to close on Sunday to keep the Sabbath holy.

A major difference is that a rightward traditionalist in America, a mindset which often goes hand in hand with the moralist, can still be reminded that a reason the country was founded, and indeed the 1st Amendment was written, was to escape state-mandated religion.  The leftist, by contrast, believes that history started last week, and will reject the past as outmoded and obsolete in their own quest for power and The Greater Good.  As Thomas Sowell writes in his book “The Vision of the Anointed”:

“For the anointed, traditions are likely to be seen as the dead hand of the past, relics of a less enlightened age, and not as the distilled experience of millions who faced similar human vicissitudes before.”

Returning to Hayek, pg 175:

If one has not one’s self experienced this process, it is difficult to appreciate the magnitude of this change of the meaning of words, the confusion which it causes, and the barriers to any rational discussion which it creates.  It has to be seen to be understood how, if one of two brothers embraces the new faith, after a short while he appears to speak a different language which makes any real communication between them impossible.  And the confusion becomes worse because this change of meaning of the words describing political ideals is not a single event but a continuous process, a technique employed conciously or unconciously to direct the people.  Gradually, as this process continues, the whole language becomes despoiled, and words become empty shells deprived of any definite meaning, as capable of denoting one thing as its opposite and used solely for the emotional associations which still adhere to them.

To sidetrack a while from the explicitly political, using a pop culture reference as an example, you can see how freedom has changed.  Most of the readers of this blog will know who this is.  On the off chance we have some very young readers or very old readers, this is Optimus Prime, leader of the Autobots – the good guy Transformers.

His motto: “Freedom is the right of all sentient beings.”

Now consider this online discussion amongst a group of Transformers fans.  Here are a few lines from the discussion, starting off with forum member “Octavius Prime” (hereafter OP) citing a movie review that had this line:

(Movie Review): And when Optimus Prime, the chief good Transformer, declares that “Freedom is the right of all sentient beings,” we know we’re in a Bush-era universe.

(OP): if the reviewers had done maybe 10 minutes of online research (say, on the Teletraan-1 wikia), they’d know that Prime has been spouting his line since before Bush’s dad was president. Moreover, what is so bad about freedom being a basic right? Isn’t that in the hugging Declaration of Independence? What is so quintessentially “Bush” about it?

(SD): Pretty much a case of people shooting words off before doing proper research, and an annoyingly over-liberal mindset. I mean, I don’t care for Bush, to put it lightly, but I also don’t wedge my political views into whatever I type/write.

(S): I can see how that line might be used by the likes of Bush to justify a war like Iraq (the lie that the war is all about human freedom rather than oil).

(PTP): Technically we were in a Regan-era universe when it was written, which isn’t all that much better…

(OP): Maybe, but I still don’t see how the motto that encapsulates democracy would be reduced to represent someone’s biased view of the Bush administration.

(D): I’d be hard pressed to vote for a president who didn’t believe in the basic right of freedom.  I mean there’s liberal, and then there’s blindedly liberal. Gah.

(TNG): I don’t really get why anyone would think that “Freedom is the right of all sentient beings” is a particularly conservative viewpoint. Definitions of exactly what freedom means may differ within the political spectrum but I don’t think you’d find many democrats arguing against freedom as a basic human right.

Liberals=progressives=statists, specifically here, anti-Bush statists, who are competing for the same space as state controllers.  Thus Freedom=Bush talking point.  Freedom=bad, to liberals, who are really progressives, who are really leftist-statists.  Also thus the word liberal, which is supposed to mean accepting of others, is now explicitly anti-freedom (even just in this discussion).  Liberal has gone so far as to also include Reagan and all non-leftist statists, thus even the original quote by Optimus Prime waaay back in about 1984 is rejected as being related to Reagan, Republicans, and therefore to a Liberal is a Bad Thing.

According to the leftist-statist, when Bush says freedom, it means ruthless oppression, even if it is freeing a nation from an actual ruthless oppressor.  Don’t bother them with the facts.  Criticism of a poor operational plan and shoddy intelligence (that leftist-statists agreed on) turned into a rejection of freedom in its entirety.  Leftist rejection of Bush-era domestic policies (that pretty much only targeted terrorists, but that should definitely be questioned in Constitutional interests) including the Patriot Act turned into Bush hates freedom.  This year when the Patriot Act was renewed by Barack Obama, without any of the reforms that were complained about during the Bush-era… well, Obama is still a good-guy to the leftist-statist, because he’s their guy there for The Greater Good.

Liberal is anti-freedom, freedom is oppression, progressive is statist.

Even the notions of left and right are reversed.  In France in 1789, at the French Assembly, the rebels who resisted the state sat on the left, while the supporters of the state sat on the right.  Except the French state was a monarchical state that didn’t represent the people, and had subjects, not citizens.  A rebel to the French state would be resisting tyranny.

The United States, by contrast, were formed by the people, for the people, and of the people.  The government was explicity designed to respond to the citizenry, and to be accountable to the citizenry.  The Constitution itself was a charter document designed to constrain any government to the initial agreement that the citizens had made when they settled on a government.  Consider first that the Declaration of Independence was a rejection of tyranny that called for the people to institute a government from the people, then consider that a government, instituted by the citizenry who choose their government, is how the democratic republic set up by the Constitution was designed.

Thomas Paine explains in concrete terms what a Constitution is:

But it will be first necessary to define what is meant by a Constitution. It is not sufficient that we adopt the word; we must fix also a standard signification to it.

A constitution is not a thing in name only, but in fact. It has not an ideal, but a real existence; and wherever it cannot be produced in a visible form, there is none. A constitution is a thing antecedent to a government, and a government is only the creature of a constitution. The constitution of a country is not the act of its government, but of the people constituting its government. It is the body of elements, to which you can refer, and quote article by article; and which contains the principles on which the government shall be established,  the manner in which it shall be organised, the powers it shall have, the mode of elections, the duration of Parliaments, or by what other name such bodies may be called; the powers which the executive part of the government shall have; and in fine, everything that relates to the complete organisation of a civil government, and the principles on which it shall act, and by which it shall be bound. A constitution, therefore, is to a government what the laws made afterwards by that government are to a court of judicature. The court of judicature does not make the laws, neither can it alter them; it only acts in conformity to the laws made: and the government is in like manner governed by the constitution.

The Constitution is static.  It is what the government is based on, and the laws that the government, in order to remain legitimate and existing upon the consent of the people, must adhere to.  Being on the left in the US and rejecting the established Constitutional order is rejecting a truly classically radical liberal document that enshines the rights and liberties of all citizens.  Being on the left is pushing for statism.  Being a conservative who wishes to conserve Constitutional principles is being a classical liberal, a radical libertarian – one who is opposed to the idea of a controlling state.

Religious liberalism and conservatism became injected into political liberalism and conservatism, as well as social liberalism and conservatism – but there is a wide gulf between what one preaches in one’s private or even public life, and what one inflicts through force of government.  Conservative has come to mean statist-religious, liberal to mean statist-humanist/statist-Gaia-or-Science-worshipper.

In this, the leftist-progressive-statist has changed the entire discussion by changing the meaning of words.  For another example: the religious-statist who would use force of government rather than persuasion has changed the word conservative to also mean moralist authoritarian – a term the leftist-statist is very much willing to embrace, as it drives people into their camp – to accept the “freedom from religion” that then turns into trying to destroy the religions of others – which is explicitly illiberal.  Another example: fascism was a brand of statist totalitarianism wherein the economic means of production were controlled by the state, but not always wholly owned.  Communists attacked fascists, with whom they were competing for the same leftist anti-capitalist statist-totalitarian space on the political spectrum, and accused fascists of being capitalist.  Fascism, descended from national socialism as opposed to communist international socialism, suddenly became its opposite, when the two are nary a hair’s breadth apart.  Yet the modern leftist-statist who favors socialism as an economic means to his Greater Good, will accuse someone who opposes them of being a national socialist.

Paine set up concretely what a Constitution is.  Those who support it, must support it for what it is.  It is a compact between we the citizen and those citizens we choose to serve us.  Words do mean something.  Our Constitution was established as a document that can change through the amendment process, but it is not to be manipulated until freedom means slavery.  But that is precisely what the leftist-statist has embraced (as well as the rightist-statist to a lesser degree).  George Orwell summed much of this up with his coining of the term “Newspeak” in his book “1984″ several years after The Road to Serfdom had been published.  As Orwell says in “1984″:

By 2050—earlier, probably—all real knowledge of Oldspeak will have disappeared. The whole literature of the past will have been destroyed. Chaucer, Shakespeare, Milton, Byron—they’ll exist only in Newspeak versions, not merely changed into something different, but actually contradictory of what they used to be. Even the literature of the Party will change. Even the slogans will change. How could you have a slogan like “freedom is slavery” when the concept of freedom has been abolished? The whole climate of thought will be different. In fact there will be no thought, as we understand it now. Orthodoxy means not thinking—not needing to think. Orthodoxy is unconsciousness.

Sadly, Orwell himself was a democratic socialist, basically a theory of benevolent socialism, but that can be the subject for another tl;dr post.

Lest I forget, the other Hayek:

Eventually I’ll just end up with pictures of chicks from Vienna to represent the Austrian School.

Previously, on The Patriot Perspective.

What our generation has forgotten is that the system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not.  It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we has individuals can decide what to do with ourselves.  If all the means of production were vested in a single hand, whether it be nominally that of “society” as a whole or that of a dictator, whoever exercises this control has complete power over us.

And who will deny that a world in which the wealthy are powerful is still a better world that one in which only the already powerful can acquire wealth?

- F.A. Hayek, The Road To Serfdom (pg 136)

Why bring this up?  Because of this guy.  We currently have an administration that focuses on “Choice Architecture” by which you will be regulated into doing what they wish.

For an example, consider that Sarah Brady of the Brady Campaign (to ban guns) was told by President Obama that his administration would be working on banning guns “under the radar”.  How does a government do that?  Through regulation.  The ATF famously enforces more regulations than laws (when they’re not supplying guns to cartels to kill Border Patrol and ICE agents, that is), as does the EPA, TSA, and numerous other government agencies that aren’t listed as constitutional functions of government.  What happens when you have someone who is willing to modify regulations to modify behavior is you get situations similar to Australia and Britain.  Gun control there is so strict that even dedicated collectors end up giving up their firearms rather than deal with the hassle, and the average citizen won’t even want to bother, and both are left completely defenseless against crime and tyrannical government.  Power becomes concentrated in the hands of those who hold government positions, and government no longer exists at the consent of the governed, but as a condition of those who rule choosing to do so.

The same applies to the myriad dictates of the EPA which change the costs of your food and fuel, the tax code (which is probably somewhere around 16,000 pages long), TSA regulations that abuse children, and so on and so forth.  Government acquires power and then dictates, government may not seize property as in communist regimes, but it controls the individuals’ use of their own property.  This coercion and “nudging” is mostly a distinction without a difference.

Those who have power are the only ones who can make things comfortable for themselves, at the expense of those who they lord over.  This becomes a system of kings and serfs, wherein the individual is made a slave to the state – the very warning of The Road to Serfdom – a road taken by many nations in the past, and one that demagogues today seek to lead us down “for our own good“.

As soon as the state takes upon itself the task of planning the whole economic life, the problem of the due station of the different individuals and groups must indeed inevitably become the central political problem.  As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.  There will be no economic or social questions that would not be political questions in the sense that their solution will depend exclusively on who wields the coercive power, on whose are the views that will prevail on all occasions.

I believe it was Lenin himself who introduced to Russia the famous phrase “who, whom?” – during the early years of Soviet rule the byword in which the people summed up the universal problem of a socialist society.  Who plans whom, who directs and dominates whom, who assigns other people to their station in life, and who is to have his due allotted by others?  These become necessarily the central issues to be decided solely by the supreme power.

- F.A. Hayek, The Road To Serfdom (pg138-139)

This is where redistribution comes in.  This is where the “Obama Money” comes in.  In the US, the fedgov has already used some 16,000 pages of tax code to take in money, and now it decides where to spend it and how, and also how much to borrow from China to continue spending on its pet projects.  This is a major reason why we’re in the economic conditions we’re in.  Politicians have promised so much with other people’s money (often Hu Jintao’s money) that they continue to spend that money due to political pressures of the zero-liability voter recipient class.

Many of the current crop of politicians agree that spreading other people’s wealth around is a good idea – and the ideological reason is to create equality of outcome (regardless of who has to pull others’ slack), but the political reason is that the people who vote for them want them to plunder from the better-off-than-them.  The politicians have encouraged the nonsense of class warfare and run entire campaigns against “the rich”, promoting a crab in the bucket mentality, rather than removing government barriers impeding individuals so that they may improve their own status, or to show how wealthy even the poor in America are compared to the rest of the world (though they do tell us the rest of the world is poor every time they tell the US that we need to make sacrifices – but that’s more advanced international socialism).

And this is where Hayek comes down to quoting Lenin.  Lenin knew that the socialist state would be one that is totalitarian of necessity, and the only question is how to operate it.  There is no other way that such political structures can be created.  The population must be forced into redistributive socialism, whether through indoctrination, coercion, reduction of choices (Sunstein’s nanny-state tyranny), or outright violence.

It reduces the individuals’ ability to choose, it reduces the free market’s ability to create dynamic solutions to lifes’ problems, but it certainly empowers the socialist in charge.  It creates massive power and authority for the government (no longer by the consent of the governed) that will end up wielded by some supreme governmental power, whether it be by deciding what business lives or dies, or what people live or die.

We just need to get off that Road To Serfdom… maybe put it in low gear…

And now for some less economic Hayek:

Mike in East Texas, a special guest on Charley Jones’ Texas Overnight show on 1080 KRLD, has a very good breakdown on what’s gone on in the last week that serves as a microcosm of the bigger economy.

Part 1
Part 2

The silver crash is of large note, as a lot of people are invested in commodities, and the adjustment to silver came when the New York market silver is traded on came up with a new regulation for silver trading.  This affected oil and gold, which people invested in silver are often also invested in, as they began to dump contracts to try and save their positions.

There’s an artificial bubble in energy driven by speculators, whose belief in high energy prices is pretty unfounded.  With the economy in a recession (or depression), fuels aren’t being used at the same rate – demand is low.  Supply is still at the same level it was before the recession, or close to it.  With shale oil reserves in places like the Bakken Formation and untapped and unused oil wells all across the US, supply really isn’t a problem.  Demand is low.  Speculation is a bubble.

The artificial bubble in precious metals is due to people wanting that oft-advertised “insurance against inflation” and stability – whether the individual buying bullion or the fund manager buying a huge contract.  Once stability is actually provided by level-headed governments, banks will begin loaning again, businesses will begin to expand with the capital they’re sitting on, and PM prices will probably go down.  Of course, with the radical Keynesians in charge, that’s not going to happen for a while, so the bubble will continue – and gold and silver will still be worth quite a bit, but a drop from $50 to $32 in silver is pretty substantial.

Now what’s the key factor that caused silver to change so dramatically?  The market rules changed.

So what’s keeping the economy stagnant?  Change.

Uncertainty for a consumer is a killer.  If you, Jane or Joe Citizen, wants to make a purchase of X item, but don’t know how much X item is going to cost, you’ll be more likely to hang onto your money, whether X is a house with collapsing value or silver with fluctuating value or even gasoline you don’t need.  Discretionary spending gets cut to nothing in a household, because you have to get the things you need before you get the things you want.

Uncertainty for a business is a killer.  Do you want to open that new factory?  Will the government put new regulations on you?  Do you want to hire that new employee?  Will taxes go up because government won’t stop spending?  When your taxes go up, can you keep that new employee?  Can you open the new factory if they put a new tax on factories?  What if they send the unions after you?  Will the government make you pay for health care?  Will health care pass, be ruled unconstitutional, and then be enacted anyway, even after being ruled illegal?

That dynamic change, that fundamental change of the American system, with the observable intent by even former supporters of “change” of remaking the nation in a socialist-communist model, is something that rightfully leaves business and individuals scared to spend.  Banks, being businesses, aren’t willing to spend on other people’s projects if they don’t think they’ll come to fruition – and people don’t ask for the money if they don’t think they can pay it back.  It keeps businesses, individuals – the entire economy stagnant.

Now, mind you the stock market looks great… but that’s because businesses are all streamlining.  That’s why unemployment is so high, and that’s not even taking into account the real unemployment numbers which include those who have “left the workforce” by being unemployed more than 6 months.  Businesses are going lean and maximizing profit and minimizing loss as much as possible just to stay alive.  That makes them more attractive with regards to stocks.  Employees who aren’t of the highest value are going away – and govt is watching them arrive on unemployment, even if it starts writing them off as having “left the workforce”.

Stability and certainty and rule of law mean that things can be accomplished.  It means you’re willing to buy that house because you know your taxes won’t jump.  You can build that factory because the government won’t change the definintion of dust or declare every breath you exhale illegal.

Nothing distinguishes more clearly conditions in a free country from those in a country under arbitrary government than the observance in the former of the great principles known as the Rule of Law.  Stripped of all technicalities, this means that government in all its actions is bound by rules fixed and announced beforehand – rules which make it possible to forsee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge.

- F. A. Hayek

Someday I'll find some other economists that share names with hot chicks.

And a final positive note, I’ll give credit where it’s due, even if I do so grudgingly.  Obama did a good job of not screwing up getting Osama.  I’d give Obama non-grudging credit if it weren’t for the odd circumstances of the disposal of Osama’s body, the odd way the operation was conducted, the blathering by his useless VP who outed the SEALs, the multiple stories about how the engagement went down, and the inherent hypocrisy in most of Obama’s stances concerning Gitmo and the War on Terror.

I think this sums up quite a bit of it:

Thanks to Jawa Report.

Barry, you’re downright hostile to the nation, your wife hated the country until you got to be a presidential candidate, you utterly lie about transparency, you insult people living next to a war zone when they demand you do your job, and you’re actively working to install people whose life goals are to destroy the nation.  But you let the people who had to kill Osama kill him, so good work.  Especially for someone who loves to meddle and install meddlers, you didn’t f*ck it up.  Good job, Mr. President.  If for some crazy reason you’re reading this blog, you know that’s about the highest praise you’re going to get, unless…

You did a decent job following one of Bush’s policies that worked – and you left the military alone and you let it work.  Now sir, if you want to change something Bush did and actually do it better, remember what he said right before he left office – “I’ve abandoned free market principles to save the free market.”  Barry, you need to abandon Keynesian-socialist-communist meddling and that will let the free market work!  If you want to jumpstart the economy, let the people work on their own – let us live free.

Then do yourself a favor and read The Road To Serfdom, Atlas Shrugged, and the Constitution.  Toss in some books by Sowell, Friedman; and then swing by A Human Right.  Then swing on by my place, I’ll give you a tour of where I work, and we can go have a beer – I’ll even buy the first round.