Monday, 25 July 2016

Vic Crone: “Talk is cheap”

 

This morning my inbox received an email from Victoria Crone. Yours may have too. “Talk is cheap,” she said. “We need a Mayor with fresh ideas who can actually deliver real results. Check out my 10 point plan for housing.”

So, thirsty for fresh ideas, I did.

They weren’t.

There were a lot of platitudes though.

Her first idea, after the hand-wringing boiler plate – her point number one? She wants to host a “housing summit.” A talk-fest. A whole festival of cheap talk. You can already feel all the good vibrations.

But that’s not all. She would also “put communities back at the heart of neighbourhood development,” whatever that means. She woud “release,” land faster than anyone else, “partner” with cronies, and “get tough” on land banking by slapping a huge rates bill on anyone not building what she wants. Not nice, and hardly either fresh or effective.

Not fresh either are ideas to speed up consenting, infrastructure, online consenting, or “aligning Unitary Plan intensification around key transport modes” -- all either being done (allegedly) or under way – or a nonsensical plan mentioned occasionally by the economically illiterate to force developers to build “a mix” of affordable houses in new developments.

So what is new and fresh from the Crone? A report card. A Mayor Crone led council would “provide user-friendly quarterly report cards on progress.”

And that’s it. Her ten fresh ideas. As a perceptive commenter said when she pasted these on Facebook, “It seems these 10 points basically deliver more government: more talk, more bureaucrats, more penalties.”

Talk is cheap, Ms Crone? Well, yes it is.. And bullying bureaucrats are ten-a-plenty.

Auckland doesn’t need another.

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Question for the Day: Do low-wage immigrants make us all poorer?

 

“No,” says John Stuart Mill:

The exportation of labour and capital from [one country to another], from a place where their productive power is less to a place where it is greater, increases by so much the aggregate produce of the labour and capital of the world.  It adds to the joint wealth of the [both countries].
~ Principles of Political Economy, V.xi s50

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Friday, 22 July 2016

Mises: Liberty & Property

 

In some ways, says Jeffrey Tucker, “I think this might be the single most inspiring and informative – and profoundly true – essay that Ludwig Von Mises ever wrote. I've read it a hundred times and each time I find more in it. Some examples are dated but not by much. It speaks a profound truth.”


Liberty and Property
by Ludwig Von Mises

This paper was originally delivered as a lecture at Princeton University, October 1958, at the 9th Meeting of the Mont Pelerin Society.

I

AT THE END of the eighteenth century there prevailed two notions of liberty, each of them very different from what we have in mind today referring to liberty and freedom.

The first of these conceptions was purely academic and without any application to the conduct of political affairs. It was an idea derived from the books of the ancient authors, the study of which was then the sum and substance of higher education. In the eyes of these Greek and Roman writers, freedom was not something that had to be granted to all men. It was a privilege of the minority, to be withheld from the majority. What the Greeks called democracy was, in the light of present-day terminology, not what Lincoln called government by the people, but oligarchy, the sovereignty of full-right citizens in a community in which the masses were meteques or slaves. Even this rather limited freedom after the fourth century before Christ was not dealt with by the philosophers, historians, and orators as a practical constitutional institution. As they saw it, it was a feature of the past irretrievably lost. They bemoaned the passing of this golden age, but they did not know any method of returning to it.

Mises1The second notion of liberty was no less oligarchic, although it was not inspired by any literary reminiscences. It was the ambition of the landed aristocracy, and sometimes also of urban patricians, to preserve their privileges against the rising power of royal absolutism. In most parts of continental Europe, the princes remained victorious in these conflicts. Only in england and in the Netherlands did the gentry and the urban patricians succeed in defeating the dynasties. But what they won was not freedom for all, but only freedom for an elite, for a minority of the people.

We must not condemn as hypocrites the men who in those ages praised liberty, while they preserved the legal disabilities of the many, even serfdom and slavery. They were faced with a problem which they did not know how to solve satisfactorily. The traditional system of production was too narrow for a continually rising population. The number of people for whom there was, in a full sense of the term, no room left by the pre-capitalistic methods of agriculture and artisanship was increasing. These supernumeraries were starving paupers. They were a menace to the preservation of the existing order of society and, for a long time, nobody could think of another order, a state of affairs, that would feed all of these poor wretches. there could not be any question of granting them full civil rights, still less of giving them a share of the conduct of affairs of state. The only expedient the rulers knew was to keep them quiet by resorting to force.

II

THE PRE-CAPITALISTIC system of production was restrictive. Its historical basis was military conquest. The victorious kings had given the land to their paladins. These aristocrats were lords in the literal meaning of the word, as they did not depend on the patronage of consumers buying or abstaining from buying on a market. On the other hand, they themselves were the main customers of the processing industries which, under the guild system, were organised on a corporative scheme. This scheme was opposed to innovation. It forbade deviation from the traditional methods of production. The number of people for whom there were jobs even in agriculture or in the arts and crafts was limited. Under these conditions, many a man, to use the words of Malthus, had to discover that “at nature’s mighty feast there is no vacant cover for him” and that “she tells him to be gone.”1 But some of these outcasts nevertheless managed to survive, begot children, and made the number of destitute grow hopelessly more and more.

Mises2But then came capitalism. It is customary to see the radical innovations that capitalism brought about in the substitution of the mechanical factory for the more primitive and less efficient methods of the artisans’ shops. This is a rather superficial view. The characteristic feature of capitalism that distinguishes it from pre-capitalist methods of production was its new principle of marketing. Capitalism is not simply mass production, but mass production to satisfy the needs of the masses. The arts and crafts of the good old days had catered almost exclusively to the wants of the well-to-do. But the factories produced cheap goods for the many. All the early factories turned out was designed to serve the masses, the same strata that worked in the factories. They served them either by supplying them directly or indirectly by exporting and thus providing for them foreign food and raw materials. This principle of marketing was the signature of early capitalism as it is of present-day capitalism. The employees themselves are the customers consuming the much greater part of all goods produced. They are the sovereign customers who are “always right.” Their buying or abstention from buying determines what has to be produced, in what quantity, and of what quality. In buying what suits them best they make some enterprises profit and expand and make other enterprises lose money and shrink.

Thereby they are continually shifting control of the factors of production into the hands of those businessmen who are most successful in filling their wants. Under capitalism private property of the factors of production is a social function. The entrepreneurs, capitalists, and land owners are mandataries, as it were, of the consumers, and their mandate is revocable. In order to be rich, it is not sufficient to have once saved and accumulated capital. It is necessary to invest it again and again in those lines in which it best fills the wants of the consumers. The market process is a daily repeated plebiscite, and it ejects inevitably from the ranks of profitable people those who do not employ their property according to the orders given by the public. But business, the target of fanatical hatred on the part of all contemporary governments and self-styled intellectuals, acquires and preserves bigness only because it works for the masses. The plants that cater to the luxuries of the few never attain big size. The shortcoming of nineteenth-century historians and politicians was that they failed to realise that the workers were the main consumers of the products of industry. In their view, the wage earner was a man toiling for the sole benefit of a parasitic leisure class. They laboured under the delusion that the factories had impaired the lot of the manual workers. If they had paid any attention to statistics they would easily have discovered the fallaciousness of their opinion. Infant mortality dropped, the average length of life was prolonged, the population multiplied, and the average common man enjoyed amenities of which even the well-to-do of earlier ages did not dream.

Mises3However this unprecedented enrichment of the masses were merely a by-product of the Industrial Revolution. Its main achievement was the transfer of economic supremacy from the owners of land to the totality of the population. The common man was no longer a drudge who had to be satisfied with the crumbs that fell from the tables of the rich. The three pariah castes which were characteristic of the pre-capitalistic ages—the slaves, the serfs, and those people whom patristic and scholastic authors as well as British legislation from the sixteenth to the nineteenth centuries referred to as the poor—disappeared. Their scions became, in this new setting of business, not only free workers, but also customers. This radical change was reflected in the emphasis laid by business on markets. What business needs first of all is markets and again markets. This was the watch-word of capitalistic enterprise. Markets, that means patrons, buyers, consumers. There is under capitalism one way to wealth: to serve the consumers better and cheaper than other people do.

Within the shop and factory the owner—or in the corporations, the representative of the shareholders, the president—is the boss. But this mastership is merely apparent and conditional. It is subject to the supremacy of the consumers. The consumer is king, is the real boss, and the manufacturer is done for if he does not outstrip his competitors in best serving consumers.

It was this great economic transformation that changed the face of the world. It very soon transferred political power from the hands of a privileged minority into the hands of the people. Adult franchise followed in the wake of industrial enfranchisement. The common man, to whom the market process had given the power to choose the entrepreneur and capitalists, acquired the analogous power in the field of government. He became a voter.

Mises4It has been observed by eminent economists, I think first by the late Frank A. Fetter, that the market is a democracy in which every penny gives a right to vote. It would be more correct to say that representative government by the people is an attempt to arrange constitutional affairs according to the model of the market, but this design can never be fully achieved. In the political field it is always the will of the majority that prevails, and the minorities must yield to it. It serves also minorities, provided they are not so insignificant in number as to become negligible. The garment industry produces clothes not only for normal people, but also for the stout, and the publishing trade publishes not only westerns and detective stories for the crowd, but also books for discriminating readers.

There is a second important difference. In the political sphere, there is no means for an individual or a small group of individuals to disobey the will of the majority. But in the intellectual field private property makes rebellion possible. The rebel has to pay a price for his independence; there are in this universe no prizes that can be won without sacrifices. But if a man is willing to pay the price, he is free to deviate from the ruling orthodoxy or neo-orthodoxy.

What would conditions have been in the socialist commonwealth for heretics like Kierkegaard, Schopenhauer, Veblen, or Freud? For Monet, Courbet, Walt Whitman, Rilke, or Kafka? In all ages, pioneers of new ways of thinking and acting could work only because private property made contempt of the majority’s ways possible. Only a few of these separatists were themselves economically independent enough to defy the government into the opinions of the majority. But they found in the climate of the free economy among the public people prepared to aid and support them. What would Marx have done without his patron, the manufacturer Friedrich Engels?

______________

1 Thomas R. Malthus, An Essay on the Principle of Population, 2nd ed. (London, 1803), p. 531.

III

WHAT VITIATES entirely the socialists’ economic critique of capitalism is their failure to grasp the sovereignty of the consumers in the market economy. They see only hierarchical organisation of the various enterprises and plans, and are at a loss to realise that the profit system forces business to serve the consumers. In their dealings with their employers, the unions proceed as if only malice and greed were to prevent what they call management from paying higher wage rates. Their shortsightedness does not see anything beyond the doors of the factory. They and their henchmen talk about the concentration of economic power, and do not realize that economic power is ultimately vested in the hands of the buying public of which the employees themselves form the immense majority. Their inability to comprehend things as they are is reflected in such inappropriate metaphors as industrial kingdom and dukedoms. They are too dull to see the difference between a sovereign king or duke who could be dispossessed only by a more powerful conqueror and a “chocolate king” who forfeits his “kingdom” as soon as the customers prefer to patronise another supplier.

Mises5This distortion is at the bottom of all socialist plans. If any of the socialist chiefs had tried to earn his living by selling hot dogs, he would have learned something about the sovereignty of the customers. But they were professional revolutionaries and their only job was to kindle civil war. Lenin’s ideal was to build a nation’s production effort according to the model of the post office, an outfit that does not depend on the consumers, because its deficits are covered by compulsory collection of taxes. “The whole of society,” he said, was to “become one office and one factory.”2 He did not see that the very character of the office and the factory is entirely changed when it is alone in the world and no longer grants to people the opportunity to choose among the products and services of various enterprises. Because his blindness made it impossible for him to see the role the market and the consumers play under capitalism, he could not see the difference between freedom and slavery. Because in his eyes the workers were only workers and not also customers, he believed they were already slaves under capitalism, and that one did not change their status when nationalizing all plants and shops. Socialism substitutes the sovereignty of a dictator, or committee of dictators, for the sovereignty of the consumers.

Along with the economic sovereignty of the citizens disappears also their political sovereignty. To the unique production plan that annuls any planning on the part of the consumers corresponds in the constitutional sphere the one-party principle that deprives the citizens of any opportunity to plan the course of public affairs. Freedom is indivisible. He who has not the faculty to choose among various brands of canned food or soap, is also deprived of the power to choose between various political parties and programs and to elect the officeholders. He is no longer a man; he becomes a pawn in the hands of the supreme social engineer. Even his freedom to rear progeny will be taken away by eugenics.

Of course, the socialist leaders occasionally assure us that dictatorial tyranny is to last only for the period of transition from capitalism and representative government to the socialist millennium in which everybody’s wants and wishes will be fully satisfied.3 Once the socialist regime is “sufficiently secure to risk criticism,” Miss Joan Robinson, the eminent representative of the British neo-Cambridge school, is kind enough to promise us, “even independent philharmonic societies” will be allowed to exist.4 Thus the liquidation of all dissenters is the condition that will bring us what the communists call freedom. From this point of view we may also understand what another distinguished Englishman, Mr. J.G. Crowther, had in mind when he praised inquisition as “beneficial to science when it protects a rising class.”5 The meaning of all this is clear. When all people meekly bow to a dictator, there will no longer be any dissenters left for liquidation. Caligula, Torquemada, Robespierre would have agreed with this solution.

Mises6The socialists have engineered a semantic revolution in converting the meaning of terms into their opposite. In the vocabulary of their “Newspeak,” as George Orwell called it, there is a term “the one-party principle.” Now, etymologically, party is derived from the noun part. The brotherless part is no longer different from its antonym, the whole; it is identical with it. A brotherless party is not a party, and the one-party principle is in fact a no-party principle. It is a suppression of any kind of opposition. Freedom implies the right to choose between assent and dissent. But in Newspeak it means the duty to assent unconditionally and strict interdiction of dissent. This reversal of the traditional connotation of all words of the political terminology is not merely a peculiarity of the language of the Russian Communists and their Fascist and Nazi disciples. The social order that in abolishing private property deprives the consumers of their autonomy and independence, and thereby subjects every man to the arbitrary discretion of the central planning board, could not win the support of the masses if they were not to camouflage its main character. The socialists would have never duped the voters if they had openly told them that their ultimate end is to cast them into bondage. For exoteric use they were forced to pay lip-service to the traditional appreciation of liberty.

_________________

2 V.I. Lenin, State and Revolution (New York: International Publishers, s.d.) p. 84.
3 Karl Marx, Sur Kritik des Sozialdemoskratischen Programms von Gotha, ed. Kreibich (Reichenberg, 1920), p. 23.
4 Joan Robinson, Private Enterprise and Public Control (published for the Association for Education in Citzenship by the English Universities Press, Ltd., s.d.), pp. 13–14.
5 J.G. Crowther, Social Relations of Science (London, 1941), p. 333.

IV

IT WAS DIFFERENT in the esoteric discussions among the inner circles of the great conspiracy. There the initiated did not dissemble their intentions concerning liberty. Liberty was, in their opinion, certainly a good feature in the past in the frame of bourgeois society because it provided them with the opportunity to embark on their schemes. But once socialism has triumphed, there is no longer any need for free thought and autonomous action on the part of individuals. Any further change can only be a deviation from the perfect state that mankind has attained in reaching the bliss of socialism. Under such conditions, it would be simply lunacy to tolerate dissent.

Mises7Liberty, says the Bolshevist, is a bourgeois prejudice. The common man does not have any ideas of his own, he does not write books, does not hatch heresies, and does not invent new methods of production. He just wants to enjoy life. He has no use for the class interests of the intellectuals who make a living as professional dissenters and innovators.

This is certainly the most arrogant disdain of the plain citizen ever devised. There is no need to argue this point. For the question is not whether or not the common man can himself take advantage of the liberty to think, to speak, and to write books. The question is whether or not the sluggish routinist profits from the freedom granted to those who eclipse him in intelligence and will power.

The common man may look with indifference and even contempt upon the dealings of better people. But he is delighted to enjoy all the benefits which the endeavours of the innovators put at his disposal. He has no comprehension of what in his eyes is merely inane hair-splitting. But as soon as these thoughts and theories are utilized by enterprising businessmen for satisfying some of his latent wishes, he hurries to acquire the new products. The common man is without doubt the main beneficiary of all the accomplishments of modern science and technology.

It is true, a man of average intellectual abilities has no chance to rise to the rank of a captain of industry. But the sovereignty that the market assigns to him in economic affairs stimulates technologists and promoters to convert to his use all the achievements of scientific research. Only people whose intellectual horizon does not extend beyond the internal organisation of the factory and who do not realise what makes the businessmen run, fail to notice this fact.

Mises8The admirers of the Soviet system tell us again and again that freedom is not the supreme good. It is “not worth having,” if it implies poverty. To sacrifice it in order to attain wealth for the masses, is in their eyes fully justified. But for a few unruly individualists who cannot adjust themselves to the ways of regular fellows, all people in Russia are perfectly happy. We may leave it undecided whether this happiness was also shared by the millions of Ukrainian peasants who died from starvation, by the inmates of the forced labour camps, and by the Marxian leaders who were purged. But we cannot pass over the fact that the standard of living was incomparably higher in the free countries of the West than in the communist East. In giving away liberty as the price to be paid for the acquisition of prosperity, the Russians made a poor bargain. [In Soviet Russial] they now have neither the one nor the other.

V

ROMANTIC philosophy laboured under the illusion that in the early ages of history the individual was free and that the course of historical evolution deprived him of his primordial liberty. As Jean Jacques Rousseau saw it, nature accorded men freedom and society enslaved him. In fact, primeval man was at the mercy of every fellow who was stronger and therefore could snatch away from him the scarce means of subsistence. There is in nature nothing to which the name of liberty could be given. The concept of freedom always refers to social relations between men. True, society cannot realise the illusory concept of the individual’s absolute independence. Within society everyone depends on what other people are prepared to contribute to his well-being in return for his own contribution to their well-being. Society is essentially the mutual exchange of services. As far as individuals have the opportunity to choose, they are free; if they are forced by violence or threat of violence to surrender to the terms of an exchange, no matter how they feel about it, they lack freedom. This slave is unfree precisely because the master assigns him his tasks and determines what he has to receive if he fulfills it.

As regards the social apparatus of repression and coercion, the government, there cannot be any question of freedom. Government is essentially the negation of liberty. It is the recourse to violence or threat of violence in order to make all people obey the orders of the government, whether they like it or not. As far as the government’s jurisdiction extends, there is coercion, not freedom. Government is a necessary institution, the means to make the social system of cooperation work smoothly without being disturbed by violent acts on the part of gangsters whether of domestic or of foreign origin. Government is not, as some people like to say, a necessary evil; it is not an evil, but a means, the only means available to make peaceful human coexistence possible. But it is the opposite of liberty. It is beating, imprisoning, hanging. Whatever a government does it is ultimately supported by the actions of armed constables. If the government operates a school or a hospital, the funds required are collected by taxes, i.e., by payments exacted from the citizens.

Mises9If we take into account the fact that, as human nature is, there can neither be civilisation nor peace without the functioning of the government apparatus of violent action, we may call government the most beneficial human institution. But the fact remains that government is repression not freedom. Freedom is to be found only in the sphere in which government does not interfere. Liberty is always freedom from the government. It is the restriction of the government’s interference. It prevails only in the fields in which the citizens have the opportunity to choose the way in which they want to proceed. Civil rights are the statutes that precisely circumscribe the sphere in which the men conducting the affairs of state are permitted to restrict the individuals’ freedom to act.

The ultimate end that men aim at by establishing government is to make possible the operation of a definite system of social cooperation under the principle of the division of labor. If the social system which people want to have is socialism (communism, planning) there is no sphere of freedom left. All citizens are in every regard subject to orders of the government. The state is a total state; the regime is totalitarian. The government alone plans and forces everybody to behave according with this unique plan. In the market economy the individuals are free to choose the way in which they want to integrate themselves into the frame of social cooperation. As far as the sphere of market exchange extends, there is spontaneous action on the part of individuals. Under this system that is called laissez-faire, and which Ferdinand Lassalle dubbed as the night-watchman state, there is freedom because there is a field in which individuals are free to plan for themselves.

The socialists must admit there cannot be any freedom under a socialist system. But they try to obliterate the difference between the servile state and economic freedom by denying that there is any freedom in the mutual exchange of commodities and services on the market. Every market exchange is, in the words of a school of pro-socialist lawyers, “a coercion over other people’s liberty.” There is, in their eyes, no difference worth mentioning between a man’s paying a tax or a fine imposed by a magistrate, or his buying a newspaper or admission to a movie. In each of these cases the man is subject to governing power. He’s not free, for, as professor Hale says, a man’s freedom means “the absence of any obstacle to his use of material goods.”6 This means: I am not free, because a woman who has knitted a sweater, perhaps as a birthday present for her husband, puts an obstacle to my using it. I myself am restricting all other people’s freedom because I object to their using my toothbrush. In doing this I am, according to this doctrine, exercising private governing power, which is analogous to public government power, the powers that the government exercises in imprisoning a man in Sing Sing.

Mises10Those expounding this amazing doctrine consistently conclude that liberty is nowhere to be found. They assert that what they call economic pressures do not essentially differ from the pressures the masters practice with regard to their slaves. They reject what they call private governmental power, but they don’t object to the restriction of liberty by public government power. They want to concentrate all what they call restrictions of liberty in the hands of the government. They attack the institution of private property and the laws that, as they say, stand “ready to enforce property rights—that is, to deny liberty to anyone to act in a way which violates them.”7

A generation ago all housewives prepared soup by proceeding in accordance with the recipes that they had got from their mothers or from a cookbook. Today many housewives prefer to buy a canned soup, to warm it and to serve it to their family. But, say our learned doctors, the canning corporation is in a position to restrict the housewife’s freedom because, in asking a price for the tin can, it puts an obstacle to her use of it. People who did not enjoy the privilege of being tutored by these eminent teachers, would say that the canned product was turned out by the cannery, and that the corporation in producing it removed the greatest obstacle to a consumer’s getting and using a can, viz., its nonexistence. The mere essence of a product cannot gratify anybody without its existence. But they are wrong, say the doctors. The corporation dominates the housewife, it destroys by its excessive concentrated power over her individual freedom, and it is the duty of the government to prevent such a gross offense. Corporations, say, under the auspices of the Ford Foundation, another of this group, Professor Berle, must be subjected to the control of the government.8

Why does our housewife buy the canned product rather than cling to the methods of her mother and grandmother? No doubt because she thinks this way of acting is more advantageous for her than the traditional custom. Nobody forced her. There were people—they are called jobbers, promoters, capitalists, speculators, stock exchange gamblers—who had the idea of satisfying a latent wish of millions of housewives by investing in the cannery industry. And there are other equally selfish capitalists who, in many hundreds of other corporations, provide consumers with many hundreds of other things. The better a corporation serves the public, the more customers it gets, the bigger it grows. Go into the home of the average American family and you will see for whom the wheels of the machines are turning.

Mises11In a free country nobody is prevented from acquiring riches by serving the consumers better than they are served already. What he needs is only brains and hard work. “Modern civilisation, nearly all civilisation,” said Edwin Cannan, the last in a long line of eminent British economists, “is based on the principle of making things pleasant for those who please the market, and unpleasant for those who fail to do so.”9 All this talk about the concentration of economic power is vain. The bigger a corporation is, the more people it serves, the more does it depend on pleasing the consumers, the many, the masses. Economic power, in the market economy, is in the hands of the consumers.

Capitalistic business is not perseverance in the once attained state of production. It is rather ceaseless innovation, daily repeated attempts to improve the provision of the consumers by new, better and cheaper products. Any actual state of production activities is merely transitory. There prevails incessantly the tendency to supplant what is already achieved by something that serves the consumers better. There is consequently under capitalism a continuous circulation of elites. What characterises the men whom one calls the captains of industry is the ability to contribute new ideas and to put them to work. However big a corporation must be, it is doomed as soon as it does not succeed in adjusting itself daily anew to the best possible methods of serving the consumers.

But the politicians and other would-be reformers see only the structure of industry as its exists today. They think that they are clever enough to snatch from business control of the plants as they are today, and to manage them by sticking to already established routines. While the ambitious newcomer, who will be the tycoon of tomorrow, is already preparing plans for things unheard of before, all they have in mind is to conduct affairs along tracks already beaten. There is no record of an industrial innovation contrived and put into practice by bureaucrats. If one does not want to plunge into stagnation, a free hand must be left to those today-unknown men who have the ingenuity to lead mankind forward on the way to more and more satisfactory conditions. This is the main problem of a nation’s economic organisation.

Mises 12Private property of the material factors of production is not a restriction of the freedom of all other people to choose what suits them best. It is, on the contrary, the means that assigns to the common man, in his capacity as a buyer, supremacy in all economic affairs. It is the means to stimulate a nation’s most enterprising men to exert themselves to the best of their abilities in the service of all of the people.

________________

6 Robert L. Hale, Freedom Through Law, Public Control of Private Governing Power (New York: Columbia University, 1952), pp. 4 ff.
7 Ibid., p. 5.
8 A.A. Berle, Jr., Economic Power and the Free Society, a Preliminary Discussion of the Corporation (New York: The Fund for the Republic, 1954).
9 Edwin Cannan, An Economist’s Protest (London, 1928), pp. VI ff.

VI

HOWEVER, one does not exhaustively describe the sweeping changes that capitalism brought about in the conditions of the common man if one merely deals with the supremacy he enjoys on the market as a consumer and in the affairs of state as a voter and with the unprecedented improvement of his standard of living. No less important is the fact that capitalism has made it possible for him to save, to accumulate capital and to invest it. The gulf that in the pre-capitalistic status and caste society separated the owners of property from the penniless poor has been narrowed down. In older ages the journeyman had such a low pay that he could hardly lay by something and, if he nevertheless did so, he could only keep his savings by hoarding and hiding a few coins.

Mises13Under capitalism his competence makes saving possible, and there are institutions that enable him to invest his funds in business. A not inconsiderable amount of the capital employed in American industries is the counterpart of the savings of employees. In acquiring savings deposits, insurance policies, bonds and also common stock, wage earners and salaried people are themselves earning interest and dividends and thereby, in the terminology of Marxism, are exploiters. The common man is directly interested in the flowering of business not only as a consumer and as an employee, but also as an investor. There prevails a tendency to efface to some extent the once sharp difference between those who own factors of production and those who do not. But, of course, this trend can only develop where the market economy is not sabotaged by allegedly social policies. The welfare state with its methods of easy money, credit expansion and undisguised inflation continually takes bites out of all claims payable in units of the nation’s legal tender.

The self-styled champions of the common man are still guided by the obsolete idea that a policy that favours the debtors at the expense of the creditors is very beneficial to the majority of the people. Their inability to comprehend the essential characteristics of the market economy manifests itself also in their failure to see the obvious fact that those whom they feign to aid are creditors in their capacity as savers, policy holders, and owners of bonds.

VII

THE DISTINCTIVE principle of Western social philosophy is individualism. It aims at the creation of a sphere in which the individual is free to think, to choose, and to act without being restrained by the interference of the social apparatus of coercion and oppression, the State. All the spiritual and material achievements of Western civilisation were the result of the operation of this idea of liberty.

Mises14This doctrine and the policies of individualism and of capitalism, its application to economic matters, do not need any apologists or propagandists. The achievements speak for themselves.

The case for capitalism and private property rests, apart from other considerations, also upon the incomparable efficiency of its productive effort. It is this efficiency that makes it possible for capitalistic business to support a rapidly increasing population at a continually improving standard of living. The resulting progressive prosperity of the masses creates a social environment in which the exceptionally gifted individuals are free to give to their fellow-citizens all they are able to give. The social system of private property and limited government is the only system that tends to debarbarize all those who have the innate capacity to acquire personal culture.

It is a gratuitous pastime to belittle the material achievements of capitalism by observing that there are things that are more essential for mankind than bigger and speedier motorcars, and homes equipped with central heating, air conditioning, refrigerators, washing machines, and television sets. There certainly are such higher and nobler pursuits. But they are higher and nobler precisely because they cannot be aspired to by any external effort, but require the individual’s personal determination and exertion. Those levelling this reproach against capitalism display a rather crude and materialistic view in assuming that moral and spiritual culture could be built either by the government or by the organization of production activities. All that these external factors can achieve in this regard is to bring about an environment and a competence which offers the individuals the opportunity to work at their own personal perfection and edification.

Mises15It is not the fault of capitalism that the masses prefer a boxing match to a performance of Sophocles’ Antigone, jazz music to Beethoven symphonies, and comics to poetry. But it is certain that while pre-capitalistic conditions as they still prevail in the much greater part of the world makes these good things accessible only to a small minority of people,capitalism gives to the many a favourable chance of striving after them.

From whatever angle one may look at capitalism there is no reason to lament the passing of the allegedly good old days. Still less is it justified to long for the totalitarian utopias, whether of the Nazi or of the Soviet type.

We are inaugurating tonight the ninth meeting of the Mont Pelerin Society. It is fitting to remember on this occasion that meetings of this kind in which opinions opposed to those of the majority of our contemporaries and to those of their governments are advanced and are possible only in the climate of liberty and freedom that is the most precious mark of Western civilisation. Let us hope that this right to dissent will never disappear.


Ludwig von Mises

Ludwig von Mises (1881-1973) taught in Vienna and New York and served as a close adviser to the Foundation for Economic Education (FEE), where this piece was first published.
He is considered the leading theorist of the Austrian School of the 20th century.
Ayn Rand once suggested the best course for an intelligent student would be to study Aristotle in philosophy, von Mises in economics, Montessori in education,and Victor Hugo in literature – “If student minorities,” she said, “have succeeded in demanding that they be given courses on such subjects as Zen Buddhism, guerrilla warfare, Swahili, and astrology, then an intellectual student minority can succeed in demanding courses on [these giants]. At the very least, such courses would save the students' mind; potentially, they would save the culture.”

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Want safer kids? Send them into traffic

 

Heading into work this morning was a breeze. A short, easy trip. I’m guessing your’s has been too, these last two weeks.

Amazing how well the roads work, isn’t it, when kids are enjoying their school holidays and their mummies aren’t driving them to and from bloody school twice a day!  (Four trips every day, plus coffees – take all those trips off the traffic on our clogged roads—four trips multiplied by a frighteningly large proportion of the 770,000 children who attend school every day—and you get roads that work roughly the way they were designed to, and you wouldn’t need to talk about things like charging cars to enter Auckland: A bad idea.)

So the roads work better, and the kids are all better off too. They get to enjoy a little bit of independence.

Q: Why don’t stay-at-home mums stay at home and let their children make their own way to school? Fair question: Crime is decreasing, roads are safer, finding their own way to and from school is a great way to encourage and develop independence … but they don’t. Instead, every morning and every afternoon, these helicopter mummies strap their babies in, cocoon them in the safety bubble of their family car, and then head out to fill up the roads and help ensure their babies never fully grow up.

Want safer kids? Send them into traffic.

It would be much better for all of us.

Think about how important it is for your child to learn independence; place the infinitesimally small (and falling) chance that something bad might happen to them while walking against the certainty that something bad will happen to them if they don’t: they will never fully grow up.

Crikey, even the so-called “walking buses” you see—those regimented cocoons boasting hi-vis-vested volunteers guiding children along the street as if fearful they might show an interest in what’s going on around them—even those are more about exercise than they are independence. Yes, they help everyone else using the roads by keeping a few mummy’s cars off it, but they’re a symptom of helicopter childcare rather than a thirst to break out. If independence is your goal and you do have volunteers who want to help, then why not try this for your “walking bus”: instead of having your volunteers walk with the children as little policemen, with the volunteers taking responsibility for behaviour, have them stand only at the trickier street corners to ensure children know what they’re about there, and take their own responsibility for the rest of their journey.

If you want your children to become adults, then letting them learn how to make their own way is crucial.

Lenore Skenazy from the highly-recommended Free-Range Kids blog (a Free-Range Kid being “a kid who gets treated as a smart, young, capable individual, not an invalid who needs constant attention and help”) offers three tips for helping children become streetwise:

1. Teach them to cross the street. Above and beyond the look-both-ways mantra, Skenazy advised her own sons to make eye contact with drivers when possible at intersections, telling her children that while drivers don’t have the right of way, they often take it.
2. Never multitask while crossing the street. No headphones, music, calling or texting at an intersection.
3. Speaking to strangers can be okay, but never follow one. On public transit, such as with her son’s infamous first solo subway ride, children may want to ask for help with directions, which Skenazy encourages. “You can always talk to a stranger, you cannot go off with a stranger,” she says. And teaching children to only speak to mothers with children or police officers is unnecessary, Skenazy says. “The odds that the person you ask for help is a murderous stranger is very small,” she says. “And most people like to help each other.”

Basically, Skenazy says,

giving your child a free-range childhood gives them a place in the world, not just inside our homes.
    But whether you're letting your 8-year-old walk to school on his own or letting your 6-year-old daughter walk up the path by herself, wannabe free- range parents might consider the story of a 10-year-old kid who rode his bike across the George Washington Bridge to New York City on his own.
    He pedalled 30 kilometres down unfamiliar roads and busy streets, past neighbours and strangers, out into the unknown. "I didn't need help from anyone. It took me all day, but I found the way and did it myself," he recalled.
    This free-range kid went to the moon. His name is Buzz Aldrin.

So instead of more roads and charging cars to enter Auckland: A bad idea, how about we try to get a cultural change

FURTHER READING:

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Thursday, 21 July 2016

It’s not about *national* standards, it’s opposition to any real standards at all!

 

There was a revealing convo about National Standards this morning on NatRad with the Educational Institute's president Louise Green who’s agin. The standards, she says “are just way too narrow.” That they’re still “on trial.” That they’re a “judgement” about a “milestone” that lacks the “richness” of something or other.

To be fair, it wasn’t all that coherent [listen here.], especially when she started into the jargon about “OTJs,” “rich judgement,” “assessment tools,” and “learning conversations.”

She then went on to say it was important to look at “not just reading, writing and mathematics.” These represent, said the head of the Educational Institute “a very narrow area of the curriculum.” Which is good to know, don’t you think?  That the expert opinion of the head of the state’s Educational Institute thinks reading, writing and mathematics is only a very narrow area of the curriculum.

So, without wanting to be too narrow, I wondered just what her own ideal curriculum might be filled with? Fortunately, she went on to tell us (it was an extremely informative five minutes) blustering on about what would replace standards in her world, about something called “rich reporting,” and things like parent open days, “celebrations of learning,” (the jargon was rich here, I can tell you) and “learning conversations” that, in her mind, are superior to the standards she opposed.

So I looked up the most appallingly jargon-ridden term: “learning conversations,” to discover it described by a similarly mus-minded part of the Ministry of Miseducation as:

_Quote_IdiotLearning as dialogue between students and students, and teachers and students, in which meaning and learning is constructed.

Learning that is constructed out of dialogue!? What would that look like? How would you go about that? Here’s how, they say:

_Quote_IdiotCreate a group/class matrix for students to track who they have 'learning talk' with on a particular day or over a period of time.

And

_Quote_IdiotCo-create 'learning talk' prompts such as: 'the hardest thing is...' 'another way of thinking about this is...' it's easier to do this when...' 

Does that look any form of assessment you can recognise? Or even some kind of genuine learning? Why don’t you sit down right now and write down a group/office matrix to track who you’ve had 'learning talks' with today, and learn for yourself exactly how much you get out of it.

You can certainly see, if this is any part of your idea for an idealised curriculum, how you’d object to the idea of any measurable standards at all; and how there’d be very little time left over in your ideal curriculum for the narrow area—sorry, the very narrow area—of reading, writing and mathematics.

Because this is neither decent assessment nor real learning at all, is it. (So no wonder so many children find themselves left out of learning altogether, only to be discovered many years later when they’ve fallen down the cliff.) At best it is only learning about learning. Or even learning about learning about learning. (How very postmodern.) It certainly isn’t learning about the things that make the world tick (reading, writing and ‘rithmetic still being three very important parts of that world) about which most parents are understandably very keen for their children to have mastered.

To those parents, Louise Green of the Educational Institute really has nothing to say.

TrinomialCube

Consider, by complete contrast, the Montessori early-childhood classroom, where a child’s progress is measured by the materials with which the child is working and becoming competent, leading on to more complex materials comprising more advanced learning, and so on. So, to take just one instance here -- because in every Montessori environment thirty of these experiences will be happening simultaneously every day – if your 6 year old is working with and mastering the Trinomial Cube (above), you will know in some depth just what sort of standard they have reached. We will have both learning and assessment in one; what a thought! And while Louise Green’s children are holding hands and talking to each other about “constructing learning,” your six-year old is setting themselves up to use and understand trinomial equations:

TrinomialLayout_Small

How radical.

And consider too how much learning about learning about learning new teachers themselves have to learn under Louise’s ideal system. The problem being that the new teachers themselves in this system are selected not because they actually have some area of expertise in which to teach (because, don’t worry, we’ll construct that on our own, thank you very much) but because they have spent three years at unTeaching College learning about learning about learning – where they’re taught only about teaching, even if they actualy have no area of experitse about which to teach) emerging with a piece of paper signed by an assessor so that people like Louise know they have met her own chosen standards. (Ironic, much?)

Contrast this with the approach taken by schools like the Van Damme Academy for example, which makes a point of employing teachers who are recognised experts in their subject, whose job it is to pass on to students that expertise and their delight in the subject.

What a contrast with the blancmange lack of standards espoused by Louise Green and her ilk. I’m no champion of the government’s drive for national standards (see here and here for example). But it’s as easy to see why these practitioners of cognitive child abuse are opposed to them as to see why they resist charter schools, and make it so hard for real Montessori schools to stay open.

Because all of them show them up.

 

[Pic by WikiSori, vid by Van Damme Academy ]

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PS: An entertaining 'Quick Draw' introduction to Montessori education [hat tip MMEF]:

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Quote of the Day: Utilitarianism v Rights

 

“Right is a principle; utility is only a result. Right is a cause; utility is only an effect. Say to a man: you have the right not to be put to death or arbitrarily plundered. You will give him quite another feeling of security and protection than you will by telling him: it is not useful for you to be put to death or arbitrarily plundered.”
~ Henri-Benjamin Constant (1767–1830), Principles of Politics

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[Hat tip Conza]

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Unnecessary words

 

May I confess to a secret love. I love reading writing guides. Style guides. Guides to English usage.

It’s true.

My favourite is probably the guide to Modern Engish Usage known to its friends only as Fowler’s, to which Bill Bryson’s Troublesome Words is a useful complement ("Class, when do you use 'fewer' instead of 'less'?”) The best of them are pithy and incisive (I remember with affection Peikoff’s Principles of Grammar offering the example of subject and verb in a sentence: Governments coerce.”).

So a friend who knew my love gave me a copy of The Economist Style Guide (1986 edition), from which this guide to excising flatulence fell out (note: the emphases are in the original):

UNNECESSARY WORDS. Some words add nothing but length to your prose. Use adjectives to make your meaning more precise and be cautious of those you find yourself using to make it more emphatic. The word very is a case in point. If it occurs in a sentence you have written, try leaving it out and see whether the meaning is changed. The omens were good may have more force than The omens were very good.
    Avoid strike action (strike will do), cutbacks (cuts), track record (record), wilderness area (usually either a wilderness or a wild area), large-scale (big), the policymaking process (policymaking), sale events (sales), weather conditions (weather), etc. This time around just means This time, just as any time soon just means soon.
    Shoot off, or rather shoot, as many prepositions after verbs as possible. Thus people can meet rather than meet with; companies can be bought and sold rather than bought up and sold off; budgets can be cut rather than cut back; plots can be hatched but not hatched up; organisations should be headed by rather than headed up by chairmen, just as markets should be freed, rather than freed up. And children can be sent to bed rather than sent off to bed—though if they are to sit up they must first sit down. Pre-prepared just means prepared.
    The word community is usually unnecessary.  So the black community means blacks, the business community means business, the homosexual community means homosexuals, the international community, if it means anything, means other countries, aid agencies, or just occasionally, the family of nations. What the global community means is a mystery.
     Use words with care. A heart condition is usually a bad heart. Positive thoughts (held by long-suffering creditors, according to The Economist) presumably means optimism. Industrial action is usually industrial inaction, industrial disruption or strike. A substantially finished bridge is an unfinished bridge, an executive summary a summary and a role model a model, a major speech usually just a speech, a top politician or top priority is usually just a politician or a priority. Something with reliability problems probably does not work. If yours is a live audience, what would a dead one be like.
    This advice you are given free, or for nothing, but not for free.
In general, be concise. Try to be economical in your account or argument (“The best way to be boring is to leave nothing out”—Voltaire). Similarly, try to be economical with words. “As a general rule, run your pen through every other word you have written; you have no idea what vigour it will give to your style.” (Sydney Smith). Raymond Mortimer put it even more crisply when commenting about Susan Sontag: “Her journalism, like a diamond, will sparkle more if it is cut.”

No mention is made of either sea change or step change, but then neither are used by the Key Government any more either. So there’s that.

And here’s a useful exercise too: see if you can spot the paragraph that’s been dropped from the more recent edition – and ask yourself why. (Here’s a clue.) Feel free to drop us a line when you have it.

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Wednesday, 20 July 2016

#VenezuelaWatch | You will not see this on the 6pm news

 

For anyone watching the contemporary experiment in socialism that is Venezeula –  a conclusive almost scientific experiment that every young person sympathetic to the system should observe: as starvation became a real thing this week in what was once one of the wealthiest countries in South America, the Venezuelan regime opened its border with Colombia to allow desperate people the opportunity to purchase food and other supplies on the Colombian side of the border.

Get that: To get food and supplies, Venezuelans had to queue up to cross over to neighbouring Colombia – not because Venezuelans have experienced a natural disaster, but because they voted themselves into the political disaster that is socialism. And, see, it is easy to buy food and provisions in Colombia, because they didn’t.

While store shelves sit empty in Venezuela, they teem with food and provisions just next door. The footage below shows the difference between socialism and the free market for any with eyes to see it – and there is no need to speak Spanish to understand the tragedy that is taking place in that country.

The Venezuelan regime opened up the bridge for only a few days: https://www.youtube.com/watch?v=bQ-Y05rOLcw

 

Venezuelans streamed toward the border, pleading for liberty and food:

 

The desperation can be seen in this video: a Venezuelan man crying, kissing and hugging a Colombian soldier. “This government oppresses us a lot…There is no food in Venezuela. God bless you, you are very kind” he cries.

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“Erdogan Lives - And Secular Turkey Dies”

 

Let me alert you to an exceptional piece by Chris Trotter on the events of the weekend on the streets of Turkey, and how Turkish strongman Erdogan has used them since to his advantage. His argument is summarised in the title: Erdogan Lives - And Secular Turkey Dies.

The collapse of this attempted coup d’état has been met with many sighs of relief in Western capitals. Had it succeeded, President Barack Obama, in particular, would have faced an extremely difficult choice. To condemn the overthrow of the democratically-elected government of a Nato ally; or, to endorse the constitutionally sanctioned role of the Turkish military as the secular Turkish Republic’s ultimate protectors. Because it was precisely in this guise that the soldiers who rose against Erdogan presented themselves. As the last, desperate hope of all those Turks who still cling to the legacy of Mustapha Kemal – the father of the modern Turkish state.
    That it was colonels, and not generals, who ordered their men on to the streets, says much about the state of Turkey. Those who might have struck a more telling blow in the name of the republic, the nation’s most senior military officers, had long ago been arrested under trumped-up charges by Erdogan’s followers, dismissed from their posts and thrown into prison. A similar fate befell the nation’s senior judges and police officers. In the slow-motion coup Erdogan and his Islamist political allies have been carrying out since coming to power 2003, they have been careful to ensure that the secular state they were striking down would never again rise to its feet.
    Those who have been issuing congratulatory statements to the Erdogan regime, should ponder the meaning of its first acts upon reclaiming the levers of power. Yes, thousands of rebel troops and their officers have been detained. That is to be expected. But so, too, have upwards of twenty thousand judges, prosecutors and policemen. Is that the response of a democratic government? No. It is the response of a tyrant who described the failed coup attempt as “A gift from God.”

And what was the nature of “the ‘democratic’ crowds who, at Erdogan’s bidding, poured on to the streets of Ankara and Istanbul to confront the rebel troops”?

Did they shout: “Long live the Turkish Republic!” Or, “Long live Turkey’s secular democracy!” No. The moustachioed men (there were no women in evidence) shouted “Allahu ekber!” – “God is great!”, and declaimed the shahadah: “There is no god but God – and Muhammad is his prophet!”
    Secular Turks disdain the facial hair of Erdogan’s followers – although, with the backbone of their judiciary broken, and the last of their military protectors in detention, it might be wise for secular Turkish men to put away their razors, and for secular Turkish women to cover their heads.
    Is this the true import of Erdogan’s jubilant description of the failed coup as a gift from God? Does he now feel justified in speeding-up his party’s progress towards the creation of a Sunni Islamic Republic in Turkey? A fanatical religious regime to rival the Shia Islamic Republic of Iran? And how much in common would such a republic have with the theocratic extremism of the Sunni Saudi Kingdom? Between these two powerhouses of radical Islam would stand only Lebanon, Syria, Iraq, Jordan – and Israel. Of those five states, only Israel possesses the military strength to defend its borders.

Dangerous times.

Read and reflect: Erdogan Lives - And Secular Turkey Dies – Chris Trotter, BOWALLEY ROAD BLOG

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The economics of the minimum wage in one diagram

 

13707592_1205144556204598_64688641361708310_n

UPDATE: The dinosaur has a follow-up question to ponder: Why, or why not?

13697200_10154205424200726_6962489292468343142_n

[Hat tip Keith Weiner, Tom Woods]

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Has “online harassment” become “a scary norm”?

 

Via RNZ:

A parenting columnist says she’s been told she “should be raped” and sent photos of dead babies – and other women with an online presence say harassment has become a scary norm.
    A new study led by security company Norton, in which 500 women took part, has found 72 percent of New Zealand women under 30 experience online harassment.
    One in four women said they had received threats relating to death, rape and sexual assaults.

I got a death threat myself just yesterday, my moderator-of-comments tells me. It may have included a threat of sexual assault as well, although it’s hard to know:

Troll

This, sadly, is the kind of fetid garbage that pollutes the comments sections of most online fora, and why most of those comments sections are now either moderated or non-existent -- RNZ and Spinoff being just two who’ve turned off comments recently.

But we should all be aware that Norton here are just talking their book. Keyboard warriors writing this unhinged slime are not active activists, they’re just sad and pathetic. A threat only to themselves, not anything for Norton to get any new business over.

But you can understand why comments evverywhere are heading for the high jump.

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Trump: Nixon? Surely Not

 

So Trump wants to be like Nixon huh? This is not good.
Guest post by Jeffrey Tucker

If you have followed the Republican trajectory over the last year, perhaps this will not surprise you. And maybe you discerned this last week when “Law and Order” became another official Republican campaign slogan, alongside “Make America Great Again.”

As it turns out, the model that the Donald Trump campaign is using for its public image, messaging, and policies was the one pioneered by Richard Nixon in 1968. Trump’s campaign manager Paul Manafort confirmed it.

Then the candidate himself agreed.

_Quote_IdiotI think what Nixon understood is that when the world is falling apart, people want a strong leader whose highest priority is protecting America first [said the Trumpanzee]. The ’60s were bad, really bad. And it’s really bad now. Americans feel like it’s chaos again.

Nixon Was the Turning Point

Nixon was a remarkable case. His public credibility was built by his big role in the 1948 congressional hearings that pitted State Department Official Alger Hiss against Whittaker Chambers. Nixon was then a congressman from California and a key player on the House UnAmerican Activities Committee (HUAC). He publicly demonstrated Hiss’s Communist Party connections, and thereby became a hero to the anti-communists of that time.

The event became the cornerstone of Nixon’s entire career, establishing him as the leader of the anti-leftist faction of the party. Based on this reputation, he went from the House to the Senate in 1950, to the Vice Presidency in 1950, and finally the Presidency in 1968. Upon his election, hopes were high among the libertarians of the time that he would perhaps work to dismantle the welfarism and warfarism of the Lyndon Johnson era.

NixonButtonI recall my father telling me about his own feelings at the time. “I never trusted Nixon,” he told me years later. “But we shared the same enemies. At the time, that was enough for me.”

[Ayn Rand herself, politically was not primarily anti-communist but pro-freedom. Writing of that 1968 election she called herself an “Anti-Nixonite for Nixon.”

As to the state of the country at large, as we approach the Presidential election of 1968: it is obvious that there is an enormous swing to the right—if by "right" we mean the trend toward freedom and capitalism. But, tragically, it is a blind swing, without conscious knowledge, programme or direction. The people are rightfully, indignantly against the welfare state, against the blatantly cynical injustices of pressure-group warfare, against the deceptions and contradictions of pragmatic "anti-ideology." But they do not know the root nor the solution of these evils. They do not know whether they are for capitalism—they should be, but probably would not be, at present. It is the task of a country's intellectuals to provide the people with political knowledge—with an intelligible political philosophy. The philosophy of a mixed economy, of the Welfare State in all its variants, is bankrupt: it has had its day and has brought us to our present state. There is only one alternative now: the philosophy of capitalism—if a collapse into dictatorship is to be averted.
    Without the proper intellectual leadership, the people's blind rebellion will not save this country and will come to nothing, as have all the blind rebellions of the past. But the people's groping need and desperate eagerness for enlightenment are there, waiting for the men of courage and integrity to speak. Let us hope that a Nixon Administration will make it easier for such men to appear and to be heard.

Like many others, she was to be profoundly disappointed.]

Even in those days, the Republican Party was a coalition of disparate groups: foreign policy hawks, law-and-order conservatives, and the libertarian-minded merchant class that was sick of government spending, inflation, taxation, and regulation. The political priorities of the groups were in tension, often in contradiction. Which would prevail?

As it turned out, Nixon would devastate the anti-communist crowd by opening up diplomatic relations with China. But that was nothing compared to his complete betrayal of the libertarian wing who had reluctantly supported him. He began the drug war that was specifically structured to harm blacks and hippies. He ordered IRS audits of his enemies.

Nixon closed the gold window and officially put the monetary system on a paper standard – thus realising the dreams of decades of Keynesians and backers of big government. He pushed the Fed for more inflation. He founded the Environmental Protection Agency, which has harassed private property owners ever since.

Most egregiously and shockingly, on August 15, 1971, Nixon announced to the nation a policy that hadn’t been experienced since World War II. It was like a scene from Atlas Shrugged. “I am today ordering a freeze on all prices and wages throughout the United States,” he said. After the freeze, all price increases—every single one – were to be approved by a pay board and a price commission. [The Moratorium on Brains, Rand called it.]

Galvanising the Libertarians

This was the event that led the libertarians to gain a heightened consciousness of the task before them. What had previously been a loose association of intellectuals and a few other writers became a mass movement of students, donors, organisations, publications, and activists. The Libertarian Party was founded. Reason Magazine, founded as a mimeographed pamphlet in 1968, became a real magazine with an actual publication schedule. Ron Paul, under the intellectual influence of the Foundation for Economic Education, decided to enter public life.

Murray Rothbard captured the spirit of outrage that gave birth to the libertarian movement. He wrote the following in the New York Times on September 4, 1971:

On Aug. 15, 1971, fascism came to America. And everyone cheered, hailing the fact that a “strong President” was once again at the helm. The word fascism is scarcely an exaggeration to describe the New Economic Policy. The trend had been there for years, in the encroachment of Big Government over all aspects of the economy and society, in growing taxes, subsidies, and controls, and in the shift of economic decision-making from the free market to the Federal Government. The most recent ominous development was the bailout of Lockheed, which established the principle that no major corporation, no matter how inefficient, can be allowed to go under.
   
But the wage-price freeze, imposed in sudden hysteria on Aug. 15, spells the end of the free price system and therefore of the entire system of free enterprise and free markets that have been the heart of the American economy. The main horror of the wage-price freeze is that this is totalitarianism and nobody seems to care…
   
The worst part of our leap into fascism is that no one and no group, left, right, or center, Democrat or Republican, businessman, journalist or economic, has attacked the principle of the move itself. [Well, Rand did, as we’ve noted above.] The unions and the Democrats are only concerned that the policy wasn’t total enough, that it didn’t cover interest and profits. The ranks of business seem to have completely forgotten all their old rhetoric about free enterprise and the free price system; indeed, The ‘Washington Post’ reported that the mood of business and banks is “almost euphoric.”…
   
The conservatives, too, seem to have forgotten their free enterprise rhetoric and are willing to join in the patriotic hoopla. The New Left and the practitioners of the New Politics seem to have forgotten all their rhetoric about the evils of central control...

It was this article, and the events he described, that made the libertarians realise that they needed their own movement, something different from the left and right, and outside the Democrats and Republicans, each of whom represent their own kind of tyranny. Never again would they trust the promises of a “strong president.” Never again would they trust a mainstream party.

Libertarianism1The experience with Nixon taught those who seek more freedom that there is a huge difference between merely hating the left and actually loving liberty. The lesson was burned into the hearts and minds of a whole generation: to see your enemies crawl before you is not really a victory. The only real victory would be freedom itself. And to love liberty is neither left nor right. Libertarianism is a third way, a worthy successor to the great liberal movement from the 17th-19th centuries, the movement that established free trade, worked for peace, celebrated prosperity through freedom, ended slavery, liberated women, and universalised human rights.

The realisation marked a new era in American political life.

Then there Was Watergate

If you don’t like government as we know it, you need to decide why. When Nixon was finally driven out of office following the Watergate scandal, conservatives wept. But the libertarians, having now developed a sense of their task quite apart from the rightest cultural and political agenda, cheered the end of the cult of the Presidency. By then, Nixon had become their bete noir.

Rothbard wrote:

It is Watergate that gives us the greatest single hope for the short-run victory of liberty in America. For Watergate, as politicians have been warning us ever since, destroyed the public’s “faith in government” – and it was high time, too. Watergate engendered a radical shift in the deep-seated attitudes of everyone – regardless of their explicit ideology – toward government itself. For in the first place, Watergate awakened everyone to the invasions of personal liberty and private property by government – to its bugging, drugging, wiretapping, mail covering, agents provocateurs – even assassinations. Watergate at last desanctified our previously sacrosanct FBI and CIA and caused them to be looked at clearly and coolly.
    But more important, by bringing about the impeachment of the President, Watergate permanently desanctified an office that had come to be virtually considered as sovereign by the American public. No longer will the President be considered above the law; no longer will the President be able to do no wrong. But most important of all, government itself has been largely desanctified in America. No one trusts politicians or government anymore; all government is viewed with abiding hostility, thus returning us to that state of healthy distrust of government. *

It’s almost a half century later and the Republicans have once again chosen a man who is loved mainly because of the people he hates and those who hate him back. And once again, we are being told that greatness, law, and order should be the goal. Once again, the right is defining itself as anti-left while the left is defining itself as anti-right, even while both favor centralist and nationalist agendas.

It’s a perfect time to remember what that Nixon generation learned: regardless of ideology, absolute power corrupts absolutely. Even twenty years later, libertarians were highly skeptical of Ronald Reagan for this reason. It wasn’t until he showed himself to be a very different kind of candidate than Nixon – Reagan was very clear that the real enemy of the American people was government itself – that libertarians went along.

Regardless of the personalities ascendent at the moment, the real struggle we face is between the voluntary associations that constitute the beautiful part of our lives, on the one hand, and, on the other, the legal monopoly of violence and compulsion by the institutions of the state, which lives at the expense of society.

If you don’t like government as we know it, you need to decide why. Is it because you believe in a social order that minimizes coercion and unleashes human creativity to build peace and prosperity? Or is it because you think the wrong people are running it and we need a strong leader to put them in their place? This is the major division in politics today.


Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education and CLO of the startup Liberty.me. Author of five books, and many thousands of articles, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the WorldFollow on Twitter and Like on Facebook.
His post first appeared at FEE.


NOTE:

*  Ayn Rand disagreed. It was the disaster of pragmatic government that Watergate exposed, she argued immediately after the televised Watergate hearings – of short-termist unprincipled government without any serious goals beyond re-election (sounding familiar?):

It is not a matter of personalities, nor of anyone's honesty or dishonesty. The corruption is inherent in the system: it is inherent in any situation in which men have to act without any goals, principles or standards to guide them. "The good of the country" is not a goal (unless one has a clear, objective definition of what is the good). "The public interest" is not a principle. (Observe that all pressure groups claim to represent "the public interest.") Someone's wish or "aspiration" is not a standard.
    You have heard every politician in every election proclaim his allegiance to those empty generalities. You have been wise enough not to believe his public utterances. What makes you believe that he has better principles in the privacy of his own mind and that, once elected, he will act on them? He hasn't and he can't.
In a controlled (or mixed) economy, a legislator's job consists in sacrificing some men to others. No matter what choice he makes, no choice of this kind can be morally justified (and never has been). Proceeding from an immoral base, no decision of his can be honest or dishonest, just or unjust—these concepts are inapplicable. He becomes, therefore, an easy target for the promptings of any pressure group, any lobbyist, any influence-peddler, any manipulator—he has no standards by which to judge or to resist them. You do not know what hidden powers drive him or what he is doing. Neither does he.
    Now observe the results of such policies and their effect on the country. You have seen that Nixon's wage-price controls, imposed two years ago for the purpose of slowing down inflation, have accelerated it. You have seen that a shortage of soybeans, which you probably do not buy, has led to the shortage of most of the food items which you do buy and need. You have seen a demonstration of the fact that a country's economy is an integrated (and self-integrating) whole—and that the biggest computer would not be able to predict all the consequences of an edict controlling the price of milk, let alone an edict controlling the price, the costs, the sales, the amounts of wheat or beef or steel or oil or electricity. Can you hold in mind the total of a country's economy, including every detail of the interrelationships of every group, every profession, every kind of goods and services? Can you determine which controls are proper or improper, practical or impractical, beneficent or disastrous? If you cannot do it, what makes you assume that a politician can? In fact, there is no such thing as proper, practical or beneficent controls.
    Like the Nixon re-election committee, the government of a mixed economy is a setup ruled by undefined goals, undefined principles, undefined standards, undefined responsibility, undefined (and unlimited) power, unearned (and unlimited) wealth. A country  that accepts such conditions can achieve nothing but self-destruction, as the men of the re-election committee did. This is the lesson that comes loud and clear through the grimy mess of the Watergate hearings—a pictorial lesson that concretises the senselessness, the pettiness, the futility, the chaos, and the depersonalised evil of a government swollen with a power no government can or should hold. (For a discussion of the proper functions of a government, I refer you to my [essay on ‘The Nature of Government.’)

    A "mixed" government is the only institution that grows not through its successes, but through its failures. Its advocates use every disaster to enlarge the power of the government that caused it…. The solution, of course, is to eliminate … the government's power over the economy. No, it cannot be done overnight. But if you want to fight for that ultimate solution, Watergate provides you with intellectual ammunition: its lesson is the diametric opposite of the notions now being palmed off on the country by the statist-liberal establishment.
Libertarianism2    If you feel, as many people do, that such a battle would take too long and comes too late, there is one piece of advice I should like to give you: if you choose to resign yourself to the reign of an unchallenged evil, do so with your eyes open. Hold an image of the Watergate hearings in your mind and ask yourself what I asked you at the start of this discussion: Do you feel respect for the men on either side of the long committee table? To which of them would you care to surrender your freedom? To Senator Ervin? To Jeb Stuart Magruder? To John D. Ehrlichman? Whose judgment would you regard as superior to yours and competent to do a job which you can neither grasp  nor judge nor define nor undertake: the impossible job of controlling this country's economy? The judgment of H.R. Haldeman? Of Frederick C. LaRue? Of Senator Montoya? Which of them would you entrust with the power to dispose of your life, your work, your income, and your children's future? Senator Baker? Senator Weicker? John W. Dean 3d?
    If you hold Richard Nixon responsible for Watergate, as the absentee authority in whose name the men of the re-election committee were acting and whose favor they were scrambling to win, then—in relation to all the politicians of this country—you are the absentee authority, it is in your name that they are issuing their edicts, it is your favour that they are scrambling to win (or wheedle or extort or manipulate) at election time. No, you cannot fight them by means of your one vote. But you can make yourself heard. It is your voice that they fear, when and if it is the voice of your mind, because their entire racket rests on the hope that you will not understand.
    Do not hide behind the futile hope that the men you saw on television might be bigger in real life, that responsible government positions would raise their stature. In real life, they are smaller; today's government positions shrink them—for a reason stated by a great political thinker of the last century.
    His statement was mentioned during the Watergate hearings, but no one paid much attention to it. Yet that statement is the real answer to Senator Baker's question: it indicates what must be eliminated in order to prevent the future occurrence of events such as Watergate (or such as the Watergate hearings).
    That thinker was Lord Acton, who said: "Power tends to corrupt and absolute power corrupts absolutely."

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