Saturday, October 3, 2009

Michael Moore Wants to End the Fed (He Just Doesn't Realize It)

“You keep on using that word. I do not think it means what you think it means.”

- Mandy Patinkin as Inigo Montoya in The Princess Bride (1987)

It is ironic that Michael Moore’s latest movie, Capitalism: A Love Story features two appearances by writer and comedic actor Wallace Shawn. There is even a clip of Shawn exclaiming “Inconceivable!” in his hilarious turn as Vezzini in The Princess Bride. However, the most appropriate clip from that movie would have been Inigo Montoya uttering the words quoted in the prologue of this article. Using one of Moore’s staple filmmaking techniques, he could have cut to the clip immediately after one of his own pronouncements about capitalism. For although Moore says the word over and over throughout the movie, it is apparent that it “doesn’t mean what he thinks it means.”

The closest thing to a definition of capitalism that Moore provides to his audience comes early on when he remarks, “Capitalism: a system of giving and taking – mostly taking.” He goes on to show a half dozen or so clips of people extolling capitalism for providing “the freedom to succeed and to fail” or hailing the virtues of competition. However, the common mistake made by both Moore when attacking capitalism and the Republican politicians he depicts defending it is their mutual failure to recognize the central tenet of capitalism: property rights.

True capitalism is based upon one simple principle: that all exchanges of property are made with the voluntary consent of all parties. Private ownership of property and competition – the other two components of capitalism in most traditional definitions – are actually results of this foundational principle. As all governments are institutions of coercion, there is no way for them to acquire property through voluntary exchange. Further, with all exchanges being voluntary, sellers must by definition compete with one another in order to sell their products. So, the foundation of “capitalism” is really the non-aggression principle applied to property. Capitalism requires that no one’s property can be taken from them without their consent.

However, Moore’s film does not examine anything close to that system, which Adam Smith called “a system of natural liberty” (the word “capitalism” was not coined until nearly a century later). There is a good reason for that – it doesn’t exist. What Moore mistakes for capitalism is really the soft fascism that has been increasing in intensity in the United States since the Federal Reserve and income tax were created and property rights were destroyed. He makes the same mistake that Republican voters make when they vote Republican politicians into office. They believe the politicians when they say that they support “free markets,” despite the fact that they go on to govern in exactly the opposite way.

The injustices that Moore depicts in his film are without exception caused by government. Not one can be traced to people voluntarily exchanging their goods and services with one another. What Moore represents as “capitalism” is really what Thomas Dilorenzo described as “Hamilton’s Curse” in his 2008 book of the same name. Without attempting to reduce Dilorenzo’s treatise to a few sentences, he generally describes the economic system whereby the government allies itself with the wealthiest segment of society in order to plunder the wealth of everyone else in pursuit of “national greatness” or “the common good.” The hallmarks of the system are corporate welfare, deficit spending by government, protectionist tariffs, and most importantly, a central bank with a government-granted monopoly on the creation of money.

This system purports to benefit society by encouraging the growth of domestic industry and thereby increasing the power and standing of the nation as a whole, as well as providing employment for the working class. However, like socialism, it must achieve “societal goals” by violating the fundamental principle of capitalism. It must violate the non-aggression principle by taking property away from people without their consent and redistributing that property to others. Some of this is accomplished through taxation. A much greater part is accomplished through monetary inflation.

It is astounding that most people are able to ignore the fact that the central bank is an instrument of theft and thereby completely antagonistic to capitalism. It takes an incredible dearth of healthy skepticism not to question the reason for legal tender laws, which force people to use the central bank’s currency. There is only one reason for these laws: without them no one would choose to accept an un-backed paper currency in exchange for their real goods or services. People are forced to use Federal Reserve Notes so that the government and its corporate allies can use inflation (expansion of the money supply) to transfer wealth from everyone in society to the privileged few who benefit from the transfer. The beneficiaries include corporate defense contractors, large farming corporations, Wall Street banks, and other “pillars of the economy.” It is inflation more than anything else that widens the gap between rich and poor. It is the chief vehicle for what Bastiat described as “the few plunder the many.”

However, Michael Moore does not recognize the right to the fruits of one’s labor and so he is completely blind to the difference between capitalism and the system promoted by Republican politicians (in deed if not in word). He fails to see that every aspect of our financial meltdown was caused by some violation of property rights, representing a departure from capitalism.

The money needed to extend all of those “deceptive mortgages” was created by the Federal Reserve out of thin air, thus diluting the value of all existing U.S. dollars. This was a theft from the holders of those existing dollars. Most of the loans themselves were guaranteed by Fannie and Freddie Mac, which uses the coercive power of government to force taxpayers to put up their money as collateral for people who would either not receive those loans or who would pay a much higher interest rate without it.  Again, this is not capitalist voluntary exchange but instead wealth redistribution and a distortion of the free market. Similarly, the hundreds of billions paid out to defense contractors and other beneficiaries of President Bush’s wars in the Middle East were also funded by inflation, which the Republicans overtly flaunted by cutting taxes while skyrocketing government spending.

Since he fails to recognize that it was violation of property rights that truly caused our economic meltdown, he doesn’t recommend the restoration of property rights as the solution. Moore blindly accepts the traditional “progressive” fallacy that free market participants can only benefit at someone else’s expense, instead of recognizing that people who exchange voluntarily do so to their mutual benefit. As a result, he accepts government’s role as plunderer of property and merely suggests dividing up the loot differently. He promotes the bogus idea that the government can grant rights to people, and suggests that the coercive power of government no longer be used to redistribute to the wealthy, but instead be used to redistribute to everyone else. He objects to a system wherein the few plunder the many, but suggests it be replaced with a system where “everybody plunders everybody.”

Moore asserts that FDR had the answer when he proposed a “Second Bill of Rights,” granting Americans the right to a reasonable wage, health care, a pension, and other entitlements. Again, as the concept of property rights is foreign to him, Moore is able to ignore the fact that granting a right to these things means that those who provide them have no rights. He extols the “justice” of labor unions, but ignores the fact that it was the unions that destroyed the U.S. automakers by claiming exactly these rights. It was actually an alliance between government and these unions – identical in principle to the alliance between government and Wall Street - that turned his beloved Flint into a ghost town. He suggests that we should set these forces loose upon all of society. His ability to ignore reality is, to quote Mr. Shawn, “inconceivable.”

Like all of his movies, Capitalism: A Love Story is very well made. Moore is exceptionally good at what he does, bringing wit, comedic timing, and emotional power to the screen. Also like all of his movies, he identifies real injustices and expresses appropriate outrage at them. However, throughout his distinguished career he has made the classic mistake of misidentifying the cause of the problems he depicts so poignantly on the screen.

He compares the United States to Rome and points to the similarities between our problems and theirs. He correctly identifies half of the cause of Rome’s decline and ours: the government’s unholy alliance with a landed aristocracy that plunders the wealth of the people for redistribution to the privileged few. However, he fails to recognize his solution as the other half of the cause of both Rome’s decline and ours: the rest of society attempting to share in the plunder by means of majority vote (democracy). It was both of these forces acting together which destroyed Rome’s currency and led to her eventual collapse. Like Rome, we are also afflicted with both of these ills.

The only real solution to our predicament is to implement a system that supports Bastiat’s third alternative – “where nobody plunders anybody.” It is only by following this principle that justice can truly prevail. The most significant step in achieving such a system would be to eliminate the Federal Reserve System. Neither the Republican system of plunder for the wealthy nor the Democratic system of plunder for everybody is possible without monetary inflation. There is no way that government could ever achieve either through direct taxation.

I believe that Michael Moore’s intentions are good. At the end of his film, he asks Americans to join him. I have an alternative proposition for him. If he truly wants to see justice restored in America, along with equal opportunity for all Americans to pursue their happiness, he should call off his misguided attack on capitalism and join us to End the Fed.

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!


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© Thomas Mullen 2009

9 comments:

Who is Ken Matesz? said...

Tom,

I have not seen the movie, but have read several reviews, including yours. One I read was on mises.org. The reviewer there commented succinctly that Moore generally outlined or displayed injustices and people in various stages of trouble, but never attempted to explain how they got there (other than the assumed culprit - capitalism).

As you well stated, the issue with the Federal Reserve is at the heart of the destruction of property rights and capitalism.

The last baation of hope, in my opinion, lies with the states. State representatives still are fairly accessible and malleable. Many states have now passed "sovereignty" bills. Now it's time to get them to pass "honest money" bills, creating a competing currency (gold and silver). Check out committeesofsafety.org for more infomation.

Thanks so much for your thoughtful blogs.

Claire M said...

Moore is just plain dishonest. He should have interviewed true advocates of free-market capitalism like Ron Paul instead of the corporate-crony Republican straw men he portrayed as representing capitalism in politics. I think he knows exactly what he is doing-- and that he would most certainly lose in a debate against someone like RP, Peter Schiff or Judge Napolitano. If capitalism is so badly misrepresented it's in large part because of hucksters like Moore selling lies to the public.

I would love to get some people together to make a documentary that tells the truth about capitalism. Unfortunately it is difficult to obtain funding and talent for a project like that in a town that is so invested in the "progressive" agenda. I know a guy who is working on a great documentary entitled Sick and Sicker, which deals with the perils of socialized medicine. He's almost done, but it's been an uphill battle and he is having a really hard time getting it finished. Here is his website:
http://www.sickandsickermovie.com/
If you believe in what he is saying, and if you can, I would encourage you to help him out.

Charles said...

It is hard to begin; to try explain how your fluid thoughts enlighten ones thinking, teaching as you write.
How do you discribe genious? why it is you! I would like to suppose because I am enriched by your words that it would be the same for all, yet it seems I do not see the admiration I feel reflected in the replies so far written, oh well.
You understanding of many things, one of which is the constitution of the United States, needs you to get in there and make it right, Why are you not using that magnificant power of mind you have to guide the government of a stumbling country?
We need you Man!

NFT said...

excellent article, Tom! (aside from one small error about rights as principles.) Was so happy to see Bastiat references all over the place in it. I'm going to share this one with facebook family and friends - you rock! :)

Steve Curtis said...

Well done as always. How can we get Michael Moore and Tom in the same room, ideally with an audience? I think that would make a terrific movie (if we can keep Moore from deceptively editing it).

Keep up the good work.

George said...

The Fed should be abolished!
We need desperately to return to our Constitutional currency! That is what John F. Kennedy planned to do.

Clarence said...

Excellent article. One question ....

If your desired system of property rights includes the unlimited right to own land, how do you keep the unlanded from being plundered by the landed?

Mountain Goat said...

It's been said armchair generals study strategy, whereas professionals study logistics. Moore is someone who has ideas about how things should be, but his only real capacity is whining.

Our core problem is the unConstitutional concentration of power in Washington. We need to eliminate Social Security, Medicare, Medicaid, the Dept. of Education, Housing, and damn near everything else, and transfer those tasks to the States. Reduce Federal income tax to minimal levels, and let the States themselves decide how they want to live.

As far as Rome, that might apply to the fall of the Republic, but the Empire basically fell to former Roman mercenaries who wanted back pay.

The Roman system never really solved the problem of Imperial succession, which resulted in persistent civil wars, that ravaged the ranks of the best soldiers, with the result they relied more and more on people who were not Latin in their origins.

Add to that bad leadership, economic policy like we are conducting today, and you get the eventual sack of Rome, several times.

And teh Empire never really fell, formally, it just slid into irrelevance militarily. The Catholic Church, of course, retains a good bit of power even today.

Roy said...

The only real solution to our predicament is to implement a system that supports Bastiat’s third alternative – “where nobody plunders anybody.” It is only by following this principle that justice can truly prevail.

No, the only solution is to establish liberty which is not a system, but rather the lack of a system. It is the existence of a system that is screwing things up so badly. We must dismantle the system (i.e. government) so that unfettered free markets can do what they do best, including regulating themselves and protecting property rights. No coercive monopoly is required to protect free markets. Unfettered free markets would devise ways of regulating and protecting themselves if allowed to do so.

The most significant step in achieving such a system would be to eliminate the Federal Reserve System. Neither the Republican system of plunder for the wealthy nor the Democratic system of plunder for everybody is possible without monetary inflation. There is no way that government could ever achieve either through direct taxation.

No, there have been central banks before that have been eliminated and they always come back. The only way we will get rid of them for good is to eliminate the institution that makes them possible, namely government.

Even if it were possible to eliminate the Fed at this point another one would spring up down the road to take its place.

Even if it were possible to put the government back in the bounds of the constitution at this point, it would grow out of it again.

The only solutions is to get rid of the cancer completely, and the cancer is government.

BTW, Tom how is your anarcho-capitalism education going. Have you finished your reading assignments yet?