President Obama has come under heavy criticism for his dictatorial “shakedown” of BP and rightly so. Considering the presidencies of Woodrow Wilson, Franklin D. Roosevelt, Lyndon Johnson, and most recently, George W. Bush, it is no small accomplishment for a president in 2010 to actually commit an unprecedented violation of the U.S. Constitution. I am sure that sooner or later his extortion will be described by his supporters as “bold,” which is the new euphemism for the illegal exercise of arbitrary power.
However, during the June 15 speech* in which he announced this and other planned incursions into what is left of the free market and the rule of law, the president made one very correct observation about the Minerals Management Service (the federal regulatory agency in charge of regulating oil drilling). He said,
"At this agency, industry insiders were put in charge of industry oversight. Oil companies showered regulators with gifts and favors, and were essentially allowed to conduct their own safety inspections and write their own regulations.”
The president correctly recognizes that this is a problem. One cannot reasonably expect that a regulatory agency is going to police an industry if the policemen are all hired directly out of the companies that they are supposed to regulate. However, the president’s statement begs the question, “Who should replace these industry insiders in regulating the safety of deep-water oil drilling?”
The only possible answer is that government-appointed bureaucrats, with no knowledge of or experience with the machinery, equipment, and specific engineering principles associated with deep-water oil drilling should replace them. Of course, logic dictates that if unqualified people start making rules about how equipment and machinery that they don’t understand is operated, there are going to be a lot more accidents. Is there no way out of this dilemma?
There is an important distinction to be made between “laws” and “regulations.” A law is a statute that prohibits conduct that constitutes intentional harm to someone by another person. There are laws against murder, theft, fraud, and other crimes of aggression. A law should always be the exercise of a negative power (the new healthcare bill violates this fundamental principle).
A regulation, on the other hand, has an entirely different purpose. Regulations attempt to prevent economic agents from having the opportunity to harm another person or the environment, whether intentional or not. So, regulations either prohibit actions that do not constitute harm to other people, such as procedures that are considered unsafe by the regulator, or actually compel the regulated person or entity to do certain things that the regulator deems necessary (a positive power). This is why it was necessary for the Minerals Management Service to recruit its regulators out of the oil industry. Who else can tell an oil company how to run an oil well?
However, the president is a bit disingenuous in implying that this agency is unique in being peopled with industry insiders. The practice of hiring insiders to regulate their former employers is the norm in Washington, as is the practice of the regulated companies actually drafting the regulations that they are to be governed by themselves.
If you think that this means that the resulting regulations don’t do a very good job of protecting consumers or the environment, you are correct. Workers aren’t safer since the creation of OSHA, food and drugs aren’t safer since the creation of the FDA, consumers aren’t protected by the Consumer Protection Agency, and as we are now painfully aware, the oceans aren’t safer because of the Minerals Management Service.
However, this “public-private partnership” (formerly known as fascism) does accomplish one thing. It creates massive compliance costs for the companies that are regulated. Combined with the fact that the regulations are written specifically to give an advantage to existing conglomerates, these artificially high start-up costs have the effect of insulating large, established companies from new competition. The result in each regulated industry is a small group of large corporations that have traded their liberty for the high profits resulting from artificially limited competition.
This does not mean that there are not conflicts between government and the corporations. Since the regulations are far too numerous and onerous to be followed, the regulated companies are constantly violating them. When a consumer or environmental issue makes the news, there is an immediate call for more or better regulations to prevent a similar incident from occurring again. The politician uses the incident to seek more power, while the corporation seeks greater protection from competition. The consumer pays higher prices and gets products that are of lower quality and safety than those that would be available in a free market.
This dysfunctional relationship between government, business, and consumers is allowed to persist for only one reason: the widespread misconception that it would be more profitable for unregulated industries to gouge their customers and sacrifice their safety and that of the environment in order to reduce their costs and widen their profit margins. This incorrect assumption flies completely in the face of history.
BP will pay at least $20 billion, not in fines for violating regulations, but in compensation to the people whose lives and properties were damaged by their negligence. There are already widespread rumors that they will be broken up and sold off because of the financial vulnerability resulting from the fall in the price of their stock. Similarly, Enron went bankrupt due to market forces and its officers were prosecuted for breaking the laws against fraud. Both of these outcomes would have been the same without the existence of the regulations and regulatory agencies that governed these companies, because they occurred as the result of the government enforcing property rights, not regulations. When property rights are enforced, the profit motive discourages companies from exposing themselves to liability. Those who do not heed this natural law quickly find themselves out of business.
Thomas Jefferson once wrote, “No man has a natural right to commit aggression on the equal rights of another; and this is all from which the laws ought to restrain him.” He was right. It is a violation of liberty for the government to try to prevent crime or negligence, which it is unable to do anyway. There will always accidents, regardless of regulations that attempt to prevent them. If you want to maximize protection of consumers and the environment, regulations are not the answer.
A truly free market without artificial barriers to new competitors will force companies to constantly improve their products, services, and production processes and limit their exposure to liability. It will also force them to please their customers. The companies that do these things the best will outperform and eventually eliminate those companies that do not. This does not represent “companies regulating themselves,” as President Obama argues, but rather regulation by economic law.
Liberals constantly rail against Big Oil, Big Pharma, and large corporations in general. However, they then call for expansion of the fascist regulatory complex that created them and keeps them big. The cure for the disease is not more of the bacteria that caused it. If you want to see fairness to consumers and protection of the environment, a truly free market is the only answer.
*Transcript of entire speech
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 2010
Sunday, June 27, 2010
Monday, June 21, 2010
Hooray for Hollywood?
Libertarians generally cringe at most of what comes out of Hollywood and for good reason. The consistent message from its movies and movie stars is that private property and free enterprise are the scourge of society, that profits are made by exploiting the poor and working classes, and that private industry is the enemy of nature that will eventually destroy the earth.
Given this consistent anti-freedom message, it would be hard to blame anyone for a reflexive roll of the eyes upon hearing that Kevin Costner has come forward regarding the BP oil spill. However, this real-life story has a surprising twist. Costner is not calling for some tax-funded government boondoggle. Nor is he taking the opportunity to lecture the masses about their responsibility to sacrifice their lives and property to save the earth or why they should feel guilty for polluting it merely by being alive. Instead, Costner has provided a solution, born out of his entrepreneurial interest in a new technology, that may be effective in cleaning up the oily gulf.
According to an article in the LA Times, Costner and a business partner acquired Ocean Therapy Industries after the Exxon Valdez oil spill and “has spent 15 years and $24 million of his own money on this technology.” The technology had little commercial potential until the Deepwater Horizons accident, which may also qualify Costner as – gasp – a speculator.
The article goes on to say that, “The machines essentially operate like big, floating vacuum cleaners, which suck up oily water and spin it around at high speed. On one side, it spits out pure oil, which can be recovered. The other side spits out 99% pure water.” Costner and his partner hope to sell the reclaimed oil and donate most of the profits to local parishes which have suffered because of the spill. Presumably, the revenues for selling the machines themselves will constitute a handsome return on investment for Costner and his partner.
Whatever Costner’s political views may be, his actions speak louder than words. He is demonstrating yet again that every innovation that has improved the quality of human life has been the result of entrepreneurs taking risks in the hope of profits. While President Obama is making speeches and looking for asses to kick, private enterprise has stepped forward with a solution that will benefit all parties involved. Like all exchanges in a free market, the customer benefits from a new product that it needs or wants, the entrepreneur is enriched for risking his own money and devoting his own labor and time, and all of humanity benefits from the existence of new technology. There are no “losers” in a voluntary exchange of property.
In all fairness, this technology was originally developed by the U.S. government. However, it took the vision, commitment, and risk tolerance of a private investor to transform the technology into something useful and make it available when the time was right. This is also not without precedent. In the 1980’s, entrepreneur’s saw opportunity in a little-known technology called ARPANET, the result of a partnership between MIT and the Department of Defense. They decided to risk their own money developing this technology into something that would actually be useful to everyday people. They created products and services that billions now benefit from and the entrepreneurs were enriched in the process. Today, we call that technology the Internet.
Hopefully, Costner’s fellow actors, producers, and directors will not vilify Costner for “making money on this environmental tragedy.” I recommend that they look at it that Costner is “making the big, bad oil company pay” for the damage it has done. However, no amount of spin can change the facts. This solution was provided by a private entrepreneur who took a risk in the hope of profits. As far as this crisis is concerned, the score is Market 1, Government 0.
Libertarians don’t get to say this very often, so let me be the first: Hooray for Hollywood! Oh, and Kevin, good luck with your venture. I hope you make a million bucks.
Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!
Home
© Thomas Mullen 2010
Given this consistent anti-freedom message, it would be hard to blame anyone for a reflexive roll of the eyes upon hearing that Kevin Costner has come forward regarding the BP oil spill. However, this real-life story has a surprising twist. Costner is not calling for some tax-funded government boondoggle. Nor is he taking the opportunity to lecture the masses about their responsibility to sacrifice their lives and property to save the earth or why they should feel guilty for polluting it merely by being alive. Instead, Costner has provided a solution, born out of his entrepreneurial interest in a new technology, that may be effective in cleaning up the oily gulf.
According to an article in the LA Times, Costner and a business partner acquired Ocean Therapy Industries after the Exxon Valdez oil spill and “has spent 15 years and $24 million of his own money on this technology.” The technology had little commercial potential until the Deepwater Horizons accident, which may also qualify Costner as – gasp – a speculator.
The article goes on to say that, “The machines essentially operate like big, floating vacuum cleaners, which suck up oily water and spin it around at high speed. On one side, it spits out pure oil, which can be recovered. The other side spits out 99% pure water.” Costner and his partner hope to sell the reclaimed oil and donate most of the profits to local parishes which have suffered because of the spill. Presumably, the revenues for selling the machines themselves will constitute a handsome return on investment for Costner and his partner.
Whatever Costner’s political views may be, his actions speak louder than words. He is demonstrating yet again that every innovation that has improved the quality of human life has been the result of entrepreneurs taking risks in the hope of profits. While President Obama is making speeches and looking for asses to kick, private enterprise has stepped forward with a solution that will benefit all parties involved. Like all exchanges in a free market, the customer benefits from a new product that it needs or wants, the entrepreneur is enriched for risking his own money and devoting his own labor and time, and all of humanity benefits from the existence of new technology. There are no “losers” in a voluntary exchange of property.
In all fairness, this technology was originally developed by the U.S. government. However, it took the vision, commitment, and risk tolerance of a private investor to transform the technology into something useful and make it available when the time was right. This is also not without precedent. In the 1980’s, entrepreneur’s saw opportunity in a little-known technology called ARPANET, the result of a partnership between MIT and the Department of Defense. They decided to risk their own money developing this technology into something that would actually be useful to everyday people. They created products and services that billions now benefit from and the entrepreneurs were enriched in the process. Today, we call that technology the Internet.
Hopefully, Costner’s fellow actors, producers, and directors will not vilify Costner for “making money on this environmental tragedy.” I recommend that they look at it that Costner is “making the big, bad oil company pay” for the damage it has done. However, no amount of spin can change the facts. This solution was provided by a private entrepreneur who took a risk in the hope of profits. As far as this crisis is concerned, the score is Market 1, Government 0.
Libertarians don’t get to say this very often, so let me be the first: Hooray for Hollywood! Oh, and Kevin, good luck with your venture. I hope you make a million bucks.
Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!
Home
© Thomas Mullen 2010
Thursday, June 17, 2010
Congressman Ron Paul Endorses A Return to Common Sense!
“Thomas Mullen is a knowledgeable and passionate libertarian and “A Return to Common Sense” is a valuable addition to the libertarian literature. Those new to the freedom movement will benefit from Tom’s introduction to both the practical and moral arguments for freedom. Long-time activists will benefit from Tom’s explanation of why strict adherence to principle is vital to the future success of the liberty moment.”
- Representative Ron Paul (TX-14)
Get your copy right here!
e-mail Tom Mullen
- Representative Ron Paul (TX-14)
Get your copy right here!
e-mail Tom Mullen
Saturday, June 12, 2010
The Three Types of Government Spending
Any objection whatsoever to some new, tax-funded government program elicits a consistent response from liberals or progressives. “You just don’t want to pay your fair share,” or “I guess we won’t see you driving on any of those government roads or calling the government police or fire departments.” The underlying assumption is that taxation is an all or nothing proposition. Either there is nothing that the government can collect taxes for or there is nothing that the government cannot collect taxes for. There are no principles upon which to base an answer to the question, “Is this a legitimate function of government?”
While there are probably thousands of different services that governments spend money on, they can generally be divided into three broad categories: security, public services, and wealth redistribution. Libertarians[1] argue that the only legitimate government spending is on security. Conservatives generally approve of security and some public services with their rhetoric while engaging in all three types of spending when in public office. Liberals generally endorse all three types of spending with both their rhetoric and their actions while in public office.
“Security” includes all government functions which attempt to defend citizens from aggression against their rights by other human beings. These would include the military, various police forces, and the civil and criminal courts. These are the functions of government whose purpose is to secure the individual rights of life, liberty, property, etc.
It is important to remember that even if these are legitimate functions of government, it does not mean that they cannot be abused. For example, a small suburban village in a low-crime area may not need more than the county sheriff for a police force, but may instead bear a tax burden of village, town, county, state, and even federal police forces. However, these debates revolve around how efficiently the services are being provided, not whether they should be provided by the government at all.
“Public services” generally refers to services provided to all members of society. What makes a service a “public service” is that it can be reasonably assumed that every member of the society has an equal opportunity to utilize it. Examples include roads, bridges, public libraries, garbage collection services, and fire departments. Libertarians argue that these are goods and services that the private sector can provide. Their objection to providing them with tax dollars is that those who do not consent to purchase them are still forced to pay. While this is also true of security services, libertarians acquiesce to those on the assumption that it would be impossible to exercise property rights without a government in place to defend them.
Certainly, a bridge between a new suburb and the city may improve commerce for the entire city. However, it is not necessary to protect anyone’s rights. Therefore, libertarians argue that those who want to build the bridge should provide the capital for it themselves and are perfectly within their rights to charge a fee to those who wish to use the bridge. Conservatives have traditionally argued that these services can be funded by the government and provided by private corporations under government contracts. Liberals generally support public services as well, although they sometimes object to them being provided by private firms.
Like security services, public services are prone to abuse and corruption, even if one accepts that they are legitimate functions of government. Public funds are often wasted on services that are not needed or services that are poorly rendered because they are provided by politically-connected government employees or private firms, rather than by the most qualified. Consider the “bridges to nowhere,” the roadwork construction projects that never end, or the multitude of scandals where it was discovered that $500 was spent on a single nail or some other gross abuse of public funds occurred.
The third category of government spending is wealth redistribution. Wealth redistribution collects taxes from one group of people in order to provide services to another group. What makes this type of government spending different from public services is the fact that the goods or services provided do not benefit all members of society equally. For example, health benefits under Medicaid are paid for by all taxpayers but are only available to people whose income is under a defined eligibility level. Thus, those funds are literally taken from one group and redistributed to another. Both libertarians and conservatives argue that this is nothing more than legalized theft, although conservatives have often led or acquiesced to expansion of this type of spending once in office. President Bush’s expansion of Medicare is one of the most recent examples. Liberals and progressives generally support this type of spending, arguing that it is each person’s moral responsibility to “contribute.”
In order to have an informed debate about a new government program, one must identify which category the proposed program belongs in. Too often the distinctions between these categories are blurred by both critics and proponents. Most often, a program that would properly be categorized as wealth redistribution is represented as a public service in an effort to persuade those that must pay for it that it is their civic duty to do so.
For example, if the federal government issues a grant to build a commuter train in Florida, it is really redistributing the wealth of all of those outside of the service area of the train, especially those in other states who were taxed to underwrite the grant. It is certainly not reasonable to assume that citizens of Montana have an equal opportunity to utilize that train, yet they were taxed to fund it. Therefore, a commuter train to benefit Floridians does not fit the definition of a “public service” for the entire nation. Interestingly, it is exactly this type of government spending that the 2010 Census form cites as its primary reason for collecting data (so that your community receives its “fair share” of federal funding).
Similarly, Social Security and Medicare purport to be public services which provide a plan for wage earners to save for their retirement. However, everyone knows that since the beginning of both of those programs, the taxes collected to fund them have gone to pay current beneficiaries, not into some mythical trust fund. In fact, when Social Security did run surpluses in the past (when contributions exceeded the payouts to current beneficiaries), the government spent the excess money and replaced it with its own bonds, which are just promises to pay based upon future taxes! So, Social Security is and has always been a wealth redistribution program. The same is true for Medicare.
Wealth redistribution can even be disguised as security with the right amount of government propaganda. The military is a security function insofar as it defends its citizens against aggression by foreign nations. However, when the military grows beyond what is reasonably necessary for defense of U.S. citizens and into a worldwide institution, surrounded by multi-billion dollar corporations which exist solely to support it, and which both attacks nations that have not committed aggression against the United States and stations troops in over 130 nations, one must ask the question, “Who is benefitting from this tax-funded monstrosity?”
It is hard to make an argument that the security of the United States depends upon the tens of thousands of troops stationed in Germany, Korea, or Japan. U.S. troops arrived in those countries during a war that ended 65 years ago and remained there supposedly because of a Cold War that ended 20 years ago. At this point, the only Americans benefitting from the continuation of the U.S. troop presence around the world are the defense contractors who sell goods and services to the government to support the operations. Is this not wealth redistribution disguised as security?
Often, conservatives will argue that America is protecting her allies by stationing troops in Europe, Asia, and the rest of the world. However, even this argument does not hold up to scrutiny. If the money to support these operations is collected from Americans but really benefits German, Japanese, or other foreign citizens, is this not still wealth redistribution disguised as security? This is one of the main reasons that Washington, Adams, and Jefferson told us not to make those alliances in the first place and spent most of their presidencies trying to keep America out of foreign wars.
Liberals represent the latest government foray into the health care industry as a public service. They claim that this will provide coverage for the 45 million Americans who are not currently covered by some form of health insurance coverage. While this number is widely disputed by opponents as being grossly inflated, it still only represents 15% of the population, even if accurate. It then follows that 85% of the population already has some form of health care coverage. Therefore, how can it be argued that all U.S. citizens will benefit equally from this program?
The program will also provide subsidies to those who cannot afford to buy health insurance coverage on their own, which is mandated for everyone.[2] This aspect of the program is undisguised wealth redistribution, as taxes will be collected from all Americans and used to purchase services only for those who qualify due to their income. There is not even a scheme in place for this program to make it look as if the recipients are funding the benefits, as there is with Medicare or Social Security.
The history of federal government spending in America can be separated into three eras. The first was dominated by the ideas of Jefferson and classical liberals (now called “libertarians) and enshrined in the Declaration of Independence. “To secure these rights, governments are instituted among men.” That document unambiguously limited government’s role to security.
Thirteen years later, Alexander Hamilton and his conservatives succeeded in drastically expanding the role of government with the ratification of the U.S. Constitution. That document does not limit the government’s role to “securing rights,” but also to “promote the general welfare” and “form a more perfect union.” It grants the U.S. government the power to tax for the purposes of “promoting the general welfare.” This expansion of the role of government to include public services was then increasingly exploited by conservatives throughout the next century to institute wealth redistribution programs for the benefit of a wealthy elite, all disguised as public services or security. These included subsidies to corporations to build roads and canals, subsidies to railroads, and the establishment of a large, standing military force.[3]
Once the conservatives succeeded in establishing government as wealth redistributor to the wealthy, liberals abandoned the philosophy of government limited to security and instead began to advocate government as wealth redistributor to the poor and middle classes. This transformation can be traced roughly to the Woodrow Wilson administration, which combined elements of the conservative philosophy with modern liberal ideas of social justice. With the FDR administration, the transformation of liberal philosophy was complete. The liberals now sought to redistribute wealth to the poor and middle classes, while the conservatives continued to redistribute to the wealthy. These are the choices presented to Americans to this day.
There are large grassroots movements forming with one rallying point in common: they are all opposed to a federal government that spends $3.6 trillion dollars a year and shows no sign of slowing down. If the movements are to succeed, their constituents must clearly understand the three types of government spending and which one really costs the most. True security makes up so small a percentage of the federal budget that no income tax, national sales tax, or “value added tax” is necessary to fund it. Truly public services are also insignificant in terms of cost. Even the hapless postal service, for all of its inefficiency and waste, does not make up a significant portion of the federal budget.
No, it is not spending on security or public services that has bankrupted the federal government and destroyed the U.S. economy. The true cause of the problem has been the massive redistribution of wealth, perpetrated by conservatives for the benefit of the wealthy and by liberals for the benefit of everyone else. It is this type of government spending that must be recognized in all of its disguises and eliminated if the United States is to be saved.
[1] I use the term “libertarians” to describe those who advocate limited government. There are also many libertarians who advocate a completely stateless society, with even security functions provided by private firms in a free market.
[2] This is a gross violation of liberty and property rights as well.
[3] See Tom Dilorenzo’s excellent body of work on this, including Hamilton’s Curse, How Capitalism Saved America, and The Real Lincoln.
Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!
Home
© Thomas Mullen 2010
While there are probably thousands of different services that governments spend money on, they can generally be divided into three broad categories: security, public services, and wealth redistribution. Libertarians[1] argue that the only legitimate government spending is on security. Conservatives generally approve of security and some public services with their rhetoric while engaging in all three types of spending when in public office. Liberals generally endorse all three types of spending with both their rhetoric and their actions while in public office.
“Security” includes all government functions which attempt to defend citizens from aggression against their rights by other human beings. These would include the military, various police forces, and the civil and criminal courts. These are the functions of government whose purpose is to secure the individual rights of life, liberty, property, etc.
It is important to remember that even if these are legitimate functions of government, it does not mean that they cannot be abused. For example, a small suburban village in a low-crime area may not need more than the county sheriff for a police force, but may instead bear a tax burden of village, town, county, state, and even federal police forces. However, these debates revolve around how efficiently the services are being provided, not whether they should be provided by the government at all.
“Public services” generally refers to services provided to all members of society. What makes a service a “public service” is that it can be reasonably assumed that every member of the society has an equal opportunity to utilize it. Examples include roads, bridges, public libraries, garbage collection services, and fire departments. Libertarians argue that these are goods and services that the private sector can provide. Their objection to providing them with tax dollars is that those who do not consent to purchase them are still forced to pay. While this is also true of security services, libertarians acquiesce to those on the assumption that it would be impossible to exercise property rights without a government in place to defend them.
Certainly, a bridge between a new suburb and the city may improve commerce for the entire city. However, it is not necessary to protect anyone’s rights. Therefore, libertarians argue that those who want to build the bridge should provide the capital for it themselves and are perfectly within their rights to charge a fee to those who wish to use the bridge. Conservatives have traditionally argued that these services can be funded by the government and provided by private corporations under government contracts. Liberals generally support public services as well, although they sometimes object to them being provided by private firms.
Like security services, public services are prone to abuse and corruption, even if one accepts that they are legitimate functions of government. Public funds are often wasted on services that are not needed or services that are poorly rendered because they are provided by politically-connected government employees or private firms, rather than by the most qualified. Consider the “bridges to nowhere,” the roadwork construction projects that never end, or the multitude of scandals where it was discovered that $500 was spent on a single nail or some other gross abuse of public funds occurred.
The third category of government spending is wealth redistribution. Wealth redistribution collects taxes from one group of people in order to provide services to another group. What makes this type of government spending different from public services is the fact that the goods or services provided do not benefit all members of society equally. For example, health benefits under Medicaid are paid for by all taxpayers but are only available to people whose income is under a defined eligibility level. Thus, those funds are literally taken from one group and redistributed to another. Both libertarians and conservatives argue that this is nothing more than legalized theft, although conservatives have often led or acquiesced to expansion of this type of spending once in office. President Bush’s expansion of Medicare is one of the most recent examples. Liberals and progressives generally support this type of spending, arguing that it is each person’s moral responsibility to “contribute.”
In order to have an informed debate about a new government program, one must identify which category the proposed program belongs in. Too often the distinctions between these categories are blurred by both critics and proponents. Most often, a program that would properly be categorized as wealth redistribution is represented as a public service in an effort to persuade those that must pay for it that it is their civic duty to do so.
For example, if the federal government issues a grant to build a commuter train in Florida, it is really redistributing the wealth of all of those outside of the service area of the train, especially those in other states who were taxed to underwrite the grant. It is certainly not reasonable to assume that citizens of Montana have an equal opportunity to utilize that train, yet they were taxed to fund it. Therefore, a commuter train to benefit Floridians does not fit the definition of a “public service” for the entire nation. Interestingly, it is exactly this type of government spending that the 2010 Census form cites as its primary reason for collecting data (so that your community receives its “fair share” of federal funding).
Similarly, Social Security and Medicare purport to be public services which provide a plan for wage earners to save for their retirement. However, everyone knows that since the beginning of both of those programs, the taxes collected to fund them have gone to pay current beneficiaries, not into some mythical trust fund. In fact, when Social Security did run surpluses in the past (when contributions exceeded the payouts to current beneficiaries), the government spent the excess money and replaced it with its own bonds, which are just promises to pay based upon future taxes! So, Social Security is and has always been a wealth redistribution program. The same is true for Medicare.
Wealth redistribution can even be disguised as security with the right amount of government propaganda. The military is a security function insofar as it defends its citizens against aggression by foreign nations. However, when the military grows beyond what is reasonably necessary for defense of U.S. citizens and into a worldwide institution, surrounded by multi-billion dollar corporations which exist solely to support it, and which both attacks nations that have not committed aggression against the United States and stations troops in over 130 nations, one must ask the question, “Who is benefitting from this tax-funded monstrosity?”
It is hard to make an argument that the security of the United States depends upon the tens of thousands of troops stationed in Germany, Korea, or Japan. U.S. troops arrived in those countries during a war that ended 65 years ago and remained there supposedly because of a Cold War that ended 20 years ago. At this point, the only Americans benefitting from the continuation of the U.S. troop presence around the world are the defense contractors who sell goods and services to the government to support the operations. Is this not wealth redistribution disguised as security?
Often, conservatives will argue that America is protecting her allies by stationing troops in Europe, Asia, and the rest of the world. However, even this argument does not hold up to scrutiny. If the money to support these operations is collected from Americans but really benefits German, Japanese, or other foreign citizens, is this not still wealth redistribution disguised as security? This is one of the main reasons that Washington, Adams, and Jefferson told us not to make those alliances in the first place and spent most of their presidencies trying to keep America out of foreign wars.
Liberals represent the latest government foray into the health care industry as a public service. They claim that this will provide coverage for the 45 million Americans who are not currently covered by some form of health insurance coverage. While this number is widely disputed by opponents as being grossly inflated, it still only represents 15% of the population, even if accurate. It then follows that 85% of the population already has some form of health care coverage. Therefore, how can it be argued that all U.S. citizens will benefit equally from this program?
The program will also provide subsidies to those who cannot afford to buy health insurance coverage on their own, which is mandated for everyone.[2] This aspect of the program is undisguised wealth redistribution, as taxes will be collected from all Americans and used to purchase services only for those who qualify due to their income. There is not even a scheme in place for this program to make it look as if the recipients are funding the benefits, as there is with Medicare or Social Security.
The history of federal government spending in America can be separated into three eras. The first was dominated by the ideas of Jefferson and classical liberals (now called “libertarians) and enshrined in the Declaration of Independence. “To secure these rights, governments are instituted among men.” That document unambiguously limited government’s role to security.
Thirteen years later, Alexander Hamilton and his conservatives succeeded in drastically expanding the role of government with the ratification of the U.S. Constitution. That document does not limit the government’s role to “securing rights,” but also to “promote the general welfare” and “form a more perfect union.” It grants the U.S. government the power to tax for the purposes of “promoting the general welfare.” This expansion of the role of government to include public services was then increasingly exploited by conservatives throughout the next century to institute wealth redistribution programs for the benefit of a wealthy elite, all disguised as public services or security. These included subsidies to corporations to build roads and canals, subsidies to railroads, and the establishment of a large, standing military force.[3]
Once the conservatives succeeded in establishing government as wealth redistributor to the wealthy, liberals abandoned the philosophy of government limited to security and instead began to advocate government as wealth redistributor to the poor and middle classes. This transformation can be traced roughly to the Woodrow Wilson administration, which combined elements of the conservative philosophy with modern liberal ideas of social justice. With the FDR administration, the transformation of liberal philosophy was complete. The liberals now sought to redistribute wealth to the poor and middle classes, while the conservatives continued to redistribute to the wealthy. These are the choices presented to Americans to this day.
There are large grassroots movements forming with one rallying point in common: they are all opposed to a federal government that spends $3.6 trillion dollars a year and shows no sign of slowing down. If the movements are to succeed, their constituents must clearly understand the three types of government spending and which one really costs the most. True security makes up so small a percentage of the federal budget that no income tax, national sales tax, or “value added tax” is necessary to fund it. Truly public services are also insignificant in terms of cost. Even the hapless postal service, for all of its inefficiency and waste, does not make up a significant portion of the federal budget.
No, it is not spending on security or public services that has bankrupted the federal government and destroyed the U.S. economy. The true cause of the problem has been the massive redistribution of wealth, perpetrated by conservatives for the benefit of the wealthy and by liberals for the benefit of everyone else. It is this type of government spending that must be recognized in all of its disguises and eliminated if the United States is to be saved.
[1] I use the term “libertarians” to describe those who advocate limited government. There are also many libertarians who advocate a completely stateless society, with even security functions provided by private firms in a free market.
[2] This is a gross violation of liberty and property rights as well.
[3] See Tom Dilorenzo’s excellent body of work on this, including Hamilton’s Curse, How Capitalism Saved America, and The Real Lincoln.
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 2010
Wednesday, June 2, 2010
What is Limited Government?
It is certainly encouraging to see a massive grassroots movement demanding that government cease its exponential growth. The Tea Party movement has already flexed its muscles in some high-profile elections, and there is widespread consensus that it will be a factor in the 2010 elections. For the first time in over a century, there is a critical mass of people actually demanding limited government.
However, there is one very important question that must be answered. What is limited government?
The answer supplied by Republicans for the past several decades has been “lower taxes, balanced budgets, and less government spending.” These are all wonderful ideas, although Republicans have hardly put them into practice when given the reins of power. Afterwards, their supporters have chastised them for “not being true conservatives,” although I’m not sure that the conservative movement has ever really been about “small government.” In any case, the fundamental assumption underlying conservative rhetoric is that the limits of government are quantitative. One is led to believe that if the government would only spend less on health care, education, stimulus packages, and other programs (excluding the military, of course), that freedom, peace, and prosperity would be just around the corner.
However, limited government has nothing to do with how much money government spends, but rather what government is allowed to spend money on. Restoring freedom and constitutional government depends not just upon cutting taxes, but redefining what services government can legitimately tax its citizens to underwrite. At one time in America, there was a clear and unambiguous answer to that question: taxation was limited to underwriting the defense of life, liberty, and property.
Politicians have to mince words in order to keep fragile constituencies together, so they rarely make unambiguous statements. When one faction among their supporters opposes a new government health care program, they cannot agree on principle and say that government should have no role in providing health care. This would alienate another faction among their supporters that are currently benefitting from an already well-established government health care program. So, the politician uses words like “sensible” and “market-driven” in order to attack his opponent’s program without acknowledging the principle that it violates whether administered “sensibly” or not.
Truly limited government can only mean one thing: enforcing the non-aggression principle, known to our founders as “the law of nature.” Jefferson said that no man has the right to commit aggression on the equal rights of another, and that is all from which the law ought to restrain him. As government is merely the societal use of force, its limits are no different than the limits on the use of force by an individual. An individual may use force only in defense against aggression and under no other circumstances. He may never initiate force. The words “sensible,” “lower,” and “smaller” do not apply. The limits on government are absolute.
The argument that needs to be made against the current health care program is that it violates the law of nature. By forcing some people to pay for health care services that are provided to others and by forcing everyone to purchase health insurance regardless of their consent, government exceeds the natural limits of its power. It initiates force and thereby commits aggression against every individual in society. The initiation of aggression results in the state of war. It is for this reason that the new health care program should be repealed. Once the argument is diverted to one simply about cost or the practical means to fund the program, the principle of limited government has been abandoned.
While this is a relatively simple answer, as are all answers to questions of justice, it is a double-edged sword for conservatives. Once the true limits of government power are acknowledged, then a large swath of the conservative platform is called into question. Most obviously, garnering support from older Americans in opposing “Obamacare” on the grounds that it will necessitate cuts in Medicare contradicts the principle of limited government. The flimsy distinction between the new health care program and the old has been that Medicare recipients have “paid into the system all of their lives.” While this is undoubtedly true, everyone knows that those payments all went to underwrite previous beneficiaries and not into some magical trust fund. Medicare is no less a redistribution program than Obamacare. It just benefits a different special interest group.
While support for Medicare may merely be a political necessity for conservative politicians, truly limited government is also at odds with what has become the bedrock of modern conservatism: support for the worldwide U.S. military establishment. This is not to say that limited government means no military establishment at all. However, it does mean that the government has no legitimate authority to maintain standing armies overseas, to fight wars to protect one nation from another, or to protect a foreign people from a despotic government. The natural limit of government military action is to defend its own citizens against aggression by a foreign nation. Beyond this, it is initiating force and exceeding that natural limit.
One might argue that every individual has a right and a duty to protect a fellow human being from aggression by a third party, and that therefore the U.S. government’s military interventions around the world are justified. This was the basis for the (second) argument for the Iraq war. Saddam Hussein was oppressing his people and the United States had a duty to protect them from him. However, no individual has a right to force someone else to defend a third party against aggression. Every American had the right to send money to support Hussein’s opponents or even to go and fight in a revolution to overthrow him. However, no American had the right to force his neighbor to do so. The natural limit on military spending is that which is necessary to protect those taxed to support it. Humanitarian aid in any form must be voluntary.
Liberals constantly use the term “fair share” when justifying the egregious taxation and redistribution system that the U.S. government has become. Of course, this begs the question, “What is my fair share of services that I don’t use and that I actively oppose?” The only rational answer to this question is “zero.” However, once you come to this inescapable conclusion, virtually all government social and economic programs must be eliminated, as they are all based upon taxing one person in order to provide benefits to another.
Limited government does require each individual to pay his fair share, which is the cost to protect his own life, liberty, and property and that of his dependents. It is limited to what is necessary to “secure these rights.” While everyone may not have an equal amount of property, everyone has equal rights and thus an equal stake in providing for their defense. An examination of the U.S. government’s budget reveals that the cost of providing this defense of individual rights is orders of magnitude less than what is spent now. A government operating within its natural limits would not require an income tax, a value added tax, or a “fair tax.” American history has already proven this.
While it may be justified in a theoretical sense, America’s massive redistribution state cannot be abolished with the stroke of a pen. Not even the staunchest libertarian really wants to see Social Security, Medicare, or public welfare turned off tomorrow, with the poor and elderly left to fend for themselves. However, to be committed to limited government means to be committed to working towards eliminating these programs, not reforming them. This may take generations to accomplish, but we must first at least acknowledge that they have to go.
What we can do right now is end our worldwide military empire. Unlike the social programs, this would not mean short-term hardship in exchange for long-term gain. Getting our soldiers out of the 130 countries that they are stationed in would provide an immediate benefit both to the United States and the rest of the world. Proponents of the empire would argue that a sudden withdrawal of our troops would “destabilize” the regions that they are stationed in, but this is absurd. The presence of troops does not provide stability. It inspires resentment and provokes the inhabitants to retaliate. Without a troop presence in the Middle East, the motivation for terrorism would quickly fade. It is much easier to recruit suicide bombers when you can show your recruits armed troops in their own neighborhood than it is trying to convince them to give their lives to stop women in some far off land from wearing mini-skirts. Does anyone really believe that this is why they want to kill us?
A little simple arithmetic will demonstrate that even eliminating all military spending would not allow us to pay for our welfare state. The total military budget is around $700 billion, while Social Security and Medicare alone are over $1 trillion, with Medicaid adding $400 billion more. This does not even take into consideration all of the smaller programs for housing, education, medical research, “infrastructure,” energy, agriculture – all of these programs violate the principle of limited government for the same reason that Obamacare does. Added together, the vast majority of non-military federal spending is some type of wealth redistribution. It would seem that there is no equitable way out.
The answer lies in revisiting the “fair share” idea. Unlike taxation, there is no such thing as a fair share of benefits derived from other people’s money. We must recognize that in order to undo the century of damage we have done to our society, some people are going to have to pay out more than they receive in benefits. We could certainly come up with a plan whereby people my age, in their mid-40’s, would only be guaranteed catastrophic coverage through Medicare and reduced payments from Social Security, both payable only with a demonstrated need rather than as an entitlement. This would allow new workers to get out of the system altogether and finally restore limited government and true social justice. Would it be fair? No. Neither is the status quo. However, it would lead to prosperity and justice for our children. The status quo will lead us to our destruction.
This is only one strategy and I am sure that smart people could come up with others. As the old saying goes, the first step in solving our problem is admitting that we have one. If we want limited government, we must recognize that it is far more than Obamacare or welfare for the poor that is violating the law of nature. Let us continue to oppose Obamacare, but let us also acknowledge the vast amount of work to do even after this new incursion into our liberty is vanquished.
Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!
Home
© Thomas Mullen 2010
However, there is one very important question that must be answered. What is limited government?
The answer supplied by Republicans for the past several decades has been “lower taxes, balanced budgets, and less government spending.” These are all wonderful ideas, although Republicans have hardly put them into practice when given the reins of power. Afterwards, their supporters have chastised them for “not being true conservatives,” although I’m not sure that the conservative movement has ever really been about “small government.” In any case, the fundamental assumption underlying conservative rhetoric is that the limits of government are quantitative. One is led to believe that if the government would only spend less on health care, education, stimulus packages, and other programs (excluding the military, of course), that freedom, peace, and prosperity would be just around the corner.
However, limited government has nothing to do with how much money government spends, but rather what government is allowed to spend money on. Restoring freedom and constitutional government depends not just upon cutting taxes, but redefining what services government can legitimately tax its citizens to underwrite. At one time in America, there was a clear and unambiguous answer to that question: taxation was limited to underwriting the defense of life, liberty, and property.
Politicians have to mince words in order to keep fragile constituencies together, so they rarely make unambiguous statements. When one faction among their supporters opposes a new government health care program, they cannot agree on principle and say that government should have no role in providing health care. This would alienate another faction among their supporters that are currently benefitting from an already well-established government health care program. So, the politician uses words like “sensible” and “market-driven” in order to attack his opponent’s program without acknowledging the principle that it violates whether administered “sensibly” or not.
Truly limited government can only mean one thing: enforcing the non-aggression principle, known to our founders as “the law of nature.” Jefferson said that no man has the right to commit aggression on the equal rights of another, and that is all from which the law ought to restrain him. As government is merely the societal use of force, its limits are no different than the limits on the use of force by an individual. An individual may use force only in defense against aggression and under no other circumstances. He may never initiate force. The words “sensible,” “lower,” and “smaller” do not apply. The limits on government are absolute.
The argument that needs to be made against the current health care program is that it violates the law of nature. By forcing some people to pay for health care services that are provided to others and by forcing everyone to purchase health insurance regardless of their consent, government exceeds the natural limits of its power. It initiates force and thereby commits aggression against every individual in society. The initiation of aggression results in the state of war. It is for this reason that the new health care program should be repealed. Once the argument is diverted to one simply about cost or the practical means to fund the program, the principle of limited government has been abandoned.
While this is a relatively simple answer, as are all answers to questions of justice, it is a double-edged sword for conservatives. Once the true limits of government power are acknowledged, then a large swath of the conservative platform is called into question. Most obviously, garnering support from older Americans in opposing “Obamacare” on the grounds that it will necessitate cuts in Medicare contradicts the principle of limited government. The flimsy distinction between the new health care program and the old has been that Medicare recipients have “paid into the system all of their lives.” While this is undoubtedly true, everyone knows that those payments all went to underwrite previous beneficiaries and not into some magical trust fund. Medicare is no less a redistribution program than Obamacare. It just benefits a different special interest group.
While support for Medicare may merely be a political necessity for conservative politicians, truly limited government is also at odds with what has become the bedrock of modern conservatism: support for the worldwide U.S. military establishment. This is not to say that limited government means no military establishment at all. However, it does mean that the government has no legitimate authority to maintain standing armies overseas, to fight wars to protect one nation from another, or to protect a foreign people from a despotic government. The natural limit of government military action is to defend its own citizens against aggression by a foreign nation. Beyond this, it is initiating force and exceeding that natural limit.
One might argue that every individual has a right and a duty to protect a fellow human being from aggression by a third party, and that therefore the U.S. government’s military interventions around the world are justified. This was the basis for the (second) argument for the Iraq war. Saddam Hussein was oppressing his people and the United States had a duty to protect them from him. However, no individual has a right to force someone else to defend a third party against aggression. Every American had the right to send money to support Hussein’s opponents or even to go and fight in a revolution to overthrow him. However, no American had the right to force his neighbor to do so. The natural limit on military spending is that which is necessary to protect those taxed to support it. Humanitarian aid in any form must be voluntary.
Liberals constantly use the term “fair share” when justifying the egregious taxation and redistribution system that the U.S. government has become. Of course, this begs the question, “What is my fair share of services that I don’t use and that I actively oppose?” The only rational answer to this question is “zero.” However, once you come to this inescapable conclusion, virtually all government social and economic programs must be eliminated, as they are all based upon taxing one person in order to provide benefits to another.
Limited government does require each individual to pay his fair share, which is the cost to protect his own life, liberty, and property and that of his dependents. It is limited to what is necessary to “secure these rights.” While everyone may not have an equal amount of property, everyone has equal rights and thus an equal stake in providing for their defense. An examination of the U.S. government’s budget reveals that the cost of providing this defense of individual rights is orders of magnitude less than what is spent now. A government operating within its natural limits would not require an income tax, a value added tax, or a “fair tax.” American history has already proven this.
While it may be justified in a theoretical sense, America’s massive redistribution state cannot be abolished with the stroke of a pen. Not even the staunchest libertarian really wants to see Social Security, Medicare, or public welfare turned off tomorrow, with the poor and elderly left to fend for themselves. However, to be committed to limited government means to be committed to working towards eliminating these programs, not reforming them. This may take generations to accomplish, but we must first at least acknowledge that they have to go.
What we can do right now is end our worldwide military empire. Unlike the social programs, this would not mean short-term hardship in exchange for long-term gain. Getting our soldiers out of the 130 countries that they are stationed in would provide an immediate benefit both to the United States and the rest of the world. Proponents of the empire would argue that a sudden withdrawal of our troops would “destabilize” the regions that they are stationed in, but this is absurd. The presence of troops does not provide stability. It inspires resentment and provokes the inhabitants to retaliate. Without a troop presence in the Middle East, the motivation for terrorism would quickly fade. It is much easier to recruit suicide bombers when you can show your recruits armed troops in their own neighborhood than it is trying to convince them to give their lives to stop women in some far off land from wearing mini-skirts. Does anyone really believe that this is why they want to kill us?
A little simple arithmetic will demonstrate that even eliminating all military spending would not allow us to pay for our welfare state. The total military budget is around $700 billion, while Social Security and Medicare alone are over $1 trillion, with Medicaid adding $400 billion more. This does not even take into consideration all of the smaller programs for housing, education, medical research, “infrastructure,” energy, agriculture – all of these programs violate the principle of limited government for the same reason that Obamacare does. Added together, the vast majority of non-military federal spending is some type of wealth redistribution. It would seem that there is no equitable way out.
The answer lies in revisiting the “fair share” idea. Unlike taxation, there is no such thing as a fair share of benefits derived from other people’s money. We must recognize that in order to undo the century of damage we have done to our society, some people are going to have to pay out more than they receive in benefits. We could certainly come up with a plan whereby people my age, in their mid-40’s, would only be guaranteed catastrophic coverage through Medicare and reduced payments from Social Security, both payable only with a demonstrated need rather than as an entitlement. This would allow new workers to get out of the system altogether and finally restore limited government and true social justice. Would it be fair? No. Neither is the status quo. However, it would lead to prosperity and justice for our children. The status quo will lead us to our destruction.
This is only one strategy and I am sure that smart people could come up with others. As the old saying goes, the first step in solving our problem is admitting that we have one. If we want limited government, we must recognize that it is far more than Obamacare or welfare for the poor that is violating the law of nature. Let us continue to oppose Obamacare, but let us also acknowledge the vast amount of work to do even after this new incursion into our liberty is vanquished.
Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!
Home
© Thomas Mullen 2010
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