The Fallacy of Whig Libertarianism

Writing in Reason, Alex Stevenson reviews a debate about continued UK participation in the European Union (EU).  Stevenson gives a useful overview of a new British political party, the United Kingdom Independence Party, and he questions whether participation in the EU is relevant to libertarianism. Stevenson holds on to an antiquated left-right dichotomy: He reasons that in the past the left opposed the EU, so there is no reason for libertarians to oppose it now. He claims that centralization is not a libertarian issue.

Bertrand de Jouvenal's On Power outlines the emergence of the unitary state from the decentralized fiefdoms of the Middle Ages.  De Jouvenal shows that a decline in freedom coincided with the growth of the unitary state under Louis XIV, the Sun King, and Henry VIII, and continued centralization led to further diminution of freedom. In his Economic Thought Before Adam Smith, Murray Rothbard shows that 17th century mercantilism in Spain, France, and the UK led to inefficient, anti-libertarian outcomes.

The dream of a centralized Europe goes back to the Romans, the inventors of the mixed economy and government-business partnerships.  Today's European and American economies are modernized versions of Rome, and the blessings of modernity were largely developed in the United States and Great Britain before the current, antique levels of centralization emerged.

Looking at the big picture, Charlemagne's conquest of much of Europe and Hitler's Third Reich were halting attempts to reestablish Rome. The EU is a third attempt.  No attempt, including the EU, has been libertarian in nature. Centralization of power is neither left nor right, but it is anti-libertarian because  centralization of power leads to abuse of power. It does so because citizens in a large, centralized state face high costs of organization, so protest becomes difficult.  In contrast, compact special interests with access to the central bank and high benefits per capita from organization can organize efficiently.  Centralization leads to skewed outcomes that benefit elite interests.  Smaller scale increases the benefit per capita from organization by general citizens.  Citizens' monitoring of and resistance to special interests increases as the scale of government decreases.

In the UK the Whigs began as the country party, and they originated many libertarian ideas.  In the US the Whig Party, which used the country party's name, was a court party and a reaction to Andrew Jackson's democratic and libertarian views.  By Jackson's time the courtly Federalists and country anti-Federalists were gone, but remnants of the anti-Federalists' views survived, including in the South, so when South Carolina threatened to secede in 1832 over its demand to nullify the Tariff of Abominations, Jackson threatened them with military force.

Jackson, then, was no libertarian, but he was too libertarian for the remnant of the Federalist Party, which Henry Clay, Abraham Lincoln's mentor, led by the 1820s.  In 1832 Clay founded the Whig  Party, the party of  a centralized bank, centralized power, subsidized banks, subsidized railroads, increased tariffs, big government, public works, and government waste.

The American Whigs have always claimed to be for freedom: Today's Republicans, like Mark Levin and Mitt Romney, continue to claim so just as today's Democrats continue to call themselves "liberals," a term that had been applied to libertarians in America until the 1890s.

While claiming to favor freedom, the Whigs--both today's Democrats and today's Republicans--are anti-libertarian, while a minority of decentralizers has tended to be libertarian.  The reason that decentralization fosters liberty even when some of the smaller units adopt anti-libertarian policies is that government cannot be measured as just a quantity.  The government that governs least is not the most libertarian government if it is imposed by force; it is fundamental to Lockean libertarianism that government be derived from the consent of the governed.

A government that governs an increasingly large population finds that it has a decreasing ability to derive consent from the governed.  If America had conquered the heart of Mexico instead of just California and Texas, it would have imposed less government on the Mexicans than they have since imposed on themselves. Nevertheless, as Thoreau points out in Civil Disobedience, such an action would not have been libertarian because it would have involved force rather than consent.  As the scope of a governed territory grows, the likelihood of consent diminishes.  A single government cannot represent the diverse needs of a large number of people.  In 1787 America had three million, mostly Christian, mostly white, mostly English citizens. The governments of about half of today's states govern larger, more diverse populations.

In economic terms there is only one real-world governmental utility curve; it reflects the sum of public choices about government's use of violence.  At the same time each citizen has his own utility curve, and culturally convergent groups, nations, communities, and peoples share utilities, so the distance from each individual's utility curve to the government curve is smaller under self-rule than it would be if strangers were to impose their values from without.

The imposition of an American state, albeit with a lesser quantity of government, would have been more divergent from the Mexicans' preferences than the Mexicans' own government has been even though there would have been less government under American imperialism. Hence, less can be more.  In the same way, the imposition of a centralized state on diverse Europeans leads to greater divergence from each group's preferences than would exist under decentralized, nationalist rule.  Scale increases coercion.

Decentralization not  only leads to freedom because it leads to competition among governments, but it  also leads to freedom because of a greater likelihood that a given government will reflect its citizens' preferences. The EU, like Rome, imposes a unitary set of preferences on all of its citizens. The sum of the distances of the preferences from the stated policy is greater than would be under a greater number of decentralized states.

As the power of Brussels increases, additional threats to liberty will emerge. The centralization of power will lead, as it did in the United States, to suppression of consent.  Suppression of consent in the United States led, within four decades after the Civil War, to suppression of  a wide range of rights, and within five decades to the founding of a central bank, an income tax, and an imperialistic foreign policy linked to the central bank and the income tax.

The Whigs, who in the post-Civil War, Mugwump era claimed to be libertarians, had ended government by the consent of the governed through the Civil War; they have since relentlessly extended the scope and power of the state, just as de Jouvenal describes. (De Jouvenal discusses FDR toward the end of his monumental work.)  For the past 120 years Whig liberalism has amounted  to government by experts who shape and control public opinion through a centralized media and enforce special interests' dictates  to a manipulated majority.

Ron Paul, Not Alexander Hamilton, Can Save Europe

In its May 26, 2012 issue,  The Economist has several excellent lead stories on the European crisis. It argues for democratic reform, political integration, and EU-wide supervision of banking.  It suggests that the costs of an EU break-up would be high, but the European public lacks an appetite for additional integration. Besides a European banking bureaucracy, The Economist argues for a European assumption of debt, which it calls mutualisation. Quoting Professor Vernon Bogdanor of King's College, London, its writers remind us that Alexander Hamilton fashioned American federalism through the federal government's assumption of debts. 

Europe needs Ron Paul, not Alexander Hamilton.

I do not doubt that a breakup of the European Union would be costly.  As well, I do not doubt that most Europeans, especially the innovative and hardworking ones, would have been better off without it.  In a letter to the editor in the same issue, Alexander Singer of Athens points out that the use of the catchword austerity with respect to recently mandated Greek reforms, in effect rejected in the May 6 election and now being re-polled on June 17,  is misguided.  Peloponnese garbage truck drivers are paid monthly pensions that are 50% above the wage of starting schoolteachers, according to Singer.

Regardless of the merits of Greek public pension policies, they are not market driven. A garbage truck driver who has saved and accumulated a fortune of one million dollars is entitled to an $80,000 pension.   One who has spent 15 years' worth of wages on hookers while sleeping in the back of his truck, only to retire at age 50 on a generous public pension, is not.

Nevertheless, the question is not whether a garbage truck driver should be paid a generous pension, but rather whether the driver produced value to justify it. Decisions about the equilibration of supply and demand are best left to markets; unions' political power allows them to divert wealth from poorer and less politically influential workers to themselves. 

The Greek government has made no attempt to equilibrate marginal wages and productivity, nor does the question matter to most Greeks, who are like children harping for an extra candy bar without an inkling as to from whence candy bars spring. It is evident that, to gratify a nation of childish fools,  the Greek government has, in yet another display of failed democratic processes, stolen the wealth used to pay that garbage truck driver from French banks. Now, French workers will be asked, through a ridiculous election outcome in France, to subsidize the French banks through monetary expansion, supposedly a "growth" strategy.

The economic incompetence advocated by the world's economists offers a convenient rationale for bankers to force workers to pay for their frivolous errors. Workers pay through inflationary policies that reduce real wages.  This is done in the supposed name of the workers themselves. Of course, The Economist's readers (bankers, lawyers,  politicians, public employees, executives, and university professors) are the true beneficiaries of stimulus policies and monetary expansion.  Since the ending of the world's reliance on gold in 1971, workers' real wages here in the US have not increased. 

The solution to Greece's and Europe's problems is recognition that more government causes greater harm.  The way out is through stabilization of money and long term stimulation of innovation and hard work through elimination of unnecessary government bureaucrats, starting with pointless institutions like the European Commission, a body whose purpose requires a Kant-sized metaphysics tome to explain.

Although there were inequities in the federal assumption of the Revolutionary War debt in the United States, there was at the time no doubt that every state had to some degree contributed to the war. There were reasons for states like Virginia and Maryland, which had repaid their war debts, to object to paying off less conservative states' debts. Nevertheless, Hamilton asked none of the states to subsidize unearned pensions for 50-year-old buffoons. In fact, many of the valiant soldiers were deprived of their pay, which was in by-then-valueless continentals.

To stabilize Europe's monetary system, the gold standard should replace the euro.  The European Central Bank should be shuttered, and the profligate French and German banks, which respectively lent to Greece and Spain, according to The Economist, should be put into whatever European equivalent to chapter 11 there may be.

One of the great ironies of the 1980s was that just as the USSR had proved itself a failure, Europe adopted a central authority akin to the Soviet Kremlin's. Every step of the way infertile bureaucratic wasters in the EU have advocated increasing government, regulation, and bureaucracy.  These privileged halfwits, who have produced nothing of value and have overseen a massive real estate bubble and debt collapse, have destroyed value.

As a European currency, gold is a better alternative than the euro  because it is not subject to quack economic theories advocated in places like The Economist, The New York Times, and most university economics departments.  Not one important economist in the world, including The Economist's staff, which spends all its time studying Europe, foresaw the current default-and-banking problems. The European bankers who lent to Spain and Greece are almost as dumb as the bankers in the US who have made one failed investment after the next for the past 60 years and who have survived only by means of one public subsidy after the next.   It is time that the global banking cancer was excised. Businesses that do not produce value, and $29 trillion in subsidies from the Fed so far say that the US banking system has not, need to die.

Recall that it was Hamilton, advocate of federalism, who favored central banking and opposed hard money.  Today, Ron Paul and his colleague Gary Johnson offer a set of solutions that can free Europe from the Carolingian dream of its uniting under a central authority.  Let Europe free itself from the medieval ideas of the Council on Foreign Relations, The Economist and The New York Times.  

A gold standard is how Europe should begin to reform itself.