The Pence Doctrine

I subscribe to Jim Rickards's Strategic Intelligence newsletter, which combines political with stock market intelligence. Rickards devotes the last issue to the Pence doctrine, based on the speech, embedded above, which the vice president gave at the Hudson Institute last October.  Rickards compares Vice President Pence's speech to George Kennan's Long Telegram, which set the stage for the Cold War containment policy of Truman and subsequent Cold War-era presidents.

Without revealing Rickards's proprietary stock advice, I conclude that investing in China is going to be a bumpier ride than most analysts have thought and that the rationales for the Trump trade war are  more complex and subtle than I had previously thought.   The arguments for free trade are correct, but they are entirely economic. Economics does not justify trade when trade creates a political or military threat. Chinese industrial espionage and its use of economic power to coerce trade secrets from American firms do create broad military threats whose costs are not borne by the firms that do business with China but who benefit from trade.

If economic actors are politically neutral and the Trump administration can wrangle concessions from Germany and China and then go back to free trade in short order, investors will be happy and economically the world will be better off. However,  Vice President Pence makes clear that there are intransigent political and military reasons to curtail trade with China, and these will not go away anytime soon even if the Chinese adopt a policy of reciprocity. (Economically, we are better off adopting a free trade stance even if a trading partner is protectionist. However, if we are selling ee cummings's nipponized "old sixth avenue el" to World War II Japan, it's a different matter.)

That American politicians and businesses have been willing to ignore China's history and ongoing practice of mass murder and political incarceration has been, until now, a moral disgrace. Americans, including me, have ignored torture and mass killing in the interest of a cheap sponge mop.  Pence states that one million Muslims are currently incarcerated in Chinese reeducation camps, where they are tortured and brainwashed.   Beijing continues to murder political dissidents; they continue to suppress minority religions, including  Tibetans and Christians as well as Muslims; they continue to attack free speech. Beijing's socialist state  has killed and continues to kill more human beings than almost any other in history--with a handful of similarly socialist exceptions.

Tech companies like Google and websites like Quora have long been apologists for China's mass murder regime. I was chastised and then I terminated my Quora account after a moderator insisted that my criticism of Chinese mass murder was outside Quora's speech parameters.  

As Vice President Pence points out, the Chinese state is taking control of  American newspapers and TV and radio stations. It runs cloaked newspaper advertisements on behalf of its political interests; it uses American airwaves as propaganda vehicles.  The Chinese mass murder state censors speech and scholarship in American universities.

The Chinese Scholars and Students Association functions as a spying organization against Chinese students here, and information it has gathered has been used to attack families of Chinese students.  It censors movie studies, and it has made direct changes to American-made films.  (Its power to do so comes from selective granting of access to its market.) In other words, Hollywood has been willing to sacrifice American security interests for access to the Chinese market.  It has attacked the New York Times and cyberattacked the Hudson Institute, where the vice president gave the speech.

President Trump, through the concerns enunciated by Vice President Pence, is the first president since Nixon's détente to identify the  threat that China poses. This has not been recognized in Democratic Party-dominated universities, Democratic Party-dominated newspapers, or Democratic Party-dominated media.  

If Rickards is right and the Pence doctrine is going to become foundational to American policy, the trade issue is going to become more complicated rather than less, and we may be in for a protracted cold war with China. 

Socialism: An Infantile Disorder

My last "Mitchell Langbert Moment"  for the Glazov Gang season, "Socialism: An Infantile Disorder," appears here.  Jamie Glazov writes:

This new edition of the Glazov Gang presents Prof. Mitchell Langbert, a professor of business at Brooklyn College, the City University of New York. Last year totalitarian university professors, anti-First Amendment Antifa students, and the national media waged a concerted campaign to have him fired.

Prof. Langbert focuses on Socialism — An Infantile Disorder, unveiling the derangement of our establishment media, Bernie Sanders and the “Radical Squad”.

I add this: Given the consistent failure of socialism;  its close association with the gravest mass murders in history; and the scientific knowledge, by now nearly 100 years old, that socialism cannot possibly be as efficient as free market capitalism, the question as to why university professors, their students, the national media, and a wide swath of American elites continue to advocate a deranged policy choice deserves more careful study.

Program Idea for the Department of Education

Dear Mr. President:

The Department of Education should formulate two educational programs concerning socialism.  One would be addressed to fifth graders and the other to tenth graders.  The programs would be the product of leading historians and economists, who would educate students as to the history of socialism, its economic failure, its political failure, and its history of mass murder.  The showing of the two programs would be a prerequisite for states’ eligibility for federal aid.

Zilvinas Silenas, a refugee from Lithuania and the new president of the Foundation for Economic Education, recently appeared in an interview on Dan Elmendorf’s Redeemer Broadcasting (http://redeemerbroadcasting.org/content/plain-answer-podcasts / A Plain Answer: A Case Study - Socialism as it was in Lithuania - Zilvinas Silenas ).  In the interview Silenas describes in vivid detail the horrible realities of socialism. Material like this could be combined with history that short circuits the left-wing indoctrination that is occurring in America’s schools.  Indeed, a discussion of political correctness and biases in the educational system should be a part of the presentation, which would be given in one-to-two-hour assemblies of students. 

The chief argument against this idea is that it can be coopted and turned into a pro-socialist presentation when the Democrats gain power.  However, such a step would create a focal point for debate, for much of the subversion currently occurs more subtly.

Along with Silenas and FEE, Peter Wood of the National Association of Scholars could help appoint a commission that would create the presentation.

Something needs to be done now about the misinformation in which American students are being indoctrinated.   

Sincerely,

Mitchell Langbert, Ph.D.

Cc: The Honorable Betsy DeVos

Atlas Shrugged and the Decline of New York

This past Tuesday I had to take my wife to her dentist in Manhattan, so I spent a little time walking around our old neighborhood, the Upper West Side, while she got her crown.  I learned that apartment buildings now have policies that can ban smoking outside the building; supermarket plastic bags are now illegal; if you want to use paper bags, you must pay a 5-cent penalty.

With so many meddlesome laws, New York is not a place in which I care to live. I first realized that the city had gone past the point of no return in 2000, when I sat on a Manhattan narcotics grand jury.  The grand jury was in the New York Supreme Court Building, 60 Centre Street, where the 1957 movie 12 Angry Men takes place.  In interacting with my fellow Manhattanites, I realized that the people of New York had gone far down the left-wing path, that they no longer believed in the rule of law, and that the ultimate result would be increasing socialism and moral chaos.

I was just rereading Atlas Shrugged, which I assigned to my class as an extra credit assignment. When I was in Manhattan on Tuesday, several things reminded me of it.  It is about the exodus of industrialists, managers, and the competent from a United States increasingly dominated by socialist looters, with an end result of the country's reverting to 18th century standards—a goal advocated today by  environmentalists.   

This passage is an example of Ayn Rand's perception of how backward-trending socialist law works.  A bureaucrat named Dr. Ferris explains the process to capitalist Hank Rearden, inventor of Rearden Metal:

“Did you really think that we want those laws to be observed?” said Dr. Ferris.  We want them to be broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against—then you’ll know that this is not the age for beautiful gestures.  We’re after power, and we mean it. You fellows were pikers, but we know the real trick, and you’d be better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals.  Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens?  What’s there in that for anyone?  But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted—and you create a nation of lawbreakers—and then you cash in on guilt.  Now that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with.

 I can picture a Democratic Party policy adopted by di Blasio, Warren, Sanders, Ocasio-Cortez, et al. whereby neighbors are encouraged to inform on each other:  "Hello, police? I just saw my neighbor,  Mrs. Taggart, entering her apartment with a plastic bag of groceries.  Yes, we're at 140 Riverside Drive, Apt. 16-k. Please send a squad car."

America, Land of the Social Security Check, Home of the Welfare Dependent

I applied for Medicare on Friday.  I'm going to be 65 in roughly three months.  When I called the Social Security Agency (welcome to socialist America),  I had an hour-and-fifteen-minute wait before I could get through, and they told me that I had to apply online.  Mark Zuckerberg needs to know, and make no mistake, Facebook can know if it wants to.  The Social Security website froze me out because I had typed in the wrong password when I had checked it several months before, so I called the helpline, which involved an additional 50-minute wait.  The young government worker was helpful, and I eventually applied after a four-hour battle.

As I was waiting on voicemail, the SSA proudly announced that 50 million Americans are currently on Social Security.  The number of Americans on means-tested welfare is roughly the same, about 52 million.  If you add the number of government employees, about 22 million, that's 124 million.  In July 2017 there were 252 million Americans over age 18, the voting age.  That means that 124/252 = 49.2% of Americans are dependent on the state. If you add to that the people who work in zombie industries that would not exist without state support-- including Wall Street, the auto industry, and public partnership real estate--the percentage of voters who depend on government is well above 50%.

In other words, the productive sector in America is well below 50% of the economy.  So much for land of the free, home of the brave--or liberty and justice for all.  America is a socialist welfare state with a dependent population.

I recently finished Garrett C. Fagan's audio  Roman history series from the Great Courses, which was a wonderful experience. The Great Courses lectures are all wonderful, and Rome was one of my favorites, along with Vejas G. Liulevicius's World War I. Fagan teaches at Penn State and Liulevicius teaches at the University of Tennessee.  My next one will be William R. Cook's history of the Catholic Church.  

In between, though, I am listening to Tucker Carlson's audio book Ship of Fools. Carlson makes a number of excellent points, and I am finding the book to be educational. Also, his writing is sharp.  I'm only up to Chapter Three. (I listen to all this in my car, so it is slow going.)

Carlson blames much of the recent decline in the American economy on elite selfishness and immigration.   Some of  his arguments parallel Christopher Lasch's in his books The Revolt of the Elites and The Culture of Narcissism.  Like Lasch, Carlson notes that the segregation of elites in all-white, upper-income neighborhoods makes them insensitive to the effects of the policies they advocate.   

Carlson's pillorying of Democratic Party looters is awesome. His discussion of dumbed-down, overprivileged millennial Chelsea Clinton is hilarious, and his discussion of  Mark Zuckerberg and the ugly effects of Facebook are eye opening.  He accurately depicts the Southern Poverty Law Center as a one-time opponent of racism that has become a fraudulent partisan advocate for Democratic Party elitists.  

As well, Carlson accurately depicts the current economy as one of decline for the average American and one of subsidization and privilege for financial, political, and technology elites.  However, a point of disagreement is that Carlson places the blame on immigration. 

Real wages have stagnated for the past 50 years, since the early 1970s, when immigrants were less than five percent of the population. Immigration is not the reason for stagnant real wages. It is at most a contributory factor, but in the absence of regulation and subsidization, immigration flows would adjust to the market- clearing level.  Native Americans ought to enjoy an economic advantage over immigrants, who do not know the language and culture. Increasing the minimum wage is likely harming immigrants, whose labor is less valuable than native speakers.  I'm not convinced that immigration is the real problem, and Carlson does not offer much fact for his claim.  The real hourly wage began to stagnate in the 1970s, right after the abolition of the gold standard and less than 10 years after the establishment of Medicare and Medicaid. By 1980 immigrants were still only six percent of the population, but real wages hadn't grown in seven or eight years. 

At the same time, it may be time to put a moratorium on immigration because of the anger it has caused. I have heretofore been in favor of open immigration, but about ten years ago I remember thinking that perhaps a moratorium on immigration might be helpful to American workers, who have suffered grievously at the hands of the Fed, the Democratic Party, and big government.  In general, a free economy based on limited government will result in optimal economic outcomes, including rising real wages, modest income inequality, and a stock market, with six percent returns.  In the 19th century most of the returns from the stock market were in the form of dividends.   

Besides immigration, my chief point of disagreement with Carlson is that he seems to believe that old-fashioned state activist liberalism--New Deal liberalism,--ought to be the new conservatism.  The old-fashioned state activist liberalism of the 1930-1970s may still capture President Trump's supporters' imaginations, but it will not restore the economy; it will not restore real wage growth; it will not return the country to the rapid economic growth of the laissez faire, Progressive, and New Deal eras (which ended in the 1960s).  

It is true that much of America's elite--the Clintons, Buffetts, Goldman Sachses, Zuckerbergs, Soroses--are a cancer on the average wage. It is also true that New Deal policies led directly to their ascendancy, and the group that was in power before them was already taking the country down a primrose path. Replacing today's rapacious, politically correct, finance-and-technology elites with the military-industrial complex about which Eisenhower and C Wright Mills warned and included George HW Bush's dad, Prescott Bush,  will not change the underlying problem, which is the result of monetary and regulatory systems controlled by a centralized, special-interest dominated state. The federal government has squashed real wages and allocated credit to crappy technology like Facebook,  crooked Wall Streeters like George Soros, and crooked hacks like the Clintons and Bushes.

Franklin Roosevelt, copying the innovations of Gustav von Schmoller and Bismarck in Germany, implemented a system that has similarities to what brothers Tiberius and Gaius Gracchus imagined for Republican Rome in the early phases of the Roman Revolution, which led to its becoming a dictatorship, then an empire, and ultimately a monarchy:  Their plan was to give the plebeians cheap grain. (Later in the empire Emperor Septimius Severus made grain free.)    The dislocations of World War I and Progressive eras paralleled the processes in the Roman Revolution, which lasted about 150 years.  Although the Progressive era was short, its system may last for as long as the early empire and the Pax Romana, which lasted 150-200 years.  It may be that in 2,000 years historians will view our era as an extension of the Progressive and World War I eras. This is already occurring as historians are beginning to view the two world wars as one war.   

It is sad to see an America with the beautiful ideals of Locke and Jefferson turned into a bread-and-circus, totalitarian state dominated by the nincompoops of today's state, technology, and finance elites and their dumbed-down propagandist-journalists.  Carlson's hilarious depiction of psychopath Max Boot is on the money.

Even if  President Trump follows the proscriptions of Carlson and slows the looting by state, technology, and Wall Street elites, there is little hope for improvement because Americans have been satisfied with a $16,000 Social Security benefit, a welfare check, and Medicare. The dynamics of public choice and special interest behavior guarantee that a large, centralized government will benefit the most corrupt and opportunistic, and  Carlson's debate with the Democrats ignores the underlying dynamic. 

An Extra Credit Class Assignment

I gave the following extra credit assignment to my classes.  I wonder whether Antifa, dumbed-down studies majors at universities around the country, Antifa's dumbed-down studies professors, and the dumbed-down New York news media will demand that I be fired for saying that socialism doesn't work. 

Dear Class:

At the beginning of the term, I said that you can raise your exam grade by five points by doing an optional extra credit assignment. The assignment requires that you read Friedrich von Hayek's article "The Use of Knowledge in Society" (available  here) and write a one- to two- page paper that develops a thesis about the article.  Your thesis can be pro or con.   You will need to read the paper thoroughly.   Adding additional readings is fine but not required. 

The paper needs to be one to two pages, double spaced, with 12-inch font, and with one-inch margins.  Your name and class section should be in the heading.  It needs to be emailed to me by December 16 because I will be submitting the final grades soon thereafter.

The background for Hayek's article is as follows:  In the 1920s Ludwig von Mises showed that socialist economic planning is necessarily inefficient because its information requirements are too great.  Later, Oskar Lange attempted to refute von Mises by claiming that firms can use survey data to equate economic marginal cost and revenue, so duplicating free markets.  However, Lange's claim that perfect competition can be duplicated with managerial survey techniques begs von Mises's original question.  

First, the burden of performing such surveys and coordinating them around the economy is too big and causes decision making to be too slow to be of any use. Second, even if such surveys are performed, a socialist economy--characterized by centralized planning, regulation, or control--violates a key premise of competition: ease of entry.  Since there is no quality competition, closed socialist economies are doomed to produce low-quality merchandise.  Moreover, because the central planning agency (Gosplan in the former USSR) cannot digest all of the information needed to coordinate a large economy, there will be inefficiencies. 

In "The Use of Knowledge in Society" Hayek provides an additional reason why socialism cannot work.  The most important knowledge in running a business is not theory. It is knowledge of specific time and place, practical coordination.  In order to coordinate economic decisions, an economic communication system is necessary. Although great advances have been made with respect to information technology since Hayek's article was published in the 1940s, the Internet, smart phones, and similar information technologies don't come close to being able to coordinate the massive, rapid fluctuations in information that must be communicated to entrepreneurs.  Only a free market PRICE system is capable of communicating such information rapidly.  Since socialism squashes, eliminates, or at a minimum distorts PRICES, information becomes garbled or disappears, and inefficiencies, shortages, and distortions occur.  

Von Mises and Hayek's ideas were transferred to smaller organization units by James March and Herbert Simon in their classic book on organization theory, Organizations.   March and Simon show that bounded rationality,--limits on the ability to plan--characterize business corporations, which are much smaller units than total states.  The information requirements to manage a state are orders of magnitude greater than the information requirements to manage a large corporation.  

Hence, the increasing trend toward socialism over the past sixty years in the United States has caused the real hourly wage to stagnate and has eliminated economic opportunities for millennials. Astonishingly, millennials now mostly support socialism, essentially favoring the system that has restricted their opportunities and likely reduced their lifetime incomes. 

The empirical evidence for the ideas of von Mises and Hayek, written in the 1920s to 1940s, supports their theories.  First, the Soviet Union fell in the 1980s for the reasons von Mises predicted in the 1920s. Second, large socialist countries like India and pre-reform China performed dismally. Third, countries that were largely democratic socialist in the 1960s, such as Denmark and Sweden, reformed their economies to eliminate much socialism because socialism performed badly there, even in smaller countries with smaller information demands than in large countries like the US or the USSR.  Denmark is now roughly as free market as the United States, and Sweden is almost as free market. 

Although scientific evidence overwhelmingly favors the failure of socialism, you probably have not been exposed to the ideas of von Mises and Hayek in your education or in the media.  The economic forces that favor socialism are the same that favored the large-scale bailouts of 2008-9.  To understand how special interests work (and make no mistake, your education has been the product of special interests), you need to understand public choice theory.  A good place to start is with Mancur Olson's Rise and Decline of Nations.  However, for this assignment you will need to focus on Hayek's essay.

Sincerely,

Prohibit Socialist rather than Racist Speech

Since socialism has been more murderous than racism, pro-socialist speech  should be prohibited before pro-racist speech.  As evil and murderous as racism is, the record on socialism is worse.  For instance, the commencement of World War I, called the August Madness, was heralded as a triumph of communitarianism over selfishness, of gemeinshchaft over geselleschaft, of community over market. The communitarian death count during World War I was 20 million, and an additional 20 million were maimed and disfigured. The renaissance of communitarianism meant the invention of nerve gas, mass killing, and scorched earth policies.  The racism of the Ku Klux Klan never came close.

Subsequent socialist, totalitarian models were based on World War I and its war economy, and the mass murders associated with twentieth century socialism were modeled on measures taken, especially by the Germans and Turks, but also by the British, French, and Americans, during the Great War. The degree to which Nazism influenced Swedish  socialism is rarely discussed, but in his book The New Totalitarians, Roland Huntford describes Gunnar Myrdal's admiration for Nazism.

The death counts due to Soviet, Chinese and other communist-linked socialisms are disputed, but Josh London's estimates on this page, based on the Black Book of Communism, are as follows:

U.S.S.R.: 20 million deaths; China: 65 million deaths; Vietnam: 1 million deaths; North Korea: 2 million deaths; Cambodia: 2 million deaths: Eastern Europe: 1 million deaths; Latin America: 150,000 deaths; Africa: 1.7 million deaths; Afghanistan: 1.5 million deaths; The international Communist movement and Communist parties not in power: about 10,000 deaths… The total approaches 100 million people killed.

The numbers in the USSR may have been much higher.  As well, the Black Book of Communism excludes non-communist socialists such as the national socialists of Nazi Germany and the left-inspired socialists of fascist Italy.  The word "fascist," which has its roots in the fasces or tied rods, which Romans used to signal imperium or the right of command, was first used as a symbol by democratic socialists in the 19th  century, most importantly by the militant socialist group Fasci Siciliani. Mussolini himself was for much of his life an active socialist.  The distinction between fascism and "progressive" models in the US is difficult to defend.  Fascism was a nationalistic ideology, much like American Progressivism.

No other ideology in history comes close to the horror and murder committed by socialists. The number of dead, when one includes the crimes of right wing socialists such as Hitler and Mussolini, is likely in excess of 200 million. 

Yet, lying on behalf of socialism continues to be a preoccupation of the American left. Prohibitions on speech are ill advised, but if we are protect ourselves from the horrific consequences of ideology, then the most realistic place to start is socialism.

The Altruistic Fallacy

I recently gave a talk at Brooklyn College's Faculty Day, a delightful annual event at Brooklyn College where about 100 of the faculty come together to share ideas. I put together a symposium entitled "Why Business Schools Can't Teach Ethics" and my paper was entitled "Ethics and the Enlightenment in Business Education."  The other participants were two philosophers, Professors Michael Menser and Christine Vitrano, and my business department colleague Professor Carol M. Connell.  I thought all of the presentations were very good, but a breach between the business faculty and our philosophical colleagues was evident.  The philosophers tended to view ethics in terms of altruism, while I do not.  Professor Connell focused on pedagogical issues.   I do believe that business schools can't teach business ethics; I coined the symposium's title.  But I came away thinking that philosophy departments cannot do so either.

In particular, the interpretation of  ethics as altruism is misguided. Aristotle gave the first rigorous alternative to Plato's confusion between collectivism and morality--he suggested that human happiness is the best moral ground.  It is true that Aristotle did not like retail trade or commercialism as we know it today, but he did not at all object to affluence, which he saw as necessary to the best life, that of philosophical contemplation. His belief in affluence as a necessary condition to the contemplative life is consistent with a belief in profit-making as we know it.  Aristotle did believe in the morality of household management, oiconomos,   from which the word economics is derived.  However, to make the distinction between retail trade and household management intelligible in today's mindset it needs to be reversed.

Aristotle's objection to retail trade rested on the absence of a mean with respect to profit.  More profit is always better, hence there is no way that a retailer can strike an intermediate between profit making and alternative aims.  This is analogous to today's discussion about corporate social responsibility.  However, he did see the aristocratic life of the Athenian landowner and slave master as capable of a mean.  The closest analogy in our experience is the life of the Southern slave owner, who did not need to maximize profit because he was assured of a graceful life so long as he managed his plantation well.  Someone like Thomas Jefferson, who engaged in philosophical contemplation as well as political activity while benefiting from his slaves' labor may be closest to the Aristotelian ideal. But as we now know, and as Jefferson himself thought, Jefferson's life depended on the profound immorality of slavery.

It is evident that in today's world, household management is less moral than retail trade, for we know that Aristotle's support for slavery was wrong. (In fact, some Sophists had argued against the institution of slavery, and Aristotle rejected their arguments.) Moreover, it is possible today to balance an affluent life with philosophical contemplation because of the separation of ownership and control, that is, because of modern capitalism.  In a purely socialist or altruistic society such balance would not be possible.

Grounding morality in a belief in the worth of every individual, and rejection of Aristotle's belief that it is in the character of slaves to be slaves, we can update Aristotle and so recognize the value of his ethics.  Without doing so we must reject all of Aristotle; his work is only intelligible if we replace his rejection of retail trade with a recognition that achievement is possible in the economic context.  For it is only through profit-making that balance is possible. This recognition is inconsistent with the claim that altruism is moral.

Aristotle could not have conceived of instruments like stocks, bonds and pension funds that permit income without one-sided fixation, and, better than an Athenian oikos, permit philosophical contemplation. Aristotle could not have visualized the enormous effect of economic and technological advance on human welfare that has only existed under profit-seeking capitalism. The pursuit of profit has tripled life expectancy, reduced hunger for billions and made widespread education possible. In a socialist state like India infant mortality remains much higher than in capitalist countries. In the former Soviet Union male life expectancy is still in the 50s.

Aristotle could only visualize retail trade as it was limited to the ancient context.  Even then, as Rostovtzeff describes in his Social and Economic History of the Roman Empire, the Hellenistic world had made tremendous advances with respect to agriculture and manufacturing that Aristotle may not have recognized because of his aristocratic orientation and his contempt for craft and technology.

In other words, human fulfillment and morality are synonymous with profit. A rigid equation of altruism to ethics ignores Henry Sidgwick's observation that we know ourselves better than others and so are better equipped to maximize our own happiness than that of others.  A system that strains the possibilities of human rationality, i.e., a system based on altruism, is bound to lead to profound immorality.  Altruism's responsibility  for the most egregious immorality in history evidences my claim.  Adolf Hitler did not pursue profit. He pursued socialist ideals as he conceived them.  The altruism of Marxism is responsible for 100 million murders, the bloodiest, most immoral outcome in human history. Altruism has been responsible for uglier immorality and depredation than any outcome of capitalism. In contrast, capitalism has improved the quality of life beyond recognition to the residents of the pre-capitalist or socialist world.
 
The claim that there is an inconsistency between morality and profit fails to consider the distinction between profit and theft.  As Benjamin Franklin claimed in the eighteenth century and as Stanley and Danko empirically confirm in their Millionaire Next Door, written in the 1990s and very much in line with Franklin's claims, the wealthy tend to be more moral than others. They tend to defer gratification, save, and productively invest. They tend to care for their families and donate to charity when they die (not before). The deferment of gratification is very much in line not only with Franklin's but with Aristotle's vision of human happiness and morality.

Business students ought not be taught that altruism is preferable to profit seeking. Rather, they ought to be taught that profit seeking needs to be rational and balanced with other goods--that it ought not to contradict the moral foundations of a free society.  To claim that the quest for economic achievement is immoral is to sink backward into the immorality of Medieval tribalism and socialism.

Nazi Austria Was What the Democrats Want for America

I just received this essay from Sharad Karkhanis.  The author is an Austrian immigrant who lived through the Anschluss and the rise of Nazism as a student.  The world she describes is just what the Democrats want.

After America , There is No Place to Go"

The author of this article lives in South Dakota and is very active in attempting to maintain our freedom. I encourage everybody to read this article and pass it along. I see so many parallels in this country–are we going to sit by and watch it happen? Spread the word; also contact your congressional reps; vote them out if they don’t do what they should. If you don’t want to be bothered, then you’re part of the problem! Google Kitty Werthmann and you will see articles and videos.

America truly is the Greatest Country in the World. Don't Let Freedom Slip Away

By: Kitty Werthmann

What I am about to tell you is something you've probably never heard or will ever read in history books.

I believe that I am an eyewitness to history. I cannot tell you that Hitler took Austria by tanks and guns; it would distort history. We elected him by a landslide - 98% of the vote.. I've never read that in any American publications. Everyone thinks that Hitler just rolled in with his tanks and took Austria by force.

In 1938, Austria was in deep Depression. Nearly one-third of our workforce was unemployed. We had 25% inflation and 25% bank loan interest rates.

Farmers and business people were declaring bankruptcy daily. Young people were going from house to house begging for food. Not that they didn't want to work; there simply weren't any jobs. My mother was a Christian woman and believed in helping people in need. Every day we cooked a big kettle of soup and baked bread to feed those poor, hungry people - about 30 daily.

The Communist Party and the National Socialist Party were fighting each other.. Blocks and blocks of cities like Vienna, Linz , and Graz were destroyed. The people became desperate and petitioned the government to let them decide what kind of government they wanted.

We looked to our neighbor on the north, Germany , where Hitler had been in power since 1933. We had been told that they didn't have unemployment or crime, and they had a high standard of living. Nothing was ever said about persecution of any group -- Jewish or otherwise. We were led to believe that everyone was happy. We wanted the same way of life in Austria .. We were promised that a vote for Hitler would mean the end of unemployment and help for the family. Hitler also said that businesses would be assisted, and farmers would get their farms back. Ninety-eight percent of the population voted to annex Austria to Germany and have Hitler for our ruler.

We were overjoyed, and for three days we danced in the streets and had candlelight parades. The new government opened up big field kitchens and everyone was fed.

After the election, German officials were appointed, and like a miracle, we suddenly had law and order. Three or four weeks later, everyone was employed. The government made sure that a lot of work was created through the Public Work Service.

Hitler decided we should have equal rights for women. Before this, it was a custom that married Austrian women did not work outside the home. An able-bodied husband would be looked down on if he couldn't support his family. Many women in the teaching profession were elated that they could retain the jobs they previously had been required to give up for marriage.

Hitler Targets Education - Eliminates Religious Instruction for Children

Our education was nationalized. I attended a very good public school. The population was predominantly Catholic, so we had religion in our schools. The day we elected Hitler (March 13, 1938), I walked into my schoolroom to find the crucifix replaced by Hitler's picture hanging next to a Nazi flag. Our teacher, a very devout woman, stood up and told the class we wouldn't pray or have religion anymore. Instead, we sang "Deutschland, Deutschland, Uber Alles," and had physical education.

Sunday became National Youth Day with compulsory attendance. Parents were not pleased about the sudden change in curriculum. They were told that if they did not send us, they would receive a stiff letter of warning the first time. The second time they would be fined the equivalent of $300, and the third time they would be subject to jail. The first two hours consisted of political indoctrination. The rest of the day we had sports. As time went along, we loved it. Oh, we had so much fun and got our sports equipment free. We would go home and gleefully tell our parents about the wonderful time we had.

My mother was very unhappy. When the next term started, she took me out of public school and put me in a convent. I told her she couldn't do that and she told me that someday when I grew up, I would be grateful. There was a very good curriculum, but hardly any fun - no sports, and no political indoctrination. I hated it at first but felt I could tolerate it. Every once in a while, on holidays, I went home. I would go back to my old friends and ask what was going on and what they were doing. Their loose lifestyle was very alarming to me. They lived without religion. By that time unwed mothers were glorified for having a baby for Hitler. It seemed strange to me that our society changed so suddenly. As time went along, I realized what a great deed my mother did so that I wasn't exposed to that kind of humanistic philosophy.

Equal Rights Hits Home

In 1939, the war started and a food bank was established. All food was rationed and could only be purchased using food stamps. At the same time, a full-employment law was passed which meant if you didn't work, you didn't get a ration card, and if you didn't have a card, you starved to death. Women who stayed home to raise their families didn't have any marketable skills and often had to take jobs more suited for men.

Soon after this, the draft was implemented. It was compulsory for young people, male and female, to give one year to the labor corps. During the day, the girls worked on the farms, and at night they returned to their barracks for military training just like the boys. They were trained to be anti-aircraft gunners and participated in the signal corps. After the labor corps, they were not discharged but were used in the front lines. When I go back to Austria to visit my family and friends, most of these women are emotional cripples because they just were not equipped to handle the horrors of combat. Three months before I turned 18, I was severely injured in an air raid attack. I nearly had a leg amputated, so I was spared having to go into the labor corps and into military service.

Hitler Restructured the Family Through Daycare

When the mothers had to go out into the work force, the government immediately established child care centers. You could take your children ages 4 weeks to school age and leave them there around-the-clock, 7 days a week, under the total care of the government. The state raised a whole generation of children.. There were no motherly women to take care of the children, just people highly trained in child psychology. By this time, no one talked about equal rights. We knew we had been had.

Health Care and Small Business Suffer Under Government Controls

Before Hitler, we had very good medical care. Many American doctors trained at the University of Vienna. After Hitler, health care was socialized, free for everyone. Doctors were salaried by the government. The problem was, since it was free, the people were going to the doctors for everything. When the good doctor arrived at his office at 8 a.m., 40 people were already waiting and, at the same time, the hospitals were full. If you needed elective surgery, you had to wait a year or two for your turn. There was no money for research as it was poured into socialized medicine. Research at the medical schools literally stopped, so the best doctors left Austria and emigrated to other countries.

As for healthcare, our tax rates went up to 80% of our income. Newlyweds immediately received a $1,000 loan from the government to establish a household. We had big programs for families. All day care and education were free. High schools were taken over by the government and college tuition was subsidized. Everyone was entitled to free handouts, such as food stamps, clothing, and housing.

We had another agency designed to monitor business. My brother-in-law owned a restaurant that had square tables. Government officials told him he had to replace them with round tables because people might bump themselves on the corners. Then they said he had to have additional bathroom facilities. It was just a small dairy business with a snack bar. He couldn't meet all the demands. Soon, he went out of business. If the government owned the large businesses and not many small ones existed, it could be in control.

We had consumer protection. We were told how to shop and what to buy. Free enterprise was essentially abolished. We had a planning agency specially designed for farmers. The agents would go to the farms, count the live-stock, then tell the farmers what to produce, and how to produce it.

"Mercy Killing" Redefined

In 1944, I was a student teacher in a small village in the Alps . The villagers were surrounded by mountain passes which, in the winter, were closed off with snow, causing people to be isolated. So people intermarried and offspring were sometimes retarded. When I arrived, I was told there were 15 mentally retarded adults, but they were all useful and did good manual work. I knew one, named Vincent, very well. He was a janitor of the school. One day I looked out the window and saw Vincent and others getting into a van. I asked my superior where they were going. She said to an institution where the State Health Department would teach them a trade, and to read and write. The families were required to sign papers with a little clause that they could not visit for 6 months. They were told visits would interfere with the program and might cause homesickness.

As time passed, letters started to dribble back saying these people died a natural, merciful death. The villagers were not fooled. We suspected what was happening. Those people left in excellent physical health and all died within 6 months. We called this euthanasia.

The Final Steps - Gun Laws

Next came gun registration.. People were getting injured by guns. Hitler said that the real way to catch criminals (we still had a few) was by matching serial numbers on guns. Most citizens were law abiding and dutifully marched to the police station to register their firearms. Not long after-wards, the police said that it was best for everyone to turn in their guns. The authorities already knew who had them, so it was futile not to comply voluntarily.

No more freedom of speech. Anyone who said something against the government was taken away. We knew many people who were arrested, not only Jews, but also priests and ministers who spoke up.

Totalitarianism didn't come quickly, it took 5 years from 1938 until 1943, to realize full dictatorship in Austria . Had it happened overnight, my countrymen would have fought to the last breath. Instead, we had creeping gradualism Now, our only weapons were broom handles. The whole idea sounds almost unbelievable that the state, little by little eroded our freedom.

After World War II, Russian troops occupied Austria . Women were raped, preteen to elderly. The press never wrote about this either. When the Soviets left in 1955, they took everything that they could, dismantling whole factories in the process. They sawed down whole orchards of fruit, and what they couldn't destroy, they burned. We called it The Burned Earth. Most of the population barricaded themselves in their houses. Women hid in their cellars for 6 weeks as the troops mobilized. Those who couldn't, paid the price. There is a monument in Vienna today, dedicated to those women who were massacred by the Russians. This is an eye witness account.

"It's true..those of us who sailed past the Statue of Liberty came to a country of unbelievable freedom and opportunity.

America Truly is the Greatest Country in the World. Don't Let Freedom Slip Away

"After America , There is No Place to Go"

Socialism In Extremis: Greek Economy, Newsweek Head for Hades

In February 2009 Newsweek claimed that "we are all socialists now."  Prime Minister George Papandreou and the Greek government could not help but agree.  Now Newsweek is following Greece to socialist Hades.

Big Journalism.com reports that socialist Newsweek, following socialist Greece, is headed for bankruptcy:

"Despite staff cuts, Newsweek has remained a drag on its parent company (The Washington Post), which is also struggling with ad declines at its namesake newspaper...Newsweek is pretty much dead, and now the only question is who’s going to rouge the corpse for a few more years, if anybody, to keep its collection of Morning Joe talking heads with at least the fig leaf of meaningful employment before the final axe falls...At $5.95 per issue, Newsweek is hardly a bargain. Newsweek is your father’s magazine, and no amount of reinvention could fix that..."  

I disagree.  Were the editors of Newsweek more imaginative, they could have found a way to survive.  Newsweek's unimaginative socialist ideology is matched by its unimaginative marketing strategy.  Just as new media is re-conceptualizing the news, so might have the Democrats at Newsweek.  Back in February 2009 I urged Newsweek to move to France.  Perhaps Hades would have been a better bet.

Conservatism Is Socialism

The appellation conservative ought not apply to Americans who believe in the Constitution or in liberty. The very word contradicts itself. Today's America differs fundamentally from the plan set forth in the Constitution not because of changing technology or mores, nor because the US Supreme Court has legitimately interpreted changing economic necessity or social values and so updated constitutional principles, but because powerful economic interests have usurped the Constitution, with the US Supreme Court acting as a rationalizing vehicle on their behalf.  To maintain today's economic structure and government is to maintain a form of fascism that is in decline.  The decline is occurring not only in economic conditions, living standards, economic opportunities, freedom of speech, property rights, and the right to keep the product of one's labor. It is also occurring in ever worsening outcomes in education;  intolerant extremists' domination of universities; a media run by bankers' lackeys; misallocation of resources on a scale that is beginning to approach that of the great failed socialist states, the USSR and communist China.  None of this would be possible without the US Supreme Court, which has illegitimately and illegally facilitated the transfer of power to economic elites. 

Given the ongoing economic decline; the absence of respect for law within American legal institutions;  and the failure of the American government to respond to evolving economic conditions, a radical or revolutionary posture is necessary.  To be a conservative is to be the most extreme socialist. 

Mass Murder and the Socialist State of Mind

Aleksandr Solzhenitsyn's Gulag Archipelago spurred me to libertarianism, but I had read another book about mass murder, Hannah Arendt's Eichmann in Jerusalem: A Report on the Banality of Evil a few years before when I was an undergraduate. I am re-reading Arendt's book and am struck by her controversial claim that the Judenraten, the Jewish administrative agencies that oversaw the holocaust, were in fact absolutely essential to the entire holocaust. In other words, Eichmann and the Nazis had to count not only on the Jews' submission, but on their cooperation, in seeing to their own deaths.

On page 125 Arendt writes:

"But the whole truth was that there existed Jewish community organizations and Jewish party and welfare organizations on both the local and the international level. Wherever Jews lived, there were recognized Jewish leaders, and this leadership almost without exception, cooperated in one way or another, for one reason or another, with the Nazis. The whole truth was that if the Jewish people had really been unorganized and leaderless, there would have been chaos and plenty of misery but the total number of victims would hardly have been between four and a half and six million people. (According to Freudiger's calculations about half of them could have saved themselves if they had not followed the instructions of the Jewish Councils. This is of course a mere estimate, which, however, jibes with the rather reliable figures from Holland and which I owe to Dr. L. de Jong, the head of the Netherlands State Institute for War Documentation. In Holland, where the Joodsche Raad like all the Dutch authorities very quickly became an 'instrument of the Nazis,' 103,000 Jews were deported to the death camps...Only five hundred and nineteen Jews returned...In contrast to this figure, ten thousand of those twenty to twenty-five thousand Jews, who escaped the Nazis--and that meant also the Jewish Council--and went underground survived; again forty to fifty per cent...)"

Why the willingness among Jews to comply with a government intent on killing them?

Arendt blames this on Nazism's causing a moral collapse, but I think that claim is incorrect. Similar phenomena were seen in the Soviet Union and China. It is not attributable to Nazism, but rather to the tribalist philosophy of socialism in general, to what Popper calls the "closed society". Moreover, elements of it exist here in the US and have increased in force as the public has become increasingly trusting and obsequious to the state. For example, if the US Supreme Court violates the law and claims the state's right to seize property for corrupt private interests, the public does not see a violent action but rather a justifiable state position.

The socialization of conscience has two additional sources. The first is ordinary conformity that the famous experiments of Stanley Milgram exposes. The second is the other directedness that David Riesman discusses in his Lonely Crowd.

Trust in government, other-directedness and conformity to state directed norms are associated with the socialist mode. In twentieth century Europe, the socialist mentality of compliance and support for the state had extended to a much greater extent than it has here in the United States. What is shocking about this process is that, given sufficient governmental and social pressure, and given Jews' widespread acceptance of the socialist model, Jews were willing to see themselves murdered rather than question the power of the German socialist state.

Should Americans comply with the dictates of government? With the IRS? Do we have a single reason to trust the government of George W. Bush or Barack Obama?

Obama Outsources the Presidency

Doug Ross's Larwyn's Lynx (see icon to right) carries a piece by Frank Miehle of northwest Montana's Daily Inter Lake in which Miehle argues that Obama's aim has been to radically transform America in a globalist and fascistic direction. Miehle writes:

>"With little fanfare and virtually no explanation, President Obama issued an executive order on Dec. 17 granting Interpol, the international police force, full diplomatic immunity to operate in the United States without accountability to our laws and courts. Why would he do so?...

>"Then there was the attempted Christmas Day bombing incident aboard a jet bound for Detroit. We discovered, as a result of the Justice Department’s handling of this case, that foreign combatants have the right to remain silent...

>"This month, it was announced that the president had signed another executive order creating yet another “new idea” in governance. This one has gotten very little attention. According to the official press release on Jan. 11, “The President today signed an Executive Order establishing a Council of Governors to strengthen further the partnership between the Federal Government and State Governments to protect our Nation against all types of hazards. When appointed, the Council will be reviewing such matters as involving the National Guard..."

Obama's position that there needs to be a brown shirt-style civilian para-military force is familiar. To understand this and the internationalist proposals we need to refer to the liberal (in the Enlightenment sense) philosopher Karl Popper. Popper argued that totalitarian socialism, in both its left wing (communist) and right wing (Nazi) forms is a reversion to tribalism. In other words, socialism is profoundly conservative and reactionary. In comparison, most members of the Tea Parties, whose ideas derive from the 17th and 18th centuries, are radicals. The first intellectual tribalist reactionary was, in Popper's view, Plato. He was reacting to the rule of law, democracy and freedom that the Athenians had created and resulted in the creation of western civilization. The most recent is, of course, Obama and his brown shirt-style youth cult. In the first month of the Obama presidency his aide, Rahm Emanuel, was talking about adoption of compulsory youth service, much like the Red Guard under Mao.

Obama is part of the tribalist camp. Today's tribalists argue not for a forgotten, pre-historic past that Plato remembered in part because nearby Sparta had retained many of the socialist elements of tribalism, but for a reconstituted medieval world order which they term "progressive". The medieval world order retained elements of the primitive tribalism because it reflected barbarians' conquest of the Roman empire, which had retained some elements of the Athenian culture. The barbarians envied Rome but were largely illiterate. They did their best to copy Rome (the Habsburgs called their core holdings "the holy Roman Empire", for example) but inevitably re-instituted elements of the tribalism that they had continued to practice. This included the common field. Each member of the medieval social order had an appropriate place under feudalism, and in many instances serfdom. Those who did not fit, like Jews, might be tolerated and harassed, but were mostly on the fringes. Crucial to the medieval world order was the world government, the Church, which oversaw welfare programs in each locality through local parishes.

In the Occident there were three major world governments, all of which were associated with religion: the eastern Christianity of Greece and Turkey (then Constantinople); the Islamic world; and western Christianity. Today's tribalists aim to replace the religious world government of medieval times with a secular humanist world government governed by financial power and a university-based priesthood.

Bob Robbins forwarded the above cartoon that appeared on Steady John's Steady Habits blog. Lockean liberals need to redouble their efforts to forestall Obama's socialist reaction. This will be a pitched battle for three more years. We need to destabilize the administration until the forces of freedom can triumph.

James Turk on Socialism

James Turk has an excellent blog on Kitco. Turk suggests that the coming government debt crisis across Europe will trigger a reassessment of the current pervasive socialism. He extensively quotes Hayek and makes the argument that government uses wars and emergencies to expand state power. The extended state power continues during peacetime to expand the welfare state. The welfare state become subject to special interests and expands relentlessly. Presumably, in a democracy the public is not smart enough to understand the effects of the expansion, namely, declining standards of living and opportunities to make a living. As the state expands wealth declines. I would also add that income inequality increases because of government policy--specifically the Federal Reserve Bank's handling of monetary expansion. Turk argues that with the coming bankruptcies of many countries, the destruction that socialism wreaks is laid bare. Turk writes:

>"The ideological bankruptcy is neatly captured by British author and advocate for individual rights, Cecil Palmer: 'Socialism is workable only in heaven where it isn’t needed, and in hell where they’ve got it'. And government insolvency is explained by famed economist Frederic Bastiat, who made this levelheaded observation nearly 150 years ago about the nascent modern socialism then emerging. 'The State is that great fiction by which everyone tries to live at the expense of everyone else.' More recently, Margaret Thatcher, being a sensible politician, put it pragmatically: 'The problem with socialism is that you eventually run out of other people's money.'

>"Take Greece for example. This past week yields on its 10-year bonds surged in the wake of downgrades by the bond rating agencies, which finally recognized that Greece does not have the financial resources needed to repay its debts, which now stand near junk levels. Not far behind are Latvia, Spain, Ireland, the United Kingdom and almost every other country in Europe, even though they may still flog paper rated as “investment grade.” The reality is that the rating agencies just have not yet come to grips with the breadth and depth of widespread government insolvency, or have willingly turned a blind-eye to it. And don’t forget Iceland which of course has already collapsed."

Might socialism die with a bang? I doubt it. Americans and Europeans have adopted the mentality of slaves. 58% of the American population depends on some level of government for its living, according to Turk's numbers. And we wonder why income inequality is on the rise and the real hourly wage hasn't risen in 40 years? The blame must rest in part with academic economists, whose policies have been as short sighted as their econometric regression models.

What would a major international debt crisis do to the stock market? To gold? Intuitively I would think stock market down, gold up. But last year it was both down. It is extremely difficult to predict the markets because Wall Street has a strong pro-dollar mythology that will only quit when the US dollar goes the way of the Continental in the post Revolutionary War period.

Question for Steve Forbes

Sharon Gitelle of the Forbes Blog Network sent the following:

Re: The Forbes Network: December 11th interactive call: Steve Forbes

Dear Mitchell,

Please join us for an interactive call with Steve Forbes, on Friday, December 11th at 3 PM Eastern time for a discussion about his new book called How Capitalism Will Save Us. (To learn more about this book please click here: http://bit.ly/WT2Um )

The expected duration of the call is 45 minutes.

Steve Forbes will be answering your questions about capitalism—please submit your question(s) to me by e-mail by Wednesday, December 9th. You will be notified by me if your question has been selected prior to the call.

My response:

Here is my question for Steve Forbes, Sharon.

In the 1870s an investment bank, Jay Cooke and Co., failed. In many respects it was similar to Citigroup and other of the Wall Street firms in that it had been heavily subsidized by the federal government throughout its life but was so incompetently run that it failed despite the large subsidies. In the case of Jay Cooke, the subsidy resulted in part from its involvement with the Civil War greenbacks (like Henry Paulson, one of its representatives, if I recall Salmon P. Chase, had been been appointed to be Secretary of treasury). In the case of Wall Street and the money center banks today, the government subsidy has taken the form of access to large amounts of artificially created money. That is, until the socialist Bush-Obama bailout, where cash was simply handed to the incompetently run American financial institutions.

In the aftermath of the Civil War, despite the subsidies it had received, Jay Cooke failed in tandem with the crash of 1873. No one was foolish or gullible enough to believe that sustaining Cooke would have helped the economy. That would have been a fool's fantasy. Following Cooke's failure and the crash there was a depression. The depression and crash were associated with the federal government's retiring of the greenbacks and deflation. During this continual deflation there were three depressions. However, real wages grew at a much faster pace than they have since 1970. Moreover, innovation occurred at a much faster pace than at any time in the history of the world, culminating with the creation of the concepts of television and radio by Nikola Tesla in 1897 and numerous inventions that were so vibrant that they continued to subsidize the American economy through the 20th century, a century of dramatically slowed creativity.

At the same time, real wages rose at an uneven clip, roughly two percent per year, more or less until the founding of the Federal Reserve Bank in 1913. As David Ames Wells points out in Recent Economic Changes (1889) the innovation and real growth of the economy was astonishing. What Wells mistakenly calls "overproduction" (see diatribe in Hazlitt's Economics in One Lesson) resulted from the dramatic innovation, as Wells points out. Of course, corporations, banks and Wall Street disliked the intense competition and deflation, which led to declining profits and hard work, but American workers saw their wages grow rapidly, as Wells pointed out.

Since the abolition of the gold standard in 1971, real wages of American workers have grown 2% over the 40 years. That's 2% in total over 40 years. In contrast, during the deflation of the late nineteenth century, real wages rose 2% per year. Yet, today's all-thumbs economics establishment claims that deflation is a major threat. It is, of course, to the banks who provide economists with endowed chairs, but it is not to workers who wish to raise their living standards. Workers did much better under deflation from 1865 to 1913 than they have under inflation from 1970 to 2009.

Thus, the 1873 failure of the major investment bank in America and the contraction of the money supply, deflation, left American workers much better off but Wall Street and corporate America less profitable. This was the period of freest markets in American history, the closest to what might be called a libertarian economy. Of course, Wall Street and the money center banks, then like now, opposed libertarianism and free market capitalism, preferring the socialist pattern that Alexander Hamilton and the Federalists advocated (Hamilton was indeed a socialist and advocated a government owned manufacturing firm that would establish American manufacturing).

Forbes has supported the bailout of Wall Street. In addition, you have echoed the all-thumbs economics establishment's obsessive fear of deflation. When I say "all-thumbs" I mean all-thumbs as far as the public is concerned, not all-thumbs as far as the government-subsidized banking interests are concerned. Politically the economists are wise servants of power.

Forbes has been on the bailout bandwagon. The bailout does not reflect libertarian or pro-free market sentiments, but sentiments in favor of the subsidization of a specific sector of the American economy through state intervention, Wall Street and banking. As I wrote to one of your columnists, and contrary to your philosophy, a libertarian America would need Wall Street as much as I need lung cancer.

Thus, it would seem that Forbes has taken not so much a free market position, but a crony capitalist or socialist position, closer to Hamiltonian Federalism, or fascism than to libertarianism, the idea that markets should be governed by a non-judgmental, objective legal standard.

Can you reconcile Forbes's position on the bailout with the views of Presidents Andrew Jackson and Grover Cleveland?

Best wishes,

Mitchell Langbert

Sharon's reply:

Great. Thank you!

Aristotle on Politically Correct Socialism of Ancient Crete

There was no laissez faire capitalism or system of individual rights in the ancient world, but collectivism and socialism were common. Hence, socialism is a reactionary system. In Book II, chapter 10 of Politics Aristotle reviews a number of socialist economic systems that were employed in the Hellenic world. One of the more politically correct was that of Crete. Here is Aristotle's description:

"The Cretan constitution nearly resembles the Spartan...in Crete... (of) all the fruits of the earth and cattle raised on public lands, and of the tribute which is paid by the Perioeci*, one portion is assigned to the gods and to the service of the state, and another to the common meals, so that men, women and children are all supported out of a common stock. The legislator has many ingenious ways of securing moderation in eating, which he conceives to be a gain; he likewise encourages the separation of men from women, lest they should have too many children, and the companionship of men with one another--whether this is a good or bad thing I shall have an opportunity of considering at another time. But that the Cretan common meals are better ordered than the Lacaedaemonian** there can be no doubt."


* According to Aristotle, "the subject population of Crete". The Spartans had colonized them. From Wikipedia: the name περίοικοι derives from περί / peri, "around," and οἶκος / oikos, "dwelling, house." They were the only people allowed to travel to other cities, which the Spartans were not, unless given permission. In other words, the subjects enjoyed greater freedom than their socialist conquerors.
**The Lacaedaemonians included the Spartans, the subject of the recent action film, "300". Notice that the more warlike culture of Sparta was socialistic, while the culture of Athens, the founder of western civilization, was closer to a free market system.

Work Is for Chumps

In the nineteenth century Americans were taught to rely on themselves and to build a better mousetrap. Although we were much poorer then, progress was rapid. In the late nineteenth century, although the average American was more than twice as well off as at the beginning, there had been an expansion of government related to the growth of big business (this began with the Dred Scott decision, which asserted federal power to regulate the states) and, in large part due to the expanding press of that day, the public saw the affluence of corrupt big businessmen like Jay Gould and John D. Rockefeller as resulting from power rather than innovation. While there was a high degree of corruption then, though no more than there is now, the solution would have been to limit state power to grant land and benefits to private companies. Rather than follow that route, big business interests, reflected by Theodore Roosevelt and his advisers in the National Civic Federation, including George Perkins, a Morgan associate and executive of US Steel and International Harvester, convinced the public that increased government redistribution was necessary for a properly functioning economy.

The result was a ten decade long reduction in the rate of innovation. But Roosevelt-Wilson Progressivism wasn't enough. Theodore's cousin Franklin shifted the rhetoric of progressivism by introducing the rhetoric of fascist redistribution from rich to poor. Much like the Roman system on which fascism modeled itself, the New Deal aimed to shore up the wealthy but to do so in the cloak of free bread and olive oil. This was accomplished using the ideology of Keynesian economics and state activist "liberalism". Franklin D. Roosevelt's New Deal was a recreation of the Roman model of a state controlled, replicative system. Thus, the innovation that occurred after World War II took the "scale" concept that the 19th century had discovered using free market processes and applied it to a far greater degree. It was able to do this because of government subsidization and stabilization of big business. However, there were two effects that the American fascists in the Democratic Party did not want but could not avoid. First, the system caused the rate of innovation to decline. While in the 1960s Americans could still imagine flying cars (as in the children's cartoon "The Jetsons") today we are happy to get cash for clunkers. Second, the system eventually caused real wages to stagnate as it increasingly reflected special interest pressure on the Federal Reserve and banking system to redistribute credit from the innovative to the government, banking and big business sectors. This was also accomplished through high taxes (middle class Americans now pay half their income to the black hole of government waste) as well as Federal Reserve monetary expansion.

The result has increasingly been that those who create wealth are poorly paid and those who do consume it are well paid. That trend has been present since the creation of the greenbacks following the Civil War, and was also associated with both the First and Second banks in the early 19th century.

The result is that people who work hard and create wealth have seen their pay stagnate, while those who play the stock market, consume resources through law suits and are on the government payroll have seen their pay increase.

The election of Barack Obama is a reassertion of New Deal fascism and we can expect increasing efforts to redistribute wealth from those who work to those who do not. This is not a trend that a small number of hard working people can reverse. Ayn Rand had the solution in her book Atlas Shrugged: stop working.

Anyone who works to produce wealth in today's America is a chump. Go on government welfare. This is a socialist/fascist state. Only fools work hard.

National Health Insurance and Freedom

Milton Friedman's Capitalism and Freedom argues that governmental control of economic resources eliminates personal freedom. In the Soviet Union, critics of the state could be deprived of work because the state controlled jobs. Friedman argues that economic freedom is a necessary but not a sufficient condition for personal freedom and civil liberties. Not all capitalist states, such as Chile and China, are liberal with respect to personal freedom, but no purely socialist state is liberal. Sweden is a good example even though it is not purely socialist. A good book on that subject is Roland Huntford's New Totalitarians, which documents a very lengthy list of ways that the socialist state in Sweden and Swedish society suppress individual liberty.

The effect of governmental power on freedom is easily seen in the expansion of government-supported universities, which exclude conservatives and libertarians from employment. One hundred percent of the institutions of higher learning in New York, public and private, are government supported, and all exclude from employment professors who disagree with state expansion. I frequently receive mail from professors and/or students that says "if you do not believe in government, then why do you work for a public university?" In other words, the state expands the scope of its power, and dissidents are to be excluded from its operations, ensuring that they are to remain unemployed. Only believers in state power are to be employed by state universities, according to this argument.That is, protest of the state's expansion is to be punished through unemployment.

Advocates of the "you work at CUNY so you should favor big government" position are in essence saying that in a purely socialist economy no disagreement with socialism will be permitted since all jobs would be controlled by the government. How can you work for the government if you disagree with government power? You will either work and survive or you will disagree with socialism. Not both.

There is much clear evidence of suppression of speech in universities, but none as clear as suggested in that argument, which has been made by readers of this blog several times. The advocates of socialism aim to silence and suppress all who disagree with them, and as the state gains power, they will economically punish anyone who disagrees, just as university professors have excluded liberals* from employment.

Now what should we fear from national health insurance? What kind of health care can dissidents in a socialized America expect when academics and officials of a socialist bureaucracy control access to health care? Will personal freedom exist? I think not. Will dissidents receive care in a socialist America? Or will they be compelled to undergo psychiatric treatment as they were in the Soviet Union?

A government-dominated health plan, national health insurance, is a threat to freedom and it should be feared. It should be feared because its advocates, the social democrats in the Democratic Party, are intolerant thugs.

*In case you're not used to this use of "liberal", the true meaning of the word liberal is "libertarian". The concept of "state activist liberalism" is an Orwellian corruption of language. Liberals believe in freedom, in liberalis, in liberalism. They do not believe in big government. That is the ideology of fascism, communism, socialism and authoritarianism and, of course, social democracy.

Bertrand de Jouvenal on the Divorce Between Socialism in Theory and in Practice

"Once it is admitted that Power may forswear its true reason and end, and as it were, detach itself from society to form far above it a separate body for its oppression, then the whole theory of Power's identity with society breaks down before this simple fact.

"At this point nearly all who have written on the subject look the other way. A Power which is both illegitimate and unjust is off their intellectual beat. This feeling of repugnance, while it is understandable, has to be overcome. For the phenomenon is of too frequent occurrence to give any chance to a theory which does not take account of it.

"It is clear enough how the mistake arose: it was from basing a Science of Power on observations made, as it is history's business to make them, of Powers whose relations with society were of one kind only; what are in fact only its acquired characteristics were thus mistaken for Power's essence. And so the knowledge acquired, while adequate to explain one state of things, was quite useless in dealing with the times of the great divorces between Power and society.

"It is not true that Power vanishes when it forswears its rightful begetter and acts in breach of the office which has been assigned to it. It continues as before to command and to be obeyed: without that, there is no Power--with it, no other attribute is needed."

----Bertrand de Jouvenal, On Power: The Natural History of Its Growth, p. 108

In the 1950s Stanley Milgram showed that conformity to authority comes naturally to a large segment, and likely a majority, of the population. All that is required to confer legitimacy on a Sovereign is an appropriate title or costume. Under laboratory conditions between 30 and 60 percent of the population will be willing to kill another person upon a scientist's command.

De Jouvenal points out that two restraints on European kings limited their exercise of power to a greater degree than modern democracy is limited. These were custom and the Church. Legal doctrines received from the Barbarian Codes and from the Romans left European kings with strictly delineated authority. Moreover, the power of the nobility, the dux, countered the power of the rex. Viewed historically, power seemed limited to historians of the 19th century because the kings never knew unlimited power until the Protestant Reformation, which overthrew custom and created the conditions for the argument of the divine right of kings. At the same time, the argument of popular sovereignty derived unlimited power from the popular will. Thus, the two doctrines of the divine right of kings and popular sovereignty evolved at the same time and considerably extended the possibility of power.

Historians could not anticipate the tragic consequences that would emanate from the unrestrained popular will of Rousseau, Hobbes, Hegel and Marx. Even the arch-capitalist Herbert Spencer was taken by surprise. He had argued that the organic evolution of the state in light of popular sovereignty would be in the direction of reductions in state power rather than more.

America was spared the Rousseauean tragedy because Locke did not claim that the people bestow all liberties on the general will, or that there is a general will at all. Unlike Rousseau and Hobbes, Locke saw only a limited granting of rights to the state. This limitation on state power creates a considerable distance between American and European democracy. Jefferson did not see this difference between the French and American Revolutions. That is one point on which Hamilton and Washington, the Federalists, were right and the Democratic Republicans were wrong. In America, Thomas Paine was exalted. In France, he was imprisoned.

Progressivism is a reassertion of Rousseauean values. The extent of the damage that Progressivism has done has yet to be seen.