Mises Wire |
- Faculty Panel: Policy and History
- Faculty Panel: Theory and Method
- Democracy's Road to Tyranny
- Progressives: Then and Now
- Business Cycles and Skyscrapers
- Political Decentralization as a Road to Anarcho-Capitalism
- The Taxation Minimal State
- Higher Education in Crisis
- Cronyism: Liberty versus Power in America, 1607-1849
- As the Fed Powell Continues to Flail, Could an MMT Fed Chair Be Next?
| Faculty Panel: Policy and History Posted: 23 Jul 2021 01:45 PM PDT Featuring Per Bylund, Tom DiLorenzo, Sandy Klein, Patrick Newman, Tim Terrell, and Mark Thornton. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| Faculty Panel: Theory and Method Posted: 23 Jul 2021 01:00 PM PDT Featuring Lucas Engelhardt, David Gordon, Jeffrey Herbener, Peter Klein, Jonathan Newman, Ritenour, and Joseph Salerno. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| Posted: 23 Jul 2021 12:00 PM PDT Plato, in his Republic, tells us that tyranny arises, as a rule, from democracy. Historically, this process has occurred in three quite different ways. Before describing these several patterns of social change, let us state precisely what we mean by "democracy." Pondering the question of "Who should rule," the democrat gives his answer: "the majority of politically equal citizens, either in person or through their representatives." In other words, equality and majority rule are the two fundamental principles of democracy. A democracy may be either liberal or illiberal. Genuine liberalism is the answer to an entirely different question: How should government be exercised? The answer it provides is: regardless of who rules, government must be carried out in such a way that each person enjoys the greatest amount of freedom, compatible with the common good. This means that an absolute monarchy could be liberal (but hardly democratic) and a democracy could be totalitarian, illiberal, and tyrannical, with a majority brutally persecuting minorities. (We are, of course, using the term "liberal" in the globally accepted version and not in the American sense, which since the New Deal has been totally perverted.) How could a democracy, even an initially liberal one, develop into a totalitarian tyranny? As we said in the beginning, there are three avenues of approach, and in each case the evolution would be of an "organic" nature. The tyranny would evolve from the very character of even a liberal democracy because there is, from the beginning on, a worm in the apple: freedom and equality do not mix, they practically exclude each other. Equality doesn't exist in nature and therefore can be established only by force. He who wants geographic equality has to dynamite mountains and fill up the valleys. To get a hedge of even height one has to apply pruning shears. To achieve equal scholastic levels in a school one would have to pressure certain students into extra hard work while holding back others. The first road to totalitarian tyranny (though by no means the most frequently used) is the overthrow by force of a liberal democracy through a revolutionary movement, as a rule a party advocating tyranny but unable to win the necessary support in free elections. The stage for such violence is set if the parties represent philosophies so different as to make dialogue and compromise impossible. Clausewitz said that wars are the continuation of diplomacy by other means, and in ideologically divided nations revolutions are truly the continuation of parliamentarism with other means. The result is the absolute rule of one "party" which, having finally achieved complete control, might still call itself a party, referring to its parliamentary past, when it still was merely a part of the diet. A typical case is the Red October of 1917. The Bolshevik wing of the Russian Social Democratic Workers' Party could not win the elections in Alexander Kerenski's democratic Russian Republic and therefore staged a coup with the help of a defeated, marauding army and navy, and in this way established a firm socialistic tyranny. Many liberal democracies are enfeebled by party strife to such an extent that revolutionary organizations can easily seize power, and sometimes the citizenry, for a time, seems happy that chaos has come to an end. In Italy the Marcia su Roma of the Fascists made them the rulers of the country. Mussolini, a socialist of old, had learned the technique of political conquest from his International Socialist friends and, not surprisingly, Fascist Italy was the second European power, after Laborite Britain (and long before the United States) to recognize the Soviet regime. The second avenue toward totalitarian tyranny is "free elections." It can happen that a totalitarian party with great popularity gains such momentum and so many votes that it becomes legally and democratically a country's master. This happened in Germany in 1932 when no less than 60 per cent of the electorate voted for totalitarian despotism: for every two National Socialists there was one international socialist in the form of a Marxist Communist, and another one in the form of a somewhat less Marxist Social Democrat. Under these circumstances liberal democracy was doomed, since it had no longer a majority in the Reichstag. This development could have been halted only by a military dictatorship (as envisaged by General von Schleicher who was later murdered by the Nazis) or by a restoration of the Hohenzollerns (as planned by Bruning). Yet, within the democratic and constitutional framework, the National Socialists were bound to win. How did the "Nazis" manage to win in this way? The answer is simple: being a mass movement striving for a parliamentary majority, they singled out unpopular minorities (the smaller, the better) and then rallied popular support against them. The National Socialist Workers' Party was "a popular movement based on exact science" (Hitler's words), militating against the hated few: the Jews, the nobility, the rich, the clergy, the modern artists, the "intellectuals," categories frequently overlapping, and finally against the mentally handicapped and the Gypsies. National Socialism was the "legal revolt" of the common man against the uncommon, of the "people" (Volk) against privileged and therefore envied and hated groups. Remember that Lenin, Mussolini, and Hitler called their rule "democratic"—demokratiya po novomu, democrazia organizzata, deutsche Demokratie—but they never dared to call it "liberal" in the worldwide (non-American) sense. Carl Schmitt, in his 93rd year, analyzed this evolution in a famous essay entitled "The Legal World Revolution": this sort of revolution—the German Revolution of 1933—simply comes about through the ballot and can happen in any country where a party pledged to totalitarian rule gains a relative or absolute majority and thus takes over the government "democratically." Plato gave an account of such a procedure which fits, with the fidelity of a Xerox copy, the constitutional transition in Germany: there is the "popular leader" who takes to heart the interest of the "simple people," of the "ordinary, decent fellow" against the crafty rich. He is widely acclaimed by the many and builds up a body guard only to protect himself and, of course, the interests of the "people." In the Name of the PeopleThink of Hitler's SA and SS and also of the tendency to apply wherever possible the prefix Volk (people): Volkswagen (people's car), Volksempfänger (people's radio set), des gesunde Volksempfinden (the healthy sentiments of the people), Volksgericht (people's law court). Needless to say that this verbal policy continues in the "German Democratic Republic" where we see a "People's Police," a "People's Army," while Moscow's satellite states are called "People's Democracies." All this implies that in earlier times only the elites had a chance to govern and that now, at long last, the common man is the master of his destiny able to enjoy the good things in life! It matters little that the realities are quite different. A very high-ranking Soviet official recently said to a European prince: "Your ancestors exploited the people, claiming that they ruled by the Grace of God, but we are doing much better, we exploit the people in the name of the people." Then there is the third way in which a democracy changes into a totalitarian tyranny. The first political analyst who foresaw this hitherto-never-experienced kind of evolution was Alexis de Tocqueville. He drew an exact and frightening picture of our Provider State (wrongly called Welfare State) in the second volume of his Democracy in America, published in 1835; he spoke at length about a form of tyranny which he could only describe, but not name, because it had no historic precedent. Admittedly, it took several generations until Tocqueville's vision became a reality. He envisaged a democratic government in which nearly all human affairs would be regulated by a mild, "compassionate" but determined government under which the citizens would practice their pursuit of happiness as "timid animals," losing all initiative and freedom. The Roman Emperors, he said, could direct their wrath against individuals, but control of all forms of life was out of the question under their rule. We have to add that in Tocqueville's time the technology for such a surveillance and regulation was insufficiently developed. The computer had not been invented and thus his warnings found little echo in the past century. Tocqueville, a genuine liberal and legitimist, had gone to America not only because he was concerned with trends in the United States, but also on account of the electoral victory of Andrew Jackson, the first Democrat in the White House and the man who introduced the highly democratic Spoils System, a genuine invitation to corruption. The Founding Fathers, as Charles Beard has pointed out, hated democracy more than Original Sin. But now a French ideology, only too familiar to Tocqueville, had started to conquer America. This portentous development lured the French aristocrat to the New World where he wanted to observe the global advance of "democratism," in his opinion and to his dismay bound to penetrate everywhere and to end in either anarchy or the New Tyranny—which he referred to as "democratic despotism." The road to anarchy is more apt to be taken by South Europeans and South Americans (and it usually terminates in military dictatorships in order to prevent total dissolution), whereas the northern nations, while keeping all democratic appearances, tend to founder in totalitarian welfare bureaucracy. The lack of a common political philosophy is more conducive to the development of outright revolutions in the South where civil wars tend to be "the continuation of parliamentarism with other (and more violent) means," while the North is rather given to evolutionary processes, to a creeping increase of slavery and a decrease of personal freedom and initiative. This process can be much more paralyzing than a mere personal dictatorship, military or otherwise, without an ideological and totalitarian character. The Franco and Salazar regimes and certain Latin American authoritarian governments, all mellowing with the years, are good examples. Slouching toward ServitudeTocqueville did not tell us just how the gradual change toward totalitarian servitude can come about. But 150 years ago he could not exactly foresee that the parliamentary scene would produce two main types of parties: the Santa Claus parties, predominantly on the Left, and the Tighten-Your-Belt parties, more or less on the Right. The Santa Claus parties, with presents for the many, normally take from some people to give to others: they operate with largesses, to use the term of John Adams. Socialism, whether national or international, will act in the name of "distributive justice," as well as "social justice" and "progress," and thus gain popularity. You don't, after all, shoot Santa Claus. As a result, these parties normally win elections, and politicians who use their slogans are effective vote-getters. The Tighten-Your-Belt parties, if they unexpectedly gain power, generally act more wisely, but they rarely have the courage to undo the policies of the Santa parties. The voting masses, who frequently favor the Santa parties, would retract their support if the Tighten-Your-Belt parties were to act radically and consistently. Profligates are usually more popular than misers. In fact, the Santa Claus parties are rarely utterly defeated, but they sometimes defeat themselves by featuring hopeless candidates or causing political turmoil or economic disaster. A politicized Saint Nicholas is a grim taskmaster. Gifts cannot be distributed without bureaucratic regulation, registration, and regimentation of the entire country. Countless strings are attached to the gifts received from "above." The State interferes in all domains of human existence—education, health, transportation, communication, entertainment, food, commerce, industry, farming, building, employment, inheritance, social life, birth, and death. There are two aspects to this large-scale interference: statism and egalitarianism, yet they are intrinsically connected since to regiment society perfectly, you must reduce people to an identical level. Thus, a "classless society" becomes the real aim, and every kind of discrimination must come to an end. But, discrimination is intrinsic to a free life, because freedom of will and choice is a characteristic of man and his personality. If I marry Bess instead of Jean, I obviously discriminate against Jean; if I employ Dr. Nishiyama as a teacher of Japanese instead of Dr. O'Hanrahan, I discriminate against the latter, and so forth. (One should not be surprised if an opera house that rejects a 4-foot tall Bambuti singer for the role of Siegfried in Wagner's "Ring" is accused of racism!) There is, in fact, only either just or unjust discrimination. Yet, egalitarian democracy remains adamant in its totalitarian policy. The popular pastime of modern democracies of punishing the diligent and thrifty, while rewarding the lazy, improvident, and unthrifty, is cultivated via the State, fulfilling a demo-egalitarian program based on a demo-totalitarian ideology. Democratic tyranny, evolving on the sly as a slow and subtle corruption leading to total State control, is thus the third and by no means rarest road to the most modern form of slavery.  This posting includes an audio/video/photo media file: Download Now |
| Posted: 23 Jul 2021 12:00 PM PDT Download the slides from this lecture at Mises.org/MU21_PPT_34. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| Business Cycles and Skyscrapers Posted: 23 Jul 2021 11:00 AM PDT Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| Political Decentralization as a Road to Anarcho-Capitalism Posted: 23 Jul 2021 09:00 AM PDT Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| Posted: 23 Jul 2021 08:45 AM PDT Eric Mack is one of the foremost contemporary philosophers who support the free market. He has for many years been concerned with the "anarchist-minarchist" dispute. In a "state of nature" in which people's rights to self-ownership and private property are generally recognized, most individuals would find it in their interest to hire private protection agencies to defend their rights rather than handle disputes about rights themselves. Robert Nozick argues in part 1 of Anarchy, State, and Utopia (1974) that competing private protection agencies in a given area would tend to coalesce into a single "state-like entity" that would have a de facto monopoly over protective services. Nozick's minimal state lacks the power to tax people, but in his view most people would buy its services. Mack is a leading critic of Nozick's argument and in a number of papers has raised difficulties for it. With the details of these difficulties we are not here concerned, but suffice it to say that he shows Nozick has not proved that a minimal state would likely arise from the state of nature described above. Despite this, Mack in his recent book Libertarianism (Polity Press, 2018) offers a possible justification for a minimal state that has more powers than Nozick's minimal state. In particular, it possesses the power of taxation. In today's article, I'd like to examine Mack's argument. He first raises for Nozick's minimal state the problem of public goods.
People will prefer to free ride, hoping that others will pay for the good; but if everyone reasons this way, the good will not be purchased. Mack is certainly right that if anarchist protective agencies or a Nozickian minimal state, lacking the power of taxation, prove unable to supply effective defense, that would be a serious objection to them indeed. But I think his argument has moved too fast. According to the customary neoclassical analysis, public goods will not be supplied efficiently. It does not follow from that, though, that the good will not be supplied at all, or in a quantity insufficient to "do the job." The extent of the supply is an empirical matter. If a libertarian theory of rights doesn't maximize neoclassical efficiency, this isn't a fatal defect. There are two other problems with invoking public goods problems to justify taxation. First, why couldn't people supply public goods through contracts in which they agreed to pay for these goods only if the contract secured a sufficient number of such conditional offers of payment to supply the good? Under such arrangements, the problem of "free riders" would be substantially alleviated. Further, the whole notion of "public goods" can be challenged from the standpoint of Austrian economics. The idea depends on conjectures about what people would demand under various hypothetical circumstances, but resort to such constructions is hardly consistent with Austrian "demonstrated preference," in which only the actual choices of people in the free market are taken account of in analysis. Suppose, though, that the free market turns out to be unable to supply defense. Would Mack then be correct when he says that a taxation minimal state (TMS) may be justifiable? He says,
If this is right, then, "the libertarian advocate of the TMS may argue that, precisely because of the non-feasibility of attaining consent from individuals to make payments in exchange for the public good of rights-protection, it is permissible to impose those payments without actual consent." I do not think this argument succeeds. In Mack's first case, it seems permissible to proceed with the life-saving operation because there is reason to believe that is what the patient would want. Most people would want to be saved in these circumstances. If she had given instructions beforehand not to operate, then the operation would not be permissible. In the taxation case, the reason consent is not feasible is that people refused to pay taxes voluntarily in a sufficient amount to enable the minimal state to function. It is hardly plausible to say that I may force you to pay me for my services, because, owing to your refusal of my services, getting your consent is not feasible. Mack himself raises an important problem for the argument for the taxation minimal state. "Recall…. that this defense of the TMS turns on a striking assumption about information. It assumes that the state's tax assessors would know, for each assessed party, what magnitude of taxation would leave that party net better off in light of the value for that party of her receipt of the tax-funded public good of protective services." The TMS has collapsed, with no prospect of emergency surgery to revive it.  |
| Posted: 23 Jul 2021 08:00 AM PDT Download the slides from this lecture at Mises.org/MU21_PPT_35. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| Cronyism: Liberty versus Power in America, 1607-1849 Posted: 23 Jul 2021 07:00 AM PDT Download the slides from this lecture at Mises.org/MU21_PPT_37. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.  |
| As the Fed Powell Continues to Flail, Could an MMT Fed Chair Be Next? Posted: 23 Jul 2021 04:00 AM PDT Inflation in America continues to rise, and with it skepticism in Federal Reserve chairman Jay Powell's insistence that increased prices are "transitory." This double whammy of consumer pain and declining institutional confidence increases the odds of another challenge to the Fed's current plans: a change in leadership. To date, there has been no indication from either Kamala Harris or Joe Biden that Jay Powell is likely to end up cashing his own covid-boosted unemployment benefits. While a political party losing control of the executive branch typically means a pink slip for most of the predecessors' chosen policymakers, Fed chairs have historically had a knack for sticking around. In 1983, Ronald Reagan renominated Jimmy Carter's Fed selection—Paul Volker—before appointing Alan Greenspan to the Fed in 1987. While 90s American politics was marked by escalating personal and partisan spats between Republicans and Democrats, Greenspan cemented his spot as one of the most powerful men in the world with the support of both George H.W. Bush and Bill Clinton. Even Ben Bernanke, the first Fed chair to be the subject of a new generation of well deserved—and often hilarious—online ridicule received the support of both George W. Bush and Barack Obama. Romantics would argue this is an illustration of the central banks' cherished—and mythical—"independence"; cynics would point out that it reflects a bipartisan commitment to credit expansion and easy money. Even Trump, who campaigned on a surprisingly strong grasp on the consequences of the Fed's monetary hedonism, ended up selecting an Obama-appointed Fed governor for the position. Of course, there is an additional reason for hesitancy in changing the name on the stationary at the Eccles Building: regime certainty. In 2009, for example, the conventional wisdom of DC and Wall Street was that a disruption in the Fed's leadership would undermine America's already anemic recovery from the recent financial crises. For similar reasons, Politico has reported that a second term for Jay Powell is "his to lose." Also supporting his case is the degree to which his views on the economy have mirrored that of his predecessor turned Treasury secretary, Janet Yellen. There is a lot of time, however, between now and the end of his term in 2022. While Fed chairs in the past have been renominated in the face of weak economic growth and underperforming labor markets, the political calculation of maintaining the status quo is very different in a country feeling the daily pain of rising consumer prices. The more the Fed admits inflation will last longer than expected, the more we are likely to see betting markets lose faith in the return of Chairman Powell. What would a post-Powell Fed look like? That is where things get interesting. As illustrated above, a change in personnel in the Fed in recent years has not meant a radical change in policy. As such, the heir-apparent would be a dependable, status quo partisan like Lael Brainard—an Obama-appointed Fed governor who was a finalist to be the current Treasury secretary. There is, however, growing interest on the progressive left in the work of Stephanie Kelton and other advocates of modern monetary theory. Additionally, the great political advantage of MMT—like Keynesianism in the 1930s—is that it provides an intellectual veneer for a political left that believes the biggest problem with American economic policy is its frugality. Kelton has publicly advocated for the Biden administration to rely on the Fed—rather than taxes—to support aggressive increases in federal spending. [FURTHER READING: A Review of Stephanie Kelton's The Deficit Myth by Robert Murphy] The enthusiasm for MMT is not shared by Ms. Brainard, nor any of the other obvious candidates within the existing Fed. Neel Kashkarki, for example, head of the Minneapolis Fed and one of the more dovish voices in the central bank, has been a strong critic of Kelton's work. Could progressive pressure, mixed with escalating economic pressure, push White House decision-makers to embrace a radical, outside the box choice to lead the Fed? The previous administration was gifted an opportunity to significantly reshape the ideology of the Fed thanks to multiple potential openings on the Federal Reserve Board of Governors. While some interesting nominees were considered, the status quo won out. With multiple vacancies on the horizon in 2022, that may not be the case for much longer.  This posting includes an audio/video/photo media file: Download Now |
| You are subscribed to email updates from Mises Wire. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment