Thursday, December 2, 2021

Mises Wire

Mises Wire

Patrick Newman on Cronyism in Early US History

Posted: 01 Dec 2021 11:30 AM PST

Patrick Newman is a fellow at the Mises Institute who have just published his new book. He talks about Rothbard's approach to history, whether the US revolution was libertarian, and the proper way to interpret Andrew Jackson.

Mentioned in the Episode and Other Links of Interest:

​For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

 

All the Trouble in the World: The Ron Paul Doctrine

Posted: 01 Dec 2021 11:30 AM PST

Daniel McAdams is executive director of the Ron Paul Institute for Peace and Prosperity and coproducer/cohost of the Ron Paul Liberty Report. Daniel served as the foreign affairs, civil liberties, and defense/intel policy advisor to US congressman Ron Paul from 2001 until Dr. Paul's retirement at the end of 2012. From 1993 to 1999 he worked as a journalist based in Budapest, Hungary, and traveled through the former Communist bloc as a human rights monitor and election observer. He has a BA in English from the University of California, Berkeley, and worked on an MA in international relations from San Francisco State University.

Jeff Deist: For any readers who are unfamiliar, tell us what the Ron Paul Institute is and what it does.

Daniel McAdams: We do three main things, Jeff. We publish every day three or four articles and they're highly curated. We want to show people three or four things to think about. And we do the daily Ron Paul Liberty Report with Dr. Paul, Monday through Thursday with me as a cohost and Friday with Chris Rossini as the cohost. The other important part of what we do is conferences. We met this year to discuss the anniversary of Nixon's closing the gold window. We had our normal Washington, DC, conference, which was our biggest conference ever. We also had the Ron Paul Scholars Seminar for upper-division undergrads and graduate students, essentially a foreign policy bootcamp. We had Thomas Massie, Phil Girardi, Jim Bovard, and Jacob Hornberger. The lineup was terrific, so it was a great event. We focus on foreign policy, but increasingly, these past two years, we've absolutely focused on civil liberties, given everything happening with covid.

JD: I had the opportunity to attend your Washington, DC, conference a month or so back and it definitely was eclectic. RFK Jr. [Robert F. Kennedy Jr.] talking about health freedom was really fascinating to me. Kudos to you and to Ron Paul because I think dollar for dollar the Ron Paul Institute punches well above its weight in terms of influence. The Ron Paul Liberty Report, of course, is a daily go-to for a lot of people.

DM: We're encouraged that so many people tune in.

JD: Let's touch briefly on your past. When I met you, you had been living in Europe for several years, in Hungary. I'm told you even had some neoconish tendencies at one point. Tell us about your background.

DM: Well, I don't know that it was neoconish tendencies, really. When the Cold War ended, I had just finished up at UC Berkeley with a degree in English literature, which is, of course, as we all know, the most useful degree on earth, right? We're in a recession in '88 and I had an English degree. I had always wanted to do foreign affairs and politics but was not able to do it. So I decided to go back to grad school and study international relations, which in some ways was a dumb move, but in some ways it was a very fortuitous move, but not necessarily neocon.

When I went to Europe I watched the Clinton administration supporting the so-called Reform Communists, I was pretty naïve back then, I'll admit it. I thought, These guys, they must not know what's going on. They must not know the good guys and the bad guys. We have to support the good guys, not the guys that have been exploiting people for decades. A lot of it's philosophical, Jeff, because there are two ways of looking at the Communist era. One is that it's an aberration in history. It's something that became unique, in a nonorganic, nonevolutionary way. If you look at it like the cancer that a lot of us believe it was, if you cut out that cancer, then you have two threads of history that are separated by several decades—in the Soviet Union's case, many decades. The question is do you rejoin those threads of history and move on in sort of a social evolutionary manner or do you view the Communist era as a part of a normal evolution process, and not an aberration of history, but just another part of history? I had fallen clearly on the side of it being an aberration, of it being a cancer. I and a lot of the people, certainly in Hungary, that I worked with, people in the Hungarian Democratic Forum (which was the first party to win the elections after communism), they looked at the traditions of precommunism and wanted to revive a lot of those traditions. For the US embassy that was anathema. It suggested the dark days of anti-Semitism, which of course it wasn't at all. It was a thousand years of Hungarian history. That's the philosophical breaking point of how you view this sort of storyography of twentieth-century central and eastern Europe.

JD: While you lived in eastern Europe you worked with the British Helsinki Human Rights group. Talk about that—why are they controversial? The interventionist regime change types don't seem to like them.

DM: No, they don't and, of course, those regime change, democracy-for-all people are now firmly ensconced on our shores. This is something we called thirty years ago, twenty-five years ago. We saw this machine taking on a life of its own and eventually coming over to the West. I was exposed to the British Helsinki Human Rights group in a pretty simple way. I was at the time writing off and on for a newspaper called the Budapest Sun, which was the largest English-language paper in central and eastern Europe. I eventually became the editorial page editor. Early on I'd noticed there was a good conservative writer, Jonathan Sunley, a brilliant British scholar who had studied under Professor Norman Stone. We became friends. It turns out that Jonathan was involved with a group that was doing a lot of work in Hungary and who were skeptics of the received conventional wisdom there. A lot of it has to do with the last answer I gave, the view of history and the view of whether or not, if you or your family were involved in the implementation of communism, you have a right to remain in the vanguard of the change away from communism. And that's of course, exactly what they all believed that they had the right to do. That's why they're the ones, to a large degree, who managed the transition. In Hungary it's called the Rendszerváltás: the transition was managed by the same people who brought communism in.

I spent a brief period in the State Department in intelligence, and by pure happenstance I was handed the Albania account in the State Department's Intelligence and Research division because the person who was doing it was following Czechoslovakia's breakup very closely and didn't have time for Albania. It just fell in my lap. I wrote several items for the Secretary of State's Morning Summary briefing book just because nobody else wanted to do it. Then I was asked in 1996, Do you want to go to Vienna and testify at the OSCE [Organization for Security and Co-operation in Europe] and take a trip to Albania and see the coup that was beginning? I was invited to Vienna by like-minded people of the British Helsinki Group, and then it was off to the races.

JD: You returned to the US a year or so before 9/11 or thereabouts. What did you know about Ron Paul at the time, and how did you come to work for him as his foreign policy staffer?

DM: I mentioned in a speech I gave a couple of weeks ago my gateway drug was Justin Raimondo. It was through finding Justin and, I'm somewhat reluctant to say it now, but I was on a website back then (kiddies may not remember that there weren't really websites as we know them now) called Free Republic. It was basically a right-wing site, wingnut site, which hated Clinton. I was not necessarily a right-winger, but I hated Clinton for a lot of reasons. There was this guy that kept putting his articles up on Free Republic and being absolutely pummeled by these right-wing wingnuts, but it never deterred him, and that was Justin Raimondo. He responded and responded and responded, and so I started reading Justin and I started realizing, of course, in the late '90s, how right he was about what was happening in the Balkans because I was literally next door. It was through Justin, thank God, that I discovered Lew Rockwell and Ron Paul and so many of the other people who were saying the same thing. Indeed, it was thanks to Justin Raimondo that I started really questioning my idea that we've got to help the good guys because the bad guys are winning. And I started realizing that we should not be helping any guys, and that was my big revelation.

JD: At that point could you have imagined the Ron Paul revolutions of 2008 and 2012?

DM: No, not at all. In fact, at the time, it was a shock to me because I wasn't awfully interested in politics. I was involved in Republicans Abroad and it was mostly a social club because I was trying to find a way to get some connections and make some dough. We did have the Gingrich Revolution when I was over there so I foolishly thought, Oh, the good guys are going to start doing really good things and, of course, I was wrong.

Then here's this obscure Texas congressman who didn't seem like a right-winger. I couldn't peg him because I didn't understand libertarianism at the time. I remember my father-in-law used to always say that he was libertarian and I didn't know what it meant, except that he thought we shouldn't be put in jail for drugs, which I disagreed with at the time. So no, I never could have foreseen it, even having worked for him for six or so years before the Ron Paul revolution took off. We were fighting rearguard actions, we were throwing metaphorical bombs into the machine to try to slow things up and to try to at least make some points. The idea that all of this would coalesce into a worldwide historic movement that will be written about and is written about in history books, it never would have really occurred to me at the time.

JD: During your years working for Dr. Paul he had a seat on the House Foreign Affairs Committee. Henry Hyde was chairman of that committee during some of those years. What was Ron's impact on that committee? Why did they (the GOP leadership) let him have a spot on a committee dealing with foreign affairs?

DM: He was on the committee before I was hired. I had been writing for Lew Rockwell and Antiwar, and I think that's what helped me. Our good friend Joe Becker, who's now with you guys at Mises, he wanted to move on and they needed someone that could handle Ron's foreign affairs stuff. So it was dumb luck. I just fit the bill. It was not easy for Ron to get on the Foreign Relations Committee. He had tried before and he was told that he wasn't sufficiently loyal to a different state, which is Israel, to be considered acceptable to be on the committee, but eventually he was offered a position there. I think they probably regretted it, particularly as we faced the run-up to the Iraq War, the years of the Iraq War, the PATRIOT Act, etc., etc. They probably regretted letting him on the committee.

JD: But it did provide him several excellent opportunities over the years to make his case.

DM: Yes, every time it came to his turn, the eyes were rolling. This is not going to be easy; here he goes again. But over and over again, he just made such crisp points, such perfect points. He never let anything slip by him, and as everyone knows, he did it in his calm manner. He wasn't pounding the table. He wasn't acting like a buffoon, like so many other members. He just simply assailed them with facts and with analysis, and that's why they hated him the most, especially Tom Lantos, who was the chairman for a brief period of time.

JD: Ron Paul was motivated by two things in deciding to run for Congress: foreign policy and monetary policy. He was able to dovetail those two things. He understood that interventionism abroad is a cousin of interventionism at home in the economy.

DM: This is something that the neocons and most conservatives never understand. Those same people believe that six thousand miles away, all of a sudden the government becomes omniscient and omnipotent, there's a huge disconnect and the reason is very simple. They never have to live with the consequences of the policies that they promote overseas. They never have to live in a Ukraine that's been destroyed by the Maidan. They never have to go back and live in Libya, which has been a nightmare since we "liberated" it. They never have to face the consequences of the policies that they support and promote, therefore they continue to promote them until the whole thing comes down, which, who knows, may be imminent.

JD: If you look at the Constitution, there's no distinction made between foreign policy and domestic policy. Yet up until recently there was a gentleman's agreement in Congress that politics stops at the water's edge. This allowed for a lot of interventionism to go unremarked, with bipartisan support.

DM: You're absolutely right. It was a very convenient tool for the interventionists because, after all, those were our boys over there and anything you say that might put them in danger questions your patriotism, so that was used a lot to solidify support for intervention overseas. There's no question about that.

JD: In your mind, is there a Ron Paul doctrine for economics and foreign policy? I recently reread Mises's Liberalism, and his prescription for a liberal society or even a liberal nationalism was very much in keeping with Dr. Paul's longtime message. Mises advocated laissez-faire at home, along with self-determination for political minorities up to and including secession. Liberal foreign policy means free trade, which prevents the problems of autarky, and a strictly noninterventionist military approach. These four elements give us Mises's prescription for a liberal society. Those same four elements are a good description of what we might call a Ron Paul doctrine.

DM: That's a very good point. I think at its core a Ron Paul doctrine would be resisting the temptation of authoritarian impulses, because they're there, they're everywhere. The thing about Ron (and I work with him now a lot more closely than I did on the Hill; as you know, we only went in there when we had an issue. Normally we left him alone.), and it's evident in every aspect of his life, including his interpersonal relationships, is resisting the impulse to authoritarianism or to any kind of intervention. And sometimes that's been a little difficult. Sometimes there were staffers who needed a little more intervention. But Ron would always hope that they would straighten up and fly right, and he always hoped that people would do the right thing, but he would always want to tell people what that right thing was. I think it could be encapsulated in bumper sticker simplicity: Well, what should I do? Well, do what you want to do. What should I do to promote liberty? Well, do what you want to do. Do what you're good at. I think that is at its core. I don't know if it's a kind of Protestant work ethic or if it's the way he was raised, in circumstances where hard work paid off to a successful career, to a successful life, one that started in very difficult circumstances. If you know about his past and about how his ancestors came over from Germany with literally nothing in their pockets and hard work provided them the American dream, I think that's really kind of who Ron Paul is because he understands what that's like.

JD: Some of his critics should deliver four thousand babies before they opine.

DM: Or ride in a horse-drawn carriage delivering milk at seven years old! (laughs)

JD: There has always been a split between what we might call DC libertarians and Ron Paul libertarians favorable to the Mises Institute. A tougher name would be regime libertarians. Some people in those circles say, Oh, Ron Paul ends up making apologies for foreign dictators because his noninterventionism is so reflexive. You have also been on the receiving end of these criticisms.

DM: Well, it's the issue of staying out of other people's business at home and abroad. You know, there is sort of a Trotskyist faction of libertarians who believe that a libertarian government overseas imposed by force in a permanent revolution is the only way we can have freedom in the world. There are these type of liberal messianic interventionists who do want to have libertarianism here first but who do also ultimately want to export that overseas. And then there are what I call the live and- let-live libertarians, which understand that people in a country, for example, Iran, may want to live under a theocracy and it's just none of our business if they do. I say, just as a sort of pressure relief system, you might let some more immigrate who don't want to live in a theocracy but otherwise people should be free to live as they wish, even in Venezuela, if they want to have a socialist system. There are always evolutionary changes, of course, and unfortunately, our evolutionary changes are not going in the right direction, but when you subject that external pressure, you move from evolutionary changes to revolutionary changes, which there's no example in history where us being a vanguard of democratic revolutionary change overseas has ever produced positive results. All of this comes from understanding the Ron Paul doctrine, as you say, and how Ron Paul views the world. Anyone who follows him knows that he's not bashful about criticizing Venezuela's economic policy, but it's just he doesn't take it to the next step of calling for us to liberate the people there.

JD: Justin Raimondo received a lot of grief for this over the years too.

DM: Oh yes.

JD: It strikes me, Daniel, how much economic ignorance resides in the neoconservative worldview. We don't have the money for wars and nation building. It's all debt financed. If people really understood economics they would know a grandiose foreign policy is flat-out incompatible with so-called limited government—supposedly a conservative shibboleth.

DM: That's absolutely true, and the more I understand how things work, the more I also understand that it's not necessarily ideological. You know, people like Bill Kristol live very good lives because they do the bidding of the defense contractors in the military-industrial complex. And we're seeing so much of that now. We're looking at now the medical-industrial complex, the pharma-industrial complex. These are special interests that literally have Congress in a chokehold. They probably produced the Cold War itself, if we want to be revisionist, but certainly the post–Cold War era and the maintenance and expansion of the US empire has all been driven by the weapons manufacturers. So, it's partially ideological, but that ideology is awfully convenient when it leads you to live a better life than normally you would live as a humble scribbler, like Kristol would have been.

JD: Here's something to consider. There is obviously crossover between a Liz Cheney and a Joe Biden on foreign policy. The Mitt Romney types agree with the Hillary Clintons and the Terry McAuliffes, who fortunately just lost the race for governor in Virginia. But we have interesting left and right crossovers on our side too. In other words, there are voices out there like Dennis Kucinich and Jimmy Dore and Caitlin Johnstone down in Australia aligning with people like you and the aforementioned Raimondo and Dr. Paul. I do think there's an opportunity there. These endless foreign wars have no natural constituency and are not popular outside the Beltway.

DM: Yes, foreign policy during this entire year and a half or two years of covid tyranny has exposed a lot of the people that I was worried might come down on the other side, because they were progressives. I have been reassured with people like Glen Greenwald, slightly a latecomer to the whole thing, but Matt Taibbi, as you say, Jimmy Dore, who's so terrific on this issue, some of the people that I've known on foreign policy, Vanessa Beeley and her group, Whitney Webb. These are great writers and they've all come down as antiauthoritarians where most of their allies or once allies on the left have firmly come down in the camp of the CIA, of the PATRIOT Act, of don't question … you are in a resistance, but don't you dare resist the authorities. Thankfully, these ties, these cross-aisle, as you would say, ties, have not only managed to survive the covid tyranny, but they've been fertilized by it. So, there is a little bit of optimism for me at least in this point.

JD: I think the covid regime has to be viewed like our interventionist regime overseas. They are part and parcel of the same beast. One thing you've mentioned in speeches is the Rockwell Rule, named after Lew Rockwell. We discussed regime libertarians who want to browbeat every tinpot dictator. They may technically oppose actual military interventions, and maybe even oppose economic sanctions, but they demand everyone join the chorus of browbeaters. So what exactly is the Rockwell Rule?

DM: It's very simply, never, ever, ever in any regime that the CIA wants to overthrow, never ever repeat their talking points. Never criticize any regime that the CIA wants to overthrow, full stop. That is the Rockwell Rule, the Rockwell Doctrine and it deprives the interventionists of the ability to say, see? Even the libertarians agree that Qaddafi is passing out Viagra or that Saddam is eating babies. They can say, Oh yeah, the libertarians, they don't want to invade, but see? Even they agree. So, deprive them of that ability. Caitlyn Johnstone has a good way of saying it, "Don't be a CIA mouthpiece." I think that is very, very important and it's so funny because you do see these things at exactly the right moment that the CIA and the regime change machine wants you to say them. When they're ramping up the heat on Iran, for example, all of a sudden, you'll have some young libertarian gal come out and say, Iran is horrible, a despotism, they're socialist in their economy. It always comes at the exact right moment. If you're a libertarian and you participate in this, you're a dupe or worse.

JD: There is a tremendous amount of hubris in the West today. The whole world has to share our principles and our form of governance, essentially social democracy. And this should be maintained through international governance in the form of the United Nations or the World Bank or whatever. From my perspective this is just the twenty-first-century version of imperialism and colonialism. It is ideological colonialism.

DM: Yes, and worse because we can kill a lot more people a lot quicker. The people that jump on the bandwagon, We've got to do this, we've got to overthrow X, you are living in a country whose foreign policy and military leadership are responsible for the deaths of millions. You have a president who just droned a family and then lied about it, started wars, who's now holding nearly a hundred people in a gulag in DC because they happened to set foot in the Capitol building on January 6. This is one of the most repressive regimes in the world, and if you doubt that, step out of line. Yet nevertheless, if there's a bad guy overseas, we're going to jump in and join the chorus and join the two minutes of hate against him, to keep this evil regime up and running, to keep the dollars flowing to the overt and covert regime change mechanism here at home. The thing is, just don't buy into it. Bite your tongue. OK, the guy's a jerk overseas, probably true, but we have bigger jerks running the State Department, running the military, running the military-industrial complex, right here at home.

JD: Give us your take on some current issues in foreign affairs. Let's start with China and Taiwan. I'm interested in Biden's saber rattling. His administration's talking to the Japanese about potential joint naval exercises. I wonder what millions of Chinese Americans would think if Biden joins forces with the Japanese over Taiwan.

DM: That's an interesting point and it's a variable I don't think has been considered much. Now I may be wrong, but from my experience, I think the Chinese Americans in the US tend to be rather apolitical. They're not as involved in politics as other immigrant groups, at least to this point they have not. This is a sweeping generalization, but they tend to keep their heads down and become very successful in business and academia, but there might be some triggers for that. You have a lot of Chinese in the US, and they have ties to their homeland and they retain those ties, so I think you could see some pushback. It would be something that would be very new, but it might be something that does eventually come about.

JD: But given our recent problems in Afghanistan, for example, is the United States military really equipped at all to take on China?

DM: No, and a lot of Americans on the Right are falling out of love with the military and that's a very good thing. They're stopping this military worship and it's because of the wokeness that's gone on within the armed forces, but that is a good question. Are we really going to provoke a war with China when we can't beat a bunch of barefooted people after twenty years of war? Well I think that's all by design too. They didn't want the Afghanistan war to end because it's the gravy train, whereas I think a war with China would be pretty quick and decisive. So, are they equipped? No, but they weren't equipped for Iraq, they weren't equipped for Afghanistan, they've not been equipped for any war, frankly. You could go back to World War I and II. We came in at the end of World War I, when things were pretty settled, so the whole thing is a complete scam, Jeff. It's a huge ripoff, it's a huge psyop against the American people.

JD: But even among libertarian audiences there are people who say China is a real threat to the United States. China is biding its time and hoping we suffer an economic fall here. Those people at the Mises Institute who talk about secession would simply open the door for a weakened America to let the Chinese lion in.

DM: What would they do? Take California? I had lunch with my good friend Colonel Douglas McGregor and he said, our military is still fighting the idea of territorial warfare. The rest of the world has given up on this idea. You don't go and fight and take over. Right now, we've taken over 30 percent of Syria. What are we doing there? Nobody knows. We're the only country in the world that goes around looking to put in bases and get territory overseas. What does it give us? It seems to me the last thing that the Chinese would ever want would be to "own" most of the US. You know, first of all, it's a basket case. They've got their own basket case because of the economic problems they have. Why would they want to inherit something worse? It would be a disaster. The real Chinese threat is that the Chinese do capitalism better than we do. We go overseas and we overthrow governments, we take over media, we push people around, we push gay rights. The Chinese go overseas and make business deals in foreign countries and they get the stuff they want. They get the rare earths. They build factories. And that's the real reason that the Chinese will certainly outpace us in the future. But instead of addressing that aspect and returning to a noninterventionist foreign policy at home and abroad, domestic policy and foreign policy, we actually are doing things that make it more likely that they will overtake us in the one area that they're outperforming us. So, scratch your heads on that one really.

JD: Talk about Turkey and Recep Tayyip Erdoğan. Just ten or fifteen years ago, he was the darling of the West and Turkey was going to join the eurozone. Now he's a devil.

DM: He is a devil now and he's pretty wily. He knows how to do business with Putin. He's not chewing on the sound bites that NATO wants to give him. He purchased the S-400s now and that makes him unqualified to participate in the F-35 project, although we're still holding a billion of his dollars. We're dangling some F-16s in front of him. Probably best to take the F-16s over the F-35s, actually. He's a populist. His support comes from the countryside. He comes from the religious countryside. I'm not particularly a huge fan of his, but I find it difficult to avoid cheering for him when he told those ten Western ambassadors including the US ambassador last week, Hey, you signed a letter dealing with something that we're dealing with in our internal judicial system. You're persona non grata. Get out of the country. And it wasn't until countries backed down, that he said, OK, you guys can stay. But he's not having it. Russia got it, Putin got it. But a country like Belarus, who's been on the receiving end of US regime change efforts for so long, still allows Western NGOs in the country? I think Erdogan has woken up to that. He's woken up to what's happening. Regardless of how you feel about his policies or his authoritarianism, if you don't like the US empire because it hurts us or hurts people overseas, you have to have a positive view of what's going on in Turkey.

JD: How about Iran? Are they actually developing nuclear weapons or just nuclear energy? Or neither?

DM: They've been about twenty minutes away from the nuclear bomb for the past thirty years, so either they're taking a long coffee break or it's, once again, Israel having a conniption fit as they always do, with the US following suit. Again, it's the same people driving it, the military-industrial complex. And the Israelis, because we subsidized their military so much, they don't have an incentive to make peace with their neighbors because they believe that the US has their back no matter what they do. This is not a healthy policy for Israel in any sense of the word and certainly not a healthy policy for us. We subsidize a policy in Israel that's very dangerous to Israel, and if we didn't do that, they would have to find a way to deal with their neighbors and find peace. The Iran policy was a disaster under Trump, is a disaster under Biden. The Biden administration is trying to have it both ways. They promised to go back to the Joint Comprehensive Agreement, the JCPOA, but they can't do it because they're having a lot of pressure from the pro-Israel faction to get additional concessions and Iran is saying, What are you talking about? We already went through this. We made an agreement. Why would we give up more than what we initially signed on to? The whole irony of it, the humor of it, is that we're pushing Iran more firmly into the camp of Russia and China. They're saying, Hey, if you don't want to deal with us, we're going to go ahead and sell some oil to China, and China says, OK, we'll take it. Sounds good. We're actually the authors of our own demise with our stupid foreign policy.

JD: Finally, give us your take on Russia and Putin.

DM: It was an interesting talk that Putin gave to the Valdai Discussion Club this past week. He talked about the wokeism in the US and he talked about how we seem to be devouring ourselves. He remembers from his own history what happened when the Soviets came and tried to suppress speech and tried to suppress normal life as the wokeists in America are doing now. He's saying that Russia is probably the last conservative, for better or worse, whatever the word means, conservative country on earth. I know that makes a lot of antiwokeists feel like Russia is the answer, is the paradise. One of the things we've seen from covid is that there's still a lot of authoritarian impulses in Russia that we might not necessarily like. It was a three-hour speech. Imagine Joe Biden giving a very detailed three-hour talk on anything! But, it's very, very, very interesting and I really highly recommend that the listeners take a look at what he had to say.

JD: In 1959, a long time ago, Murray Rothbard wrote a letter to Ken Templeton at the Volker Fund. He said, "I've decided that the war-peace question is key to this whole libertarian business." What a great quote. Are you familiar with it?

DM: Absolutely. It is the key quote.

Understanding Why Government Policies Fail

Posted: 01 Dec 2021 09:00 AM PST

Pathways to Policy Failure
by Gary Galles
American Institute for Economic Research, 2020, 490 pp.

Gary Galles, an economics professor at Pepperdine University, has in this outstanding book shown how to apply basic economic principles to evaluate concrete policy proposals. In doing so, he offers a comprehensive defense of the free market and criticism of government programs that interfere with it. Galles combines two qualities rarely found together, and it is this combination that makes his book notable. Like Leonard Read, of whom he is a biographer, he can convey free market principles in a simple and memorable way; and he also has a detailed knowledge of the costs and benefits of the policies he analyzes. Pathways to Policy Failure consists of 137 of his articles, divided into four sections, though there is considerable overlapping between them: "Underselling Self-Government: Overselling the State"; "Lax Language"; "Measurements You Can't Count On"; and "Evaluating Policy Paths." In what follows, I'll be able to discuss only a few topics in the book.

You might think it obvious that the best way to evaluate an economic system is through its results, but many critics of the free market are not satisfied with the prosperity it has given us. They claim it rests on base motives and actions. It operates, they say, through a Darwinian struggle in which the strong exterminate the weak. This criticism is the opposite of the truth, and Galles here quotes Murray Rothbard; "The 'fit' in the jungle are those most adept at the exercise of brute force. The 'fit' on the market are those most adept in the service of society" (quoted on p. 9).

Success in the market depends on how well producers are able to satisfy the demands of consumers. For this reason, the free market is far more under popular control than is government policy in a democracy. People have different preferences, and there is no way for a political system to establish a consensus that everybody will accept. Even a democracy that works well, if there is such a thing, can satisfy only the preferences of the winners of elections. In the free market, by contrast, those whose preferences few share can obtain what they want, so long as businesses can respond to their demand.

In response, market critics say that the free market is concerned only with money: economists who defend the market are like Oscar Wilde's cynic, "who knows the price of everything and the value of nothing." As Galles points out, the market does not reduce all behavior to trying to make the most money you can; to the contrary, profit-seeking businesses will endeavor to satisfy the tastes of consumers, whatever these might be. I'm inclined to think that he goes too far, though, when he claims: "To say that economists don't know the value of anything is true, but irrelevant. Nobody knows the objective value of anything, because values are not objective" (p. 40). Whether values are objective is a vexed philosophical issue, and Galles's stance on it is by no means obviously true. If an "objective value" is characterized as one that you ought to prefer, even if you don't, what is incoherent about that? But this does not weaken the key point that the free market gives people what they demand.

In doing this, the market minimizes waste. "For instance, selling part of the output that would otherwise be thrown away or require costly disposal is as much a source of profit as any other way of increasing revenue or decreasing costs" (p. 110). Students, he says, seldom learn about this because it "appears to be a natural application of market entrepreneurship and the analysis of production processes that produce multiple outputs—joint products, or productive complements" (p. 110); and few textbooks discuss productive complements.

The efforts of entrepreneurs to pursue profit, Galles emphasizes, suffice in most instances to take care of the interests the free market is accused of neglecting—to the extent these should be taken into consideration. In an especially good article, he demolishes the influential "stakeholder" theory of the corporation, which holds that managers of corporations should take into account other interests besides those of the stockholders. Galles notes that "share prices reflect gains from better utilizing and motivating employees' skills and abilities, from better developing and serving customers, and from product improvements that users value more than they cost…. Stakeholder claims beyond those enabled by pre-existing property rights can often be understood as ex post … theft or piracy. They wait until something valuable has been created by others' voluntary relationships, then try to deal themselves into leverage or power over subsequent choices" (pp. 186, 188).

The critics of the market are not satisfied with profit seeking, even if this helps consumers. Those who seek profit are motivated by greed and selfishness. Galles challenges this complaint: What is wrong with caring about what is in your own interest? This does not exclude benevolence to others, and the wrong idea that it does Galles traces in part to Auguste Comte, who coined the word "altruism." For him, an altruistic act must be motivated totally by care for others rather than yourself, but as Galles says, even "'love your neighbor as yourself' fails the unlimited duty to others his version of altruism imposes" (p. 212). It is perhaps worth noting, though, that Comte's account of altruism does not by itself imply that you ought always to sacrifice your own interests to others but only that whenever you don't, you aren't altruistic. To get to the antithesis of egoism, the premise "You should always be altruistic" needs to be added.

Most readers will already be aware of the arguments against rent control and minimum wage laws, but Galles makes a point about these misguided measures which I haven't seen before. "If higher mandated wages increase the amount of labor services offered, the reverse must also be true. Lower wages must reduce workers' willingness to offer labor services. But if that is so, rent controls must, symmetrically, reduce landlords' willingness to provide housing, and rent control will restrict rather than expand tenants' housing options" (p. 243). The arguments for rent control and minimum wage laws are at cross-purposes and you cannot consistently support both.

In a very useful criticism of the "food stamp" program (now called SNAP [Supplemental Nutrition Assistance Program]), Galles shows that in most circumstances its goals won't be achieved. The aim of the program is to ensure that recipients get the food they need, or at any rate that bureaucrats think they need, and for that reason they are given food stamps rather than money, which could be spent on cigarettes, liquor, and other things the bureaucrats don't want them to have. Galles points out that in most cases the dollar value of the SNAP grant is less than what the recipients would spend on food without access to the program. If that is so, the SNAP grant frees up part of the money that would have been spent on food to buy other things, including the "bad" items.

I have had space to cover only a few of the issues that Galles with so much analytic skill brings to our attention. The book contains many interesting byways as well. He notes, for example, that Walt Whitman was a strong defender of the free market and small government; and he points out that the biblical verse: "The love of money is the root of all evil" (1 Timothy 6:10) is better translated as "The love of money is the root of many kinds of evil."

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That Bangladesh Mask Study!

Posted: 01 Dec 2021 08:00 AM PST

Our guest is Ben Recht, Associate Professor of Electrical Engineering and Computer Science at UC Berkeley, who recently got hold of and analyzed the raw data from the Bangladesh cluster randomized control trial of masking which made headlines in September.

SHOW NOTES​

A Chance to Double Your Gift

Posted: 01 Dec 2021 08:00 AM PST

Dr. Gary Schlarbaum, one of our generous supporters, has again offered to match donations received through December 11. That means your $10 donation becomes $20, your $25 donation becomes $50, and so on.

With a donation of $25 or more, you'll receive a copy of Hans-Hermann Hoppe's What Must Be Done. And, thanks to Gary, your donation doubles. Please donate today.

Your gift allows the Mises Institute to be bigger and better in 2022, our 40th anniversary. We want to offer more free books, articles, and videos to students all over the world. We want to share our ideas with as many people as possible.

We are the life-support system for the worldwide movement for liberty, the top source for scholarship in the Austrian school tradition, and the leading publisher of free market materials. The world needs us now more than ever. Your gift is vital for us to do more!

You can also give by mailing a check (payable to the Mises Institute) to Mises Institute Matching, 518 West Magnolia Ave, Auburn, AL 36832. You may also call us to donate at 1-800-OF-MISES. Our international friends should use 1-334-321-2100.

Your company may match your gift. You can easily check here.

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It's Time for the US To Stop Courting Conflict with Russia

Posted: 01 Dec 2021 07:00 AM PST

Biden's team is dominated by liberal internationalists, and just as their aggressive approach to China is the wrong one to take in the Indo-Pacific, it has long been counterproductive in eastern and southern Europe.

Original Article: "It's Time for the US To Stop Courting Conflict with Russia"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

"Going Cashless" Isn't as Easy as It Seems

Posted: 01 Dec 2021 05:00 AM PST

The fact that various electronic money transfers are taking place does not mean that we do not require cash any longer. On the contrary, the fact that the cash exists enables those transfers to take place.

Original Article: "'Going Cashless' Isn't as Easy as It Seems"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

We've Only Just Begun to See the Benefits of the New Surge in Homeschooling

Posted: 01 Dec 2021 04:00 AM PST

Parents across America were caught unprepared for the mass closure of government schools in 2020. Soon after, however, many decided they and their children had had enough of the status quo. Now at a crossroads, will they choose reform or repudiation?

The wave of ill-advised school shutdowns last year compelled tens of thousands of parents to rethink their children's education. When the classroom was virtually forced into their homes via Zoom, parents realized just how abysmal the curricula and tutelage were.

Statistics on families fleeing to homeschooling must be worrying the education establishment.

From 2012 to 2019, the homeschooling rate hovered around 3.3 percent of K–12 US students. That figure rose to 5.4 percent in spring 2020. By the following fall, that figure had more than doubled to 11.1 percent.

Among black families, the increase was particularly noteworthy considering only 3.3 percent of black children were homeschooled in spring 2020 versus 16.1 percent in the fall.

While legacy media focused on cases of parents keeping their kids home out of fear of covid, longtime critics of the public school system argued that the pandemic actually helped to expose parents to the abuses and shortcomings that have long plagued public education.

Some chose homeschooling, but many other parents took to school board meetings, facing the beast head-on and ripping apart the deceptive social engineering with the public comment microphone. All the glory, glitz, and glam has so far gone to the latter group.

They grew a decentralized movement with immediate political consequences not only in Virginia's gubernatorial election but also in school board races across the country earlier this month.

Axios, the popular DC-based news outlet run by former Politico journalists, recently reported on the growth of the 1776 Project, a new political action committee focused on reforming public school systems at the local level.

"My PAC is campaigning on behalf of everyday moms and dads who want to have better access to their children's education," the PAC's founder Ryan Girdusky told Axios.

The 1776 Project won three-fourths of its fifty-eight races across seven states, proving the populist Right's focus on the culture wars to be smart politicking.

Now Republicans in Congress are pushing a "parents bill of rights" ahead of their 2022 primary elections. Included are so-called rights to know what's taught at school, the right to be heard, and the right to transparent school budgets and spending.

"This list of rights will make clear to parents what their rights are and clear to schools what their duties to parents are," their flier states.

The reform position focuses on schools' duty to parents and ipso facto their children. But what of the duties parents owe to their children?

What if, instead of pointing their collective finger at the school boards, parents looked in the mirror? What if they asked themselves how or why they feel entitled to have a place to drop their kids off for thirteen years of government brainwashing?

Any taxpayer has a perfect reason to object to school mask mandates or the teaching of racist and queer ideologies. Parents must start thinking more deeply about the situation, though.

Certainly for some, running for school board positions is their best shot at helping to provide their children and their neighbors' children with better education. The problem is that in too many places, there's an absolute crisis in education that can't wait any longer for reform, no matter how severe.

Every family and community ultimately applies the Catholic principle of subsidiarity, the notion that the best way to organize society is for each action or decision to be taken at the smallest scale necessary, in assessing what must be done about things such as education.

By simply refusing to accept what federal or state authorities peddled throughout 2020, parents rightfully accepted more responsibility, clearly demonstrating that when things get personal, people will do what it takes to take back control.

Whatever step in that direction is taken, the child is better off. In his great essay "Education: Free and Compulsory," Murray Rothbard argued that public school and compulsory schooling laws tend to victimize the child: "The effect of the State's compulsory schooling laws is not only to repress the growth of specialized partly individualized private schools for the needs of various types of children. It also prevents the education of the child by the people who, in many respects, are best qualified—his parents."

Unfortunately, far too few parents think of themselves as qualified, much less the best qualified educators of their children. They are easily led to believe simple reforms will "fix the system" they grew up dependent upon as children themselves.

"We always hear, Oh it's broken. It's not broken. It's doing exactly what it was designed to do," Katie Phipps Hague told Mises Institute supporters at the latest summit in Florida last month.

Hague shared her experience homeschooling her seven kids and encouraged other parents to give it a try, essentially asking, What have you got to lose?

I know this sounds like I'm a crazy person, but if you pulled your children out of school … for a whole year, then include them in everything that you do in all of your trips and all of your conversations, put them around the intelligent, capable people that you all have in your circles and let them become comfortable around those people, you'd probably do better for them than maybe anything else you could ever do.

It's wonderful that the populist movement on the right is targeting the educational bureaucracy, one of the great roots of societal decay. There is a lot of potential for good in populism, but not if it sets its sights on mere reforms. A much brighter future lies in a libertarian populism where parents free themselves from these decrepit statist systems altogether and grow alternative institutions.

Parents must be responsible for their children's education precisely so that children learn to be autonomous. Autonomous people don't support tyrannical policies, so the sooner parents embrace their own power, the sooner their children will be able to unleash their own.

 

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Jenin Younes on Legal Challenges to Vaccine Mandates

Posted: 30 Nov 2021 12:15 PM PST

Our guest is Jenin Younes, a Litigation Counsel for the New Civil Liberties Alliance. She joins us to discuss her involvement in advocacy and in legal challenges against vaccine mandates. She holds a B.A. degree from Cornell University and a J.D. from New York University School of Law. She has been featured on several national media outlets for her commentary and she recently penned an op-ed in the Wall Street Journal building the case against mandatory vaccination in children.

SHOW NOTES​

The Rise of the Sovereign State

Posted: 30 Nov 2021 12:00 PM PST

The first myth one has to debunk in order to assess the relationship between the provision of law and order and the rise of the (modern) State is that this political institution is merely a natural and organic outgrowth of political power, as old as the history of mankind or of organized society. Actually, it would be wise to dispose of the qualifier "modern": only the State is modern.1 Whether we see its cradle in the Italian system of States after the Peace of Lodi (1454), or in western Europe (Spain, France, and England) in the 1600s, one thing is clear: the State "gradually emerged in the course of the fifteenth and sixteenth centuries and found its first mature form in the seventeenth."2

After a summary of the chief traits of the State—organization, sovereignty, coercive control of the population, centralization, etc.—Gianfranco Poggi affirms: "strictly speaking the adjective 'modern' is pleonastic. For the set of features listed above is not found in any large-scale political entities rather than those which began to develop in the early-modern phase of European history."3

Oakeshott seemed to be conscious of this peculiarity of the State when he affirmed that

[t]he somewhat novel association of human beings which came to be called the states of modern Europe emerged slowly, prefigured in earlier European history, but not without some dramatic passages in their emergence … for the most part, the territories of modern states were newly delineated. They were the outcome of movements of consolidation in which local independencies were destroyed and movements of disintegration in which states emerged from the break-up of medieval realms and empires.4

The second myth we must dispose of is the belief, shared by most historians, that the rise of the State contributed to the general cause of human liberty. In other words, that it has been a "progressive factor" in the history of mankind. Instead, it must be seen as a revolution that upset the old order, granting privileges, immunities, and rents to some and obliterating them for the rest of society. As Charles Tilly put it,

the European State-makers engaged in the work of combining, consolidating, neutralizing, manipulating a tough, complicated, and well-set web of political relations…. They had to tear or dissolve large parts of the web, and to face furious resistance as they did so.5

The history of liberty is rather to be found in the attempts to restrain the powers of the State, from the fight to preserve "medieval freedoms" and community privileges, to the struggle against the concentrations of power in a given center (whether a king or a parliament).

Liberty, as well as law and order, was secured, and in some cases much better, at different stages of European history, when a monopoly of violence over a given territory was simply out of reach. Although we are primarily concerned here with the State provision of law and order, one must not forget that the self-governing communities of the Middle Ages, in northern Italy and central Europe, offer significant examples of a completely different way of guaranteeing peace and security.

In the golden age of communal liberty (which lasted in most parts of Europe until the sixteenth century, but in certain areas, like Switzerland, much longer), merchants and citizens formed their own statutes regulating passage, immigration, and exchange: in short everything related to peaceful and noncoercive self-government. During these times, there was no clear-cut definition of power over a given territory, as there were no borders in the modern sense. An institutionalized power always had an antagonistic counterpower claiming allegiance from the same subjects. The result was that every medieval command was actually nothing more than a claim, subject to be opposed and constrained by an institutional network of competing counterclaims.

In Freedom and the Law, Bruno Leoni stated that

an early medieval version of the principle, "no taxation without representation," was intended as "no taxation without the consent of the individual taxed," and we are told that in 1221, the Bishop of Winchester, "summoned to consent to a scutage tax, refused to pay, after the council had made the grant, on the ground that he dissented, and the Exchequer upheld his plea." We know also from the German scholar, Gierke, that in the more or less "representative" assemblies held among German tribes according to Germanic law, "unanimity was requisite" although a minority could be compelled to give way.6

It was not only what has been simplistically called "medieval pluralism" that guaranteed the impossibility of any state-like organizations, but rather the forms of the juridical relations between individuals and rulers. In medieval society the lives and properties were not readily "accessible" to the king and nobles. As Charles H. McIlwain pointed out:

This property which a subject had of legal right in the integrity of his personal status, and the enjoyment of his lands and goods, was normally beyond the reach and control of the King…. At the opening of the fourteenth century John of Paris declared that neither Pope nor King could take a subject's goods without his consent.7

It seems quite difficult to conceive of a State without the attributes of a State—that is, the possibility of disposing at free will over the lives and properties of its subordinates. Clearly, what was beyond the reach of king and nobles during the Middle Ages is now available to democratic majorities, and the whole "story" of the State is how we got from there to here.

Prior to the birth of the State, the predatory effects of political power on individuals were minimal (compared to other areas of the globe or to what happened later on the same continent), and in any case the citizens always retained their exit right. This right kept a check on political power and is singled out by many authors as one of the primary causes for the development of a "limited territorial predator" in the West.

Meanwhile, there was no single source of law and order: the production of security was never considered a distinct institutional affair, but rather a concern of the whole community. For several centuries, customs, traditions, and ancient Roman laws worked together in assuring a juridical order. Law in the Middle Ages was a way of resolving conflicts, but it was kept a more or less private business. There was no organic conception of the "social body," and thus crime remained a private matter to be taken care of with well-defined rules. In other words, crime was never considered a social problem, a wound inflicted on the collective body. This, in turn, implied that the victims were the center of any lawsuit; redress was done from the point of view of the victims, never of a supposedly wounded collectivity. Even when feuds broke out, which was quite often, the families involved were asked to reestablish the public peace, but very seldom were the perpetrators of crimes punished once peace was restored.

In a peculiar sense, words, as crystallized ideas, have consequences: the medieval period was definitely over when, at the end of a long gestation, the word "State" was used in the modern sense by Niccolò Machiavelli. The Florentine asserted right at the beginning of his most famous work, The Prince: "All the states, all the dominions under whose authority men have lived in the past and live now have been and are either republics or principalities."8 And the emergence, in political theory, of the cluster of ideas associated with the State is largely a Machiavellian legacy. As George Sabine put it:

Machiavelli more than any other political thinker created the meaning that has been attached to the state in modern political usage. Even the word itself, as the name of a sovereign political body, appears to have been made current in the modern languages largely by his writings.9

However, in Machiavelli we find little concern for the public peace, tranquility and security of the citizens. When the word security (sicurtà) is used, it is always in reference to the Prince's possessions: "Among kingdoms which are well organized and governed, in our own time, is that of France: it possesses countless valuable institutions, on which the king's freedom of action and security depend."10 For our purposes, Machiavelli is important, because, although a "republican" at heart, he saw the king and the kingdom as the protagonists of a new era.

From the sixteenth century, it was left to monarchical absolutism to develop the notion of the organization of power through an artificial person, the State. The novelty of such a political creature was that the entire political reality was reshaped through offices, entities, and laws. The new body politic transcended individuals as well as sovereign. It did not represent anybody; it simply existed and was nurtured by myths produced by historians as well as politicians, first and foremost the myth of having always existed.11 As Luhmann has noted: "Following the proclamation of the sovereign State, especially in France during the second half of the sixteenth century, historians went to work. The present needs a past adaptable to it."12

In this context of political modernity, the problem of law and order arose as a specific State problem. The first and foremost duty of the State toward its subjects became the provision of security. Or, to be less naïve,

the State has arrogated to itself a compulsory monopoly over police and military services, the provision of law, judicial decision-making, the mint and the power to create money, unused land ("the public domain"), streets and highways, rivers and coastal waters, and the means of delivering mail…. But, above all, the crucial monopoly is the State's control of the use of violence: of the police and armed services, and of the courts—the locus of ultimate decision-making power in disputes over crimes and contracts.13

A selection from "The Problem of Security: Historicity of the State and 'European Realism.'"

  • 1. On the modernity of the State, one of the best single accounts is still The Formation of National States in Western Europe, Charles Tilly, ed. (Princeton, N.J.: Princeton University Press, 1975). There is an immense body of scholarship on the subject, dating back to the early twentieth century. Not surprisingly, most of the literature comes from the German-speaking world (Carl Schmitt, Otto Brunner, Otto Hintze, just to quote the most famous authors), and it can be considered a reaction against the work of the previous generation. It was in fact the somewhat unconscious and hidden "research program" of the German jurists of the nineteenth century (George Waitz, Max von Seydel, Paul Laband) to consider any form of political association a "State." Some scholars of ancient history and even some modern historians deny the "modernity" of the State and of the cluster of political concepts connected with its birth, and feel free to discuss "sovereignty" in ancient Greece, or the birth of the "archaic State" in Mesopotamia. To us, this seems to be part of the dream and illusion of Jus Publicum Europaeum; i.e., to call State any form of political association, jurist any political thinker, and to pigeonhole in the sovereignty paradigm every political community. In any case, we believe that the burden of proof should fall on the historian's shoulder: it is incumbent upon him and not us (certainly no experts on antiquity) to show the usefulness of the "sovereignty" paradigm in describing ancient polities. In other words, it is the historian who should prove the relationship between the ancient institutional realities he is studying and the State.
  • 2. Heinz Lubasz, "Introduction," in The Development of the Modern State, Heinz Lubasz, ed. (New York: Macmillan, 1964), p. 1.
  • 3. Gianfranco Poggi, The State: Its Nature, Development and Prospects (Stanford, Calif.: Stanford University Press, 1990), p. 25.
  • 4. Michael Oakeshott, On Human Conduct (Oxford: Oxford University Press, 1975), p. 185.
  • 5. Charles Tilly, "Reflections on the History of European State-making," in idem, The Formation of National States in Western Europe, pp. 24–25.
  • 6. Bruno Leoni, Freedom and the Law (Princeton, N.J.: D. Van Nostrand, 1961), pp. 119–20.
  • 7. Charles Howard McIlwain, The Growth of Political Thought in the West: From the Greeks to the End of the Middle Ages (New York: Macmillan, 1932), p. 367.
  • 8. Niccolò Machiavelli, The Prince (1516), translated with an introduction by George Bull (London: Penguin Books, 1961), p. 33.
  • 9. George H. Sabine, A History of Political Theory (New York: Henry Holt, 1937), p. 351.
  • 10. Machiavelli, The Prince, p. 105.
  • 11. One need only to think of the Latin phrase "ubi societas, ibi jus" (which clearly means only that where there is organized society there must be some rules), which is still translated by many jurists as "where there is a society there must be a State." This timeless notion attached to the State is also a peculiar aspect of the secularization of theological concepts, in this case eternal life. As Schmitt put it: "All significant concepts of the theory of the modern state are secularized theological concepts." Carl Schmitt, Politische Theologie: Vier Kapital zur Lehre von der Souveränität (Munich: Duncker and Humblot, 1922), p. 49.
  • 12. Niklas Luhmann and Raffaele De Giorgi, Teoria della Società (Milano: Angeli, 1994), p. 183.
  • 13. Murray N. Rothbard, The Ethics of Liberty (New York: New York University Press, 1998), p. 162.

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The Bank of Canada's Failed Mission to "Preserve the Value of Money"

Posted: 30 Nov 2021 09:00 AM PST

In Canada, inflation hit 4.7 percent in October, and is expected to go even higher. According to a recent survey, 46 percent of Canadians are struggling to feed their families because of the rising cost of living. Perhaps they are also struggling to understand the logic of the Bank of Canada's (BOC) mission statement: "We work to preserve the value of money by keeping inflation low and stable." 

That's the BOC's objective, but it's impossible to achieve. Preserve means to maintain something in its original state, and the only way to preserve the value of money is to keep inflation at 0 percent, not low and stable, as the BOC illogically claims. According to the BOC's own inflation calculator, the Canadian dollar has lost 22 percent of its value since 2010, and 81 percent of its value since 1990. Given its perpetual failure to achieve its stated goal, why does the BOC continue to exist?

Here's the answer: the BOC recently announced that "they would stop creating money to buy Government of Canada debt." That's the BOC's real purpose: creating money! It is impossible to preserve the value of a dollar while simultaneously increasing the quantity of dollars (and if the BOC stops creating money, it will only be temporary). Moreover, the Bank of Canada, like all central banks, facilitates money creation through commercial banks.

When the quantity of money increases at a faster pace than the quantity of goods, the result will be tend to be higher prices for goods, services, or assets. Or perhaps all three. Price inflation is caused by monetary inflation, not by supply chain problems, as the BOC claims.

Economic growth does not rely on a predetermined quantity of money. If the quantity of Canadian dollars were eternally fixed, price deflation would probably be the norm. But the BOC warns us that deflation is bad because "a general, persistent fall in prices is usually a symptom of deep problems in an economy." However, American history says otherwise.

Deflation in American History

As happens today, commercial banks in nineteenth-century America made loans that were not backed by savings in the vault—known as fractional reserve banking. That is, banks would issue paper money (i.e., paper receipts for deposits in the bank) with no money in the vault to back these receipts up. This resulted in monetary inflation. Governments understood how this type of inflation could be used to the state's advantage.

During the War of 1812 and the Civil War, for example, the government encouraged and legalized banks' immoral practice of fractional reserve banking, then borrowed unbacked funds from banks to pay war expenses. This inflated supply of unbacked money eventually resulted in higher prices for goods and services. Sensing the fraud, people rushed to the banks to redeem their bank-issued paper money. The government's response—as you may have guessed—was to grant banks the legal right to refuse redemption while continuing to do business.

Outside of these two war periods, fraudulent increases to the money supply were much less pronounced during most of the nineteenth century compared to the money creation activities of central banks during the twentieth and twenty-first centuries. This relatively stable money supply was accompanied by falling prices during a time of significant economic growth. By the end of the century, the US was on the verge of overtaking Great Britain as the world's foremost economic power. This puts the lie to the BOC's claim that falling prices are "a symptom of deep problems in an economy."

friday

If not for the government's support for banks' counterfeiting activities, prices likely would have dropped further. In his book Money, Bank Credit, and Economic Cycles, Jesús Huerta de Soto explains the government's support for fraudulent money creation:

[The] gradual discovery authorities made of banks' immense power to create money explains why, in most instances, governments ended up becoming accomplices to banking fraud, granting privileges to bankers and legalizing their improper activity, in exchange for the opportunity to participate, directly or indirectly, in their enormous profits. In this way they established an important alternative source of state funding. Furthermore, this corruption of the state's traditional duty to define and defend property rights was encouraged by governments' enormous, recurrent need for resources, due to their historical irresponsibility and lack of financial control. Thus, a more and more perfect symbiosis or community of interests was formed between governments and bankers, a relationship which to a great extent still exists today. (p 39, emphasis added)

That relationship is nurtured through central banks, including the BOC.

Central Banks and Fiat Money

In Canada, the government grants a legal right to the BOC to (a) create money and (b) facilitate additional money creation through the commercial banks—in both cases with minimal human effort. This is called fiat money, and it requires no more time to create $50 billion than it does to create $50.

The BOC is owned by the federal government, which means it does the bidding of the federal government, which primarily involves the BOC's purchase of financial assets, including federal and provincial bonds, to finance budget deficits. With every purchase, the BOC creates new fiat money out of thin air.

Thus, consistent with Huerta de Soto's observation, the BOC's real purpose is to create money for favored groups and purposes (e.g., government salaries, government contractors, government expenses, commercial banks, corporate subsidies and bailouts, etc.). Welfare for the 1 percent. As Ludwig von Mises wrote:

[A] government's plans concerning the determination of the quantity of money can never be impartial and fair to all members of society. [It] always furthers the interests of some groups of people at the expense of other groups. It never serves what is called the commonweal or the public welfare.

Benefits for the 1%. Costs for the 99%.

Private sector employment is the system through which most Canadians earn their income, which they receive only after their labor has contributed to the production of goods and services. Then they exchange their production (Canadian fiat dollars) for the production (food, clothing, etc.) of other people.

In contrast, when the BOC creates new money, the recipients of this money can purchase goods that others have produced without having to produce anything themselves—while counterfeiters are thrown in jail for doing exactly the same thing.

As the newly created money works its way through the economy, consumer prices—and often asset prices, such as home prices—tend to rise before wages rise. As a recent Angus Reid poll revealed: "[The] majority of the survey's respondents don't see their wages increasing fast enough to offset increases to consumer prices." The same thing is happening in the US and in other countries. Inflation is a hidden tax.

Technically speaking, it is legal to use other forms of money in Canada, but the government actively discourages this with its tax and legal tender laws. Thus, the government's regulatory environment makes it almost impossible for hardworking Canadians to avoid a rising cost of living by using a different form of money. Canadians are trapped in an inflationary fiat money system. Within this system, the BOC's mission statement is to preserve the value of money with low inflation, which is mathematically impossible, a massive fraud perpetrated against Canadians.

When legal systems do not hinder people's freedom to use whatever form of money they wish, people tend to use money whose quantity changes very little over time, because this inspires confidence in the future value of the money. And, as American history reveals, this money freedom tends to not only preserve the value of money, but to increase its value.

The fraud must end. Abolishing fiat money, and restoring money freedom, would allow Canadians to more fully enjoy the fruits of their own labor. Moreover, financing government deficits with newly created money would no longer be possible. Deprived of the hidden inflation tax, if federal and provincial governments are unable to borrow existing money at market interest rates, they must either reduce their spending, or increase the level of visible taxes. And the latter option might disappear, because public resistance to higher visible taxes could force governments to reduce their profligate spending. Isn't that how democracy is supposed to work?

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Luca Dellanna on the Power of Adaptation: Adapt or Die

Posted: 30 Nov 2021 07:00 AM PST

Ceaseless flux. Those are words Ludwig von Mises used to describe the perpetual change in business conditions that entrepreneurs experience. The consequent need, he told us, is for a process of constant adjustment. The current word for that process is adaptation. Economics For Business talks to Luca Dellanna, a leading business expert who advises companies of all sizes on managing the challenge of continuous adaptation.

Key Takeaways and Actionable Insights

Adaptation is a necessary capacity of all businesses.

Adaptation is a necessity. The marketplace changes, customers change, technology changes. Change is the norm. Firms that don't adapt will suffer and potentially die, so adaptation must become the norm for business. In complex systems theory, adaptation is the selection of strategies or actions that enhance survival or any other measure of success (or fitness, as its sometimes called) amidst swirling change. In business, adaptation means choosing your degree and pace of change.

Change will be externally imposed if it is not internally embraced.

Businesses can influence the level of change impact. They can critically examine their mental models, and assess their products, processes, beliefs, and people, to evaluate their fitness for adapting to market change. To avoid change being imposed from outside the firm — to avoid negative natural selection, in the evolutionary metaphor – all layers of the firm must embrace change, and proactively adapt. Eliminate unfit products and processes, pursue the development of new ones that are better adapted, and upgrade people resources through thoughtful hiring and active learning.

Adaptation is different than responsiveness — it's embracing harm.

We talk a lot about a business's responsiveness to customer wants and preferences, especially when those preferences are fluid and incompletely articulated and require interpretation. Responsiveness is critical — but it's different from adaptation. It's response to an external signal. Adaptiveness is embracing change inside the firm.

Luca Dellanna has a striking way of communicating this: he advises his clients to deliberately expose themselves to what he calls "harm" — new problems never before encountered. The exposure must not be to a problem that could overwhelm the firm, but one that can be addressed at a subsidiary level or component level or via adjustment in a shared mental model. Luca calls this "small harm" — specific problems (e.g., the price of a product or service compared to the customer's willingness to pay). Proactively probe the problem, e.g., in a high pricing test, generate feedback and actively use the learning to adapt. Another word for "small harm" is stressors: situations that put stress on the firm. Set up systems to seek out these stressors so that adaptation is deliberate, and can be enculturated, rather than wait for a crisis that requires an emergency response.

Lack of discomfort is a problem to avoid.

Identify the leading indicators that describe the conditions that will change the future.

Lagging indicators — such as revenue — are metrics that describe the past. There are leading indicators available such as number of customer contacts (describing what the pipeline might look like in the future), and satisfaction scores (describing future repeat sales). Luca recommends pairing one lagging indicator with one leading indicator to develop a metrics system.

This is not the same as popular consultant-proposed metrics systems such as OKR (Objectives and Key Results). Objectives are not leading indicators. The best leading indicators are behaviors, because these can be easily adjusted if observed to be in need of change. Falling behind on objectives does not yield an actionable response if not linked to a causal factor. Inadequate behaviors (e.g., conducting a sales call without following the proven process) can be addressed, especially if they are clearly linked to positive outcomes.

This is the same principle as Amazon's focus on what they call controllable inputs, and Amazon knows a lot about driving business growth.

There are several strategies to pursue adaptation.

Redundancy (having more than needed): A focus on efficiency and "no waste" can be detrimental to adaptation if it leaves no resources for experimentation and exploration. Employees need time to work on new things, not just on current tasks and issues.

Bottom-up initiatives: Central command and control can't run everything, anticipate every harm, or plan every experiment. Ensure entrepreneurial empowerment of front-line employees and functions so that they can initiate learning.

Avoid game-over: In experimenting, calibrate the risk to ensure that a negative result is not overwhelming, and, in regular operations, be aware of any possibility of a major crisis — a Black Swan event — and be sure that it will not destroy the firm or deliver a setback from which it will be hard to recover.

Never stop exploring, in a culture of anti-fragility.

Nassim Nicholas Taleb famously coined the term "anti-fragile". The company that has the most well-developed capacity to learn from problems and harm is the most anti-fragile. The culture of anti-fragility is always to surface problems when they are encountered and address them at the source. Luca stresses that culture is built when everyone in the company can see a consistent set of actions in which the trade-offs of addressing problems are consistent with the stated vision. For example, a culture of safe operations will be reinforced when safety precautions are taken even when the cost, in time or money or both, is high.

The leading indicator is that every individual and every operation and sub-operation is following safe practices, and that the company readily commits resources when a new safety procedure or installation is proven to be effective. If the trade-off is made that the new procedure is effective but too expensive to install, the culture will be punctured because the company has acted contrary to its declared vision.

Additional Resources

"The Power Of Adaptation" (PDF): Mises.org/E4B_146_PDF

Read Luca Dellanna's book, The Power Of Adaptation: Mises.org/E4B_146_Book

Another application of adaptation, Teams Are Adaptive Systems: 12 Principles For Effective Management by Luca Dellanna: Mises.org/E4B_146_Book2

Visit Luca Dellanna's website to find more resources: Luca-Dellanna.com

E-mail Luca at luca@luca-dellanna.com

The Virginia Elections Showed Some Parents Are Seeing How Bad the Government Schools Really Are

Posted: 30 Nov 2021 07:00 AM PST

If there's one political fight worth seeing through, it's the crusade against government schooling. Many parents in Virginia may have started to see just how important the fight has become.

Original Article: "The Virginia Elections Showed Some Parents Are Seeing How Bad the Government Schools Really Are"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Smallpox: The Historical Myths behind Mandatory Vaccines

Posted: 30 Nov 2021 05:00 AM PST

Vaccine mandates are not a new invention, and states have long pushed a narrative exaggerating the success of mandates in the past. 

Original Article: "Smallpox: The Historical Myths behind Mandatory Vaccines"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

We're All Talking about Inflation, but Deflation May Also Be on the Way

Posted: 30 Nov 2021 04:00 AM PST

Most recent data continue to show a visible acceleration in "price inflation," with the yearly growth rate of the US Consumer Price Index (CPI) rising to 6.2 percent in October from 5.4 percent in September and 1.2 percent in October of last year—its highest level since December 1990.

Most experts seem to be surprised by the massive increase in the momentum of the CPI in October. Based on the definition of inflation as increases in the money supply and not increases in prices, the sharp increase in the yearly growth rate of the CPI is predominantly on account of past massive increases in money supply.

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Note that the yearly growth rate of our monetary measure for the US stood at 79 percent in February 2021 against 6.5 percent in February 2020. Given the time lag between changes in money supply and changes in the CPI, it is quite possible that the yearly growth rate of the CPI will strengthen further.

However, on account of the sharp reversal in the momentum of money supply, the momentum of the CPI might also follow suit. A sharp decline in the yearly growth rate of the Austrian money supply (AMS) measure to 17.9 percent in September 2021 from 60 percent in September 2020 raises the likelihood that the momentum of the CPI will visibly weaken ahead. We suspect this outlook could emerge in the latter part of next year (see chart).

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If this were to eventuate, then the likely decline in the yearly growth rate in the CPI ahead raises the likelihood that most commentators will start warning about deflation, i.e., a general decline in the prices and the threat that this will pose to the economy.

A general decline in the prices of goods and services is regarded as bad news since it is seen to be associated with major economic slumps such as the Great Depression of the 1930s.

In July 1932, during the Great Depression, the yearly growth rate of industrial production stood at –31 percent while the yearly growth rate of the CPI bottomed at –10.7 percent in September 1932 (see charts).

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According to commentators the possibility of deflation is a major worry. That is because when prices fall it is harder for borrowers to pay down existing debts, leading to growing defaults, while banks become reluctant to extend credit. The logic runs that these two factors combined generate a downward spiral in credit creation and resultant economic activity. Furthermore, most experts regard a general fall in prices as always "bad news" because it slows down people's propensity to spend, which in turn undermines investment in plants and machinery. These factors are further argued to set in motion an economic slump. Moreover, as the slump further depresses the prices of goods, this intensifies the pace of economic decline.

It is for these reasons that most economists are of the view that it is the duty of the central bank, the Federal Reserve System, in the US, to prevent deflation. In his 2002 speech before the National Economists Club, in Washington, DC, on November 21, 2002, entitled "Deflation—Making Sure 'It' Doesn't Happen Here," Ben Bernanke, then a Fed governor, laid out measures that the central bank could use to combat deflation, such as buying longer-maturity Treasury debt. He also mentioned Milton Friedman's "helicopter money."

For most experts the key reason for the need to pump money into the economy is to boost the demand for goods and services. For them all that is required to fix things is to strengthen aggregate demand. Once this happens the supply of goods and services will follow suit. But why should an increase in demand result in an increase in supply? Without suitable production infrastructure, no amount of expansion in supply is going to result from an increase in demand.

Also, to suggest that consumers postpone their buying of goods because prices are expected to fall means that people have abandoned any desire to live in the present. However, without the maintenance of life in the present no future life is conceivable.

Furthermore, in a free market the rising purchasing power of money, i.e., declining prices, is the mechanism that makes a great variety of goods produced accessible to many people. On this Murray Rothbard wrote, "Improved standards of living come to the public from the fruits of capital investment. Increased productivity tends to lower prices (and costs) and thereby distribute the fruits of free enterprise to all the public, raising the standard of living of all consumers. Forcible propping up of the price level prevents this spread of higher living standards."

Even if it were accepted that declines in prices in response to an increase in the production of goods promote the well-being of individuals, what about the argument that a fall in prices is associated with a decline in economic activity? Surely, this type of deflation is bad news and must be countered.

Why Monetary Pumping Makes Things Much Worse

Whenever a central bank pumps money into the economy this benefits various individuals engaged in those activities which sprang up on the back of that loose monetary policy at the expense of wealth generators. Through loose monetary policy, the central bank gives rise to a class of people who unwittingly become consumers without the prerequisite of contributing to the pool of wealth. The consumption by these recipients of newly created money is made possible through the diversion of wealth from wealth producers. They only take from the pool of wealth without contributing anything in return.

Observe that both consumption and production are equally important in the fulfillment of people's ultimate goal, which is the maintenance of life and well-being. Consumption is dependent on production, while production is dependent on consumption. The loose monetary policy of the central bank breaks this relationship by creating an environment where it appears that it is possible to consume without producing.

Not only does the easy monetary policy push the prices of existing goods higher but the monetary pumping also gives rise to the production of goods or assets which are demanded by non–wealth producers.

As long as the pool of wealth is growing, however, the various goods and services that are patronized by non–wealth producers appear to be profitable to provide. But once the central bank reverses its loose monetary stance the diversion of wealth from wealth producers to non–wealth producers is arrested.

This in turn undermines the demand of non–wealth producers for various goods and services, thereby exerting downward pressure on their prices.

The tighter monetary stance that undermines the various activities that sprang up on the back of previous loose monetary policy halts the bleeding of wealth generators. The fall in the prices of various goods and services comes simply in response to the arrest of the impoverishment of wealth producers and hence signifies the beginning of economic healing. Obviously, to reverse the monetary stance in order to prevent decline in prices amounts to the renewal of the impoverishment of wealth generators.

As a rule, what the central bank tries to stabilize is the so-called price index. The "success" of this policy however, hinges on the state of the pool of wealth. As long as the pool of wealth is expanding, the reversal of the tighter stance creates the illusion that the loose monetary policy is the right remedy. This is because the loose monetary stance, which renews the flow of wealth to non–wealth producers, props up their demand for goods and services, thereby halting or even reversing the decline in prices.

Furthermore, since the pool of wealth is still growing, the pace of economic growth stays positive. Hence the mistaken belief that a loose monetary stance that reverses a fall in prices is the key in reviving economic activity.

The illusion that through monetary pumping it is possible to keep the economy going is shattered once the pool of wealth begins to decline. Once this happens, the economy begins its downward plunge. The most aggressive loosening of monetary policy will not reverse this plunge. The reversal of the tight monetary stance will further eat into the pool of wealth, thereby deepening the economic slump. Even if loose monetary policies were to succeed in lifting prices and inflationary expectations, they could not revive the economy while the pool of wealth is declining.

Conclusion

Contrary to the popular view, as a rule deflation is always good news for the economy. Thus when prices are declining in response to the expansion of wealth, this means that people's living standards are rising.

Even when prices decline because of the bursting of a financial bubble created by money creation, it is also good news for the economy, for it indicates that the impoverishment of wealth producers is finally being stopped.

This posting includes an audio/video/photo media file: Download Now

The REAL ID Means a Real Leviathan

Posted: 29 Nov 2021 12:45 PM PST

While 9/11 is mainly forgotten, a deafening trumpet announces the presence of other supposed crises, such as covid and climate change. The Leviathan is now excited and encouraged by the possibilities of new rules and new IDs.

Original Article: "The REAL ID Means a Real Leviathan"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

No, Inflation Is Not Good for You

Posted: 29 Nov 2021 12:45 PM PST

According to the Marxists and their fellow travelers, inflation is good because it transfers wealth from creditors to debtors, and debtors are "the 99 percent." But inflation doesn't work that way.  

Original Article: "No, Inflation Is Not Good for You"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

The Forgotten Man

Posted: 29 Nov 2021 12:00 PM PST

The type and formula of most schemes of philanthropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C's interests, are entirely overlooked. I call C the Forgotten Man.

For once let us look him up and consider his case, for the characteristic of all social doctors is that they fix their minds on some man or group of men whose case appeals to the sympathies and the imagination, and they plan remedies addressed to the particular trouble; they do not understand that all the parts of society hold together, and that forces which are set in action act and react throughout the whole organism, until an equilibrium is produced by a readjustment of all interests and rights.

They therefore ignore entirely the source from which they must draw all the energy which they employ in their remedies, and they ignore all the effects on other members of society than the ones they have in view. They are always under the dominion of the superstition of government, and, forgetting that a government produces nothing at all, they leave out of sight the first fact to be remembered in all social discussion—that the state cannot get a cent for any man without taking it from some other man, and this latter must be a man who has produced and saved it. This latter is the Forgotten Man.

The friends of humanity start out with certain benevolent feelings toward "the poor," "the weak," "the laborers," and others of whom they make pets. They generalize these classes, and render them impersonal, and so constitute the classes into social pets. They turn to other classes and appeal to sympathy and generosity, and to all the other noble sentiments of the human heart. Action in the line proposed consists in a transfer of capital from the better off to the worse off.

Capital, however, as we have seen, is the force by which civilization is maintained and carried on. The same piece of capital cannot be used in two ways. Every bit of capital, therefore, which is given to a shiftless and inefficient member of society, who makes no return for it, is diverted from a reproductive use; but if it was put into reproductive use, it would have to be granted in wages to an efficient and productive laborer. Hence the real sufferer by that kind of benevolence which consists in an expenditure of capital to protect the good-for-nothing is the industrious laborer. The latter, however, is never thought of in this connection. It is assumed that he is provided for and out of the account. Such a notion only shows how little true notions of political economy have as yet become popularized.

There is an almost invincible prejudice that a man who gives a dollar to a beggar is generous and kind-hearted, but that a man who refuses the beggar and puts the dollar in a savings bank is stingy and mean. The former is putting capital where it is very sure to be wasted, and where it will be a kind of seed for a long succession of future dollars, which must be wasted to ward off a greater strain on the sympathies than would have been occasioned by a refusal in the first place. Inasmuch as the dollar might have been turned into capital and given to a laborer who, while earning it, would have reproduced it, it must be regarded as taken from the latter.

When a millionaire gives a dollar to a beggar the gain of utility to the beggar is enormous, and the loss of utility to the millionaire is insignificant. Generally the discussion is allowed to rest there. But if the millionaire makes capital of the dollar, it must go upon the labor market, as a demand for productive services. Hence there is another party in interest—the person who supplies productive services.

There always are two parties. The second one is always the Forgotten Man, and any one who wants to truly understand the matter in question must go and search for the Forgotten Man. He will be found to be worthy, industrious, independent, and self-supporting. He is not, technically, "poor" or "weak"; he minds his own business, and makes no complaint. Consequently the philanthropists never think of him, and trample on him.

We hear a great deal of schemes for "improving the condition of the working-man." In the United States the farther down we go in the grade of labor, the greater is the advantage which the laborer has over the higher classes. A hod-carrier or digger here can, by one day's labor, command many times more days' labor of a carpenter, surveyor, book-keeper, or doctor than an unskilled laborer in Europe could command by one day's labor. The same is true, in a less degree, of the carpenter, as compared with the bookkeeper, surveyor, and doctor. This is why the United States is the great country for the unskilled laborer. The economic conditions all favor that class. There is a great continent to be subdued, and there is a fertile soil available to labor, with scarcely any need of capital. Hence the people who have the strong arms have what is most needed, and, if it were not for social consideration, higher education would not pay. Such being the case, the working-man needs no improvement in his condition except to be freed from the parasites who are living on him.

All schemes for patronizing "the working classes" savor of condescension. They are impertinent and out of place in this free democracy. There is not, in fact, any such state of things or any such relation as would make projects of this kind appropriate. Such projects demoralize both parties, flattering the vanity of one and undermining the self-respect of the other.

For our present purpose it is most important to notice that if we lift any man up we must have a fulcrum, or point of reaction. In society that means that to lift one man up we push another down. The schemes for improving the condition of the working classes interfere in the competition of workmen with each other. The beneficiaries are selected by favoritism, and are apt to be those who have recommended themselves to the friends of humanity by language or conduct which does not betoken independence and energy. Those who suffer a corresponding depression by the interference are the independent and self-reliant, who once more are forgotten or passed over; and the friends of humanity once more appear, in their zeal to help somebody, to be trampling on those who are trying to help themselves.

Trade unions adopt various devices for raising wages, and those who give their time to philanthropy are interested in these devices, and wish them success. They fix their minds entirely on the workmen for the time being in the trade, and do not take note of any other workmen as interested in the matter. It is supposed that the fight is between the workmen and their employers, and it is believed that one can give sympathy in that contest to the workmen without feeling responsibility for anything farther.

It is soon seen, however, that the employer adds the trade union and strike risk to the other risks of his business, and settles down to it philosophically. If, now, we go farther, we see that he takes it philosophically because he has passed the loss along on the public. It then appears that the public wealth has been diminished, and that the danger of a trade war, like the danger of a revolution, is a constant reduction of the well-being of all. So far, however, we have seen only things which could lower wages—nothing which could raise them. The employer is worried, but that does not raise wages. The public loses, but the loss goes to cover extra risk, and that does not raise wages.

A trade union raises wages by restricting the number of apprentices who may be taken into the trade. This device acts directly on the supply of laborers, and that produces effects on wages. If, however, the number of apprentices is limited, some are kept out who want to get in. Those who are in have, therefore, made a monopoly, and constituted themselves a privileged class on a basis exactly analogous to that of the old privileged aristocracies. But whatever is gained by this arrangement for those who are in is won at a greater loss to those who are kept out. Hence it is not upon the masters nor upon the public that trade unions exert the pressure by which they raise wages; it is upon other persons of the labor class who want to get into the trades, but, not being able to do so, are pushed down into the unskilled labor class. These persons, however, are passed by entirely without notice in all the discussions about trade unions. They are the Forgotten Men. But, since they want to get into the trade and win their living in it, it is fair to suppose that they are fit for it, would succeed at it, would do well for themselves and society in it; that is to say, that, of all persons interested or concerned, they most deserve our sympathy and attention.

The cases already mentioned involve no legislation. Society, however, maintains police, sheriffs, and various institutions, the object of which is to protect people against themselves—that is, against their own vices. Almost all legislative effort to prevent vice is really protective of vice, because all such legislation saves the vicious man from the penalty of his vice. Nature's remedies against vice are terrible. She removes the victims without pity. A drunkard in the gutter is just where he ought to be, according to the fitness and tendency of things. Nature has set up on him the process of decline and dissolution by which she removes things which have survived their usefulness. Gambling and other less mentionable vices carry their own penalties with them.

Now, we never can annihilate a penalty. We can only divert it from the head of the man who has incurred it to the heads of others who have not incurred it. A vast amount of "social reform" consists in just this operation. The consequence is that those who have gone astray, being relieved from Nature's fierce discipline, go on to worse, and that there is a constantly heavier burden for the others to bear.

Who are the others? When we see a drunkard in the gutter we pity him. If a policeman picks him up, we say that society has interfered to save him from perishing.

"Society" is a fine word, and it saves us the trouble of thinking.

The industrious and sober workman, who is mulcted of a percentage of his day's wages to pay the policeman, is the one who bears the penalty. But he is the Forgotten Man. He passes by and is never noticed, because he has behaved himself, fulfilled his contracts, and asked for nothing.

The fallacy of all prohibitory, sumptuary, and moral legislation is the same. A and B determine to be teetotalers, which is often a wise determination, and sometimes a necessary one. If A and B are moved by considerations which seem to them good, that is enough. But A and B put their heads together to get a law passed which shall force C to be a teetotaler for the sake of D, who is in danger of drinking too much. There is no pressure on A and B. They are having their own way, and they like it. There is rarely any pressure on D. He does not like it, and evades it. The pressure all comes on C.

The question then arises, Who is C? He is the man who wants alcoholic liquors for any honest purpose whatsoever, who would use his liberty without abusing it, who would occasion no public question, and trouble nobody at all. He is the Forgotten Man again, and as soon as he is drawn from his obscurity we see that he is just what each one of us ought to be.

Originally entitled "On the Case of a Certain Man Who Is Never Thought Of," this essay was originally published in 1883, as part of the book What the Social Classes Owe to Each Other.

This Professor Hates the Austrian School. But He Clearly Doesn't Know Much about It.

Posted: 29 Nov 2021 09:00 AM PST

Capitalism vs. Freedom: The Toll Road to Serfdom
by Rob Larson
Zero Books, 2018, 233 pp.

Rob Larson, who is a professor of economics at Tacoma Community College in Washington, does not agree with Mises, Hayek, Rothbard, and Friedman that the free market promotes freedom and prosperity and that socialism is the "road to serfdom." That is an understatement, and you won't find any understatements in this book. To the contrary, the book abounds in wild accusations.

For Larson, the eminent economists just mentioned are more than mistaken: they are criminal deceivers. His principal targets are Friedman and Hayek, but Mises and Rothbard are not spared. He says,

This consistent pattern reveals that a number of quite respected Nobel Prize–winning conservative economists, including Friedman and Hayek, are intellectual opportunists. By coincidence, their analysis has bottomless contempt for organized labor … but the giant crimes of the enormous greater power of organized capital are studiously ignored. This puts Friedman and Hayek closer to other figures who have used their formidable intellects to defend other cruel power systems. (p. 48. All references are to the Amazon Kindle edition.)

Faced with terrible people like this, there is no need to read them carefully. Why waste your time doing so on intellectual criminals? And Larson does not waste his time. He says, "But more than Friedman and even more than Rand, the bar for capitalist worship was set by Ludwig von Mises, who is conceived to be the founder [sic] of the highly conservative Austrian school of economics, to which Hayek and Rothbard belong. Mises wrote about the 'creative genius' of wealthy entrepreneurs" (pp. 13–14). Larson then quotes a passage from Human Action about the "creative genius," but Mises is not talking there about entrepreneurs but of people like Beethoven who are so driven by the urge to create that they never stop working. More generally, I don't think that Larson knows much about the Austrian school, and I suspect Menger, Böhm-Bawerk, and Wieser would agree with me.

Even if he doesn't, though, his main thesis is worth considering. He says, in effect, "Defenders of the market like Friedman claim that it frees people from arbitrary power. Competing firms block exploitation; if a firm paid a worker below what he was worth, other firms would offer more. Friedman contrasts the market with central planning, where everyone must conform or else. What this ignores is that capitalism isn't run by small, competing firms but dominated by gigantic corporations that rule us."

To his credit, Larson recognizes an answer to his complaint: "Each case is unique in its details and in many cases the right-wing view of this issue, based on 'crony capitalism,' is relevant. Crony capitalism describes a nominal market economy, but one with monopoly, oligopoly or other concentrated structures, because industries were put in the hands of allies or 'cronies' of the state regime" (p. 125). But if defenders of the free market say that they don't favor crony capitalism and are thus immune to Larson's accusation that they "ignore the giant crimes of organized capital," they are intellectual opportunists. "[A]ll historical evidence shows that capital concentrates with economic growth and monopolies arise in free-market settings, quite consistently" (p. 126).

I hope that you noticed the key word in the last quotation: "historical." Larson offers no theoretical account that the free market leads inevitably to monopoly. He mentions economies of scale, network effects, and other factors that tend to increase the size of firms, but he presents no argument that these factors tend always or even for the most part to result in control of an industry by large firms. To the contrary, he simply describes large companies like Amazon and Walmart and wrings his hands in horror.

Another problem escapes Larson's attention, owing to his ignorance of the Austrian school. His challenge to Friedman is that much of the economy doesn't consist of a large number of very small firms. In the Austrian view, though, an abundance of small firms, each without significant influence on the market price, isn't required for competition. All firms, large and small, compete for the consumers' "dollar votes," and the market prices that result from this process aren't judged by the artificial standards of the perfect competition model.

Larson doesn't like the "dollar votes" idea either. He objects that the wealthy have more votes than the poor. Larson quotes "radical Left economist Robin Hahnel": "'It is not one person one vote but one dollar one vote in the market place…. Few would hold up as a paragon of freedom a political election in which some were permitted to vote thousands of times and others were permitted to vote only once, or not at all.' But this is exactly the kind of freedom the market provides" (p. 24). What this complaint overlooks is that, unlike in political elections, there aren't just one or a few winners, and even if the rich have more votes than the poor, this does not entail that only the commodities that they want will be produced. Everyone can be satisfied, so long as there is sufficient demand for a product to make it profitable to make it available. Furthermore, one of the points Larson most stresses tells against his criticism of consumer sovereignty. He again and again emphasizes that the rich are a small minority; but if that is true, the poor are in the majority and their dollars votes "add up." As Mises often says, "capitalism is mass production for the masses."

Suppose, though, that all my criticisms so far of Larson are wrong and that the free market is a terrible system that exploits the poor. We still need to ask him what he wants to put in its place. His answer once more suffers from his unwillingness or inability to deal with Austrian economics. In response to Hayek, who argued that central planning is a "road to serfdom," he says that his brand of socialism isn't based on central planning. Instead, it features democratic control by workers. "But of course a decent standard of living requires a great deal of coordination with other workplaces, to keep necessary goods and services flowing through their often long production chains in a reasonably efficient fashion. This communication across industries is enormously helped by today's sophisticated telecommunications technology, which could also allow different workforces to collaborate together to satisfy an agreed-upon plan" (p. 194).

How are the workers supposed to do this? Larson offers no discussion at all of Mises's fundamental point that economic calculation in a complex modern economy can take place only though market prices, and that without such prices the economy would collapse into chaos. Conferences among workers, even those equipped with the latest "telecommunications technology," won't solve the calculation problem.

Larson thinks that the critics of socialism have wrongly concentrated on central planning, but if he reads Mises's account of syndicalism in Socialism, he will discover that Mises is well aware of proposals of the type he favors. I'm reluctant to recommend that Larson do this, though, because he seems unable to read Mises without distortion, and I'll conclude with one more instance of this. Quoting a passage from The Anti-capitalistic Mentality, Larson says that "Mises attributed socialist movements to emotions of envy and resentment" (p. 195). If you look up the passage, it turns out that Mises is talking about the worker who feel dissatisfied because of people "who have succeeded where he failed," not the socialist movement. Evidently, accurate quotation isn't needed when dealing with an "intellectual opportunist" like Mises.

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The US Misery Index Shows How Weak This Recovery Is

Posted: 29 Nov 2021 04:00 AM PST

United States consumer confidence has plummeted to a decade-low in November. The University of Michigan's consumer sentiment index fell to 66.8 in November, down sharply from the October figure of 71.7 and well below consensus forecasts of 72.4. Inflation is hurting consumers and the impact on daily purchases is more severe than what the Federal Reserve and consensus estimates may want to believe.

The Misery Index, which adds inflation and unemployment, is at 10.80 percent, the highest reading in a decade if we exclude the peak of covid-19 lockdowns, when the Misery Index reached 15.13 percent. These are Carter-era levels for the Misery Index and stagflation alert signs.

The so-called recovery has exchanged unemployment for inflation, leaving consumers fighting to make ends meet despite job growth.

Interventionists say that inflation is not a problem because it is a function of high growth and point to higher wages as a mitigating factor. To them, people are earning more, so they can afford the same and continue to consume.

The problem is that it is a lie. According to St. Louis Fed data compiled by FRED, real median weekly wages for full-time employed citizens are not rising, they are falling dramatically.

Median real wages are down, unemployment is falling but is still significantly above the prepandemic level, and 35 million workers have quit their jobs because they either expect more government checks or simply cannot afford daycare, transport, and other costs. That is why the labor participation rate has remained stagnant for eleven months at a poor 61.6 percent. This is a recovery where citizens cannot take a job because they cannot afford the costs and where businesses are struggling to get workers but cannot raise wages because margins are weakening due to rising input prices.

Inflation is hurting businesses, eroding their margins in an allegedly strong economy, and consumers cannot make ends meet with falling real median wages. This is not a strong economy, it is a disaster waiting to happen, as inflation remains elevated. Even the Federal reserve now admits inflationary pressures are "persistent."

The United States economy is living on borrowed time. In a recent JP Morgan special report (The 2022 US Economic Outlook: Help Wanted), the investment bank estimates robust growth in consumer spending for 2022 predicated on the reduction of what they call "excess savings"—ask any hard-working family if they save too much—and reduction of unemployment.

However, what the current economic slowdown is showing is that this so-called recovery has many elements of a crisis. Erosion of purchasing power, the rising Misery Index, and the general loss of welfare while savings are depleted.

Consumer confidence would be even worse if the level of savings had fallen faster. But now the savings rate is close to prepandemic levels. Consumers have been using their savings to make ends meet and now find a dangerously weak labor market, rising inflation, and poor prospects of improvement. Furthermore, small businesses are suffocated by input prices as their sales rise but margins and profits plummet. Small businesses are seeing a recovery where sales improve but the financial situation worsens. And businesses are consuming their savings and credit fast.

Meanwhile, the United States government, advised by theorists that believe that a unit of deficit is a unit of revenue for the private sector, something that is simply false, continues to spend and increase debt, which is almost fully monetized by the Federal Reserve, perpetuating inflation and bottlenecks with unnecessary spending after a supply shock. No serious government launches a massive demand-side spending spree to address a supply shock.

United States consumers have been able to endure this period thanks to prudent saving and moderating consumption levels, but the cushions that have allowed them to get through these months are vanishing. Time to stop the spending, deficit, and printing lunacy, or the stagflation of the seventies will not be a risk, but a reality.

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Introduction to Natural Law

Posted: 27 Nov 2021 12:00 PM PST

This article is excerpted from the first 5 chapters of The Ethics of Liberty. Audio versions of these chapters, read by Jeff Riggenbach, are available for download.

1. Natural Law and Reason

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Among intellectuals who consider themselves "scientific," the phrase "the nature of man" is apt to have the effect of a red flag on a bull. "Man has no nature!" is the modern rallying cry and typical of the sentiment of political philosophers today was the assertion of a distinguished political theorist some years ago before a meeting of the American Political Science Association that "man's nature" is a purely theological concept that must be dismissed from any scientific discussion.1

In the controversy over man's nature, and over the broader and more controversial concept of "natural law," both sides have repeatedly proclaimed that natural law and theology are inextricably intertwined. As a result, many champions of natural law, in scientific or philosophic circles, have gravely weakened their case by implying that rational, philosophical methods alone cannot establish such law: that theological faith is necessary to maintain the concept. On the other hand, the opponents of natural law have gleefully agreed; since faith in the supernatural is deemed necessary to belief in natural law, the latter concept must be tossed out of scientific, secular discourse, and be consigned to the arcane sphere of the divine studies. In consequence, the idea of a natural law founded on reason and rational inquiry has been virtually lost.2

The believer in a rationally established natural law must, then, face the hostility of both camps: the one group sensing in this position an antagonism toward religion; and the other group suspecting that God and mysticism are being slipped in by the back door. To the first group, it must be said that they are reflecting an extreme Augustinian position which held that faith rather than reason was the only legitimate tool for investigating man's nature and man's proper ends. In short, in this fideist tradition, theology had completely displaced philosophy.3 The Thomist tradition, on the contrary, was precisely the opposite: vindicating the independence of philosophy from theology, and proclaiming the ability of man's reason to understand and arrive at the laws, physical and ethical, of the natural order, if belief in a systematic order of natural laws open to discovery by man's reason is per se anti-religious, then anti-religious also were St. Thomas and the later Scholastics, as well as the devout Protestant jurist Hugo Grotius. The statement that there is an order of natural law, in short, leaves open the problem of whether or not God has created that order; and the assertion of the viability of man's reason to discover the natural order leaves open the question of whether or not that reason was given to man by God. The assertion of an order of natural laws discoverable by reason is, by itself, neither pro- nor anti-religious.4

Because this position is startling to most people today, let us investigate this Thomistic position a little further. The statement of absolute independence of natural law from the question of the existence of God was implicit rather than flatly asserted in St. Thomas himself; but like so many implications of Thomism, it was brought forth by Suarez and the other brilliant Spanish Scholastics of the late sixteenth century. The Jesuit Suarez pointed out that many Scholastics had taken the position that the natural law of ethics, the law of what is good and bad for man, does not depend upon God's will. Indeed, some of the Scholastics had gone so far as to say that:

even though God did not exist, or did not make use of His reason, or did not judge rightly of things, if there is in man such a dictate of right reason to guide him, it would have had the same nature of law as it now has.5

Or, as a modern Thomist philosopher declares:

If the word "natural' means anything at all, it refers to the nature of a man, and when used with "law," "natural" must refer to an ordering that is manifested in the inclinations of a man's nature and to nothing else. Hence, taken in itself, there is nothing religious or theological in the "Natural Law" of Aquinas.6

Dutch Protestant jurist Hugo Grotius declared, in his De Iure Belli ac Pacis (1625):

What we have been saying would have a degree of validity even if we should concede that which cannot be conceded without the utmost wickedness, that there is no God.

And again:

Measureless as is the power of God, nevertheless it can be said that there are certain things over which that power does not extend…. Just as even God cannot cause that two times two should not make four, so He cannot cause that which is intrinsically evil be not evil.7

D'Entrèves concludes that:

[Grotius's] definition of natural law has nothing revolutionary. When he maintains that natural law is that body of rules which Man is able to discover by the use of his reason, he does nothing but restate the Scholastic notion of a rational foundation of ethics. Indeed, his aim is rather to restore that notion which had been shaken by the extreme Augustinianism of certain Protestant currents of thought. When he declares that these rules are valid in themselves, independently of the fact that God willed them, he repeats an assertion which had already been made by some of the schoolmen.8

Grotius's aim, d'Entrèves adds, "was to construct a system of laws which would carry conviction in an age in which theological controversy was gradually losing the power to do so." Grotius and his juristic successors—Pufendorf, Burlamaqui, and Vattel—proceeded to elaborate this independent body of natural laws in a purely secular context, in accordance with their own particular interests, which were not, in contrast to the Schoolmen, primarily theological.9 Indeed, even the eighteenth-century rationalists, in many ways dedicated enemies of the Scholastics, were profoundly influenced in their very rationalism by the Scholastic tradition.10

Thus, let there be no mistake: in the Thomistic tradition, natural law is ethical as well as physical law; and the instrument by which man apprehends such law is his reason—not faith, or intuition, or grace, revelation, or anything else.11 In the contemporary atmosphere of sharp dichotomy between natural law and reason—and especially amid the irrationalist sentiments of "conservative" thought—this cannot be underscored too often. Hence, St. Thomas Aquinas, in the words of the eminent historian of philosophy Father Copleston, "emphasized the place and function of reason in moral conduct. He [Aquinas] shared with Aristotle the view that it is the possession of reason which distinguished man from the animals" and which "enables him to act deliberately in view of the consciously apprehended end and raises him above the level of purely instinctive behavior."12

Aquinas, then, realized that men always act purposively, but also went beyond this to argue that ends can also be apprehended by reason as either objectively good or bad for man. For Aquinas, then, in the words of Copleston, "there is therefore room for the concept of 'right reason,' reason directing man's acts to the attainment of the objective good for man." Moral conduct is therefore conduct in accord with right reason: "If it is said that moral conduct is rational conduct, what is meant is that it is conduct in accordance with right reason, reason apprehending the objective good for man and dictating the means to its attainment."13

In natural-law philosophy, then, reason is not bound, as it is in modern post-Humean philosophy, to be a mere slave to the passions, confined to cranking out the discovery of the means to arbitrarily chosen ends. For the ends themselves are selected by the use of reason; and "right reason" dictates to man his proper ends as well as the means for their attainment. For the Thomist or natural-law theorist, the general law of morality for man is a special case of the system of natural law governing all entities of the world, each with its own nature and its own ends. "For him the moral law … is a special case of the general principles that all finite things move toward their ends by the development of their potentialities."14 And here we come to a vital difference between inanimate or even non-human living creatures, and man himself; for the former are compelled to proceed in accordance with the ends dictated by their natures, whereas man, "the rational animal," possesses reason to discover such ends and the free will to choose.15

Which doctrine, natural law or those of its critics, is to be considered truly rational was answered incisively by the late Leo Strauss, in the course of a penetrating critique of the value-relativism in political theory of Professor Arnold Brecht. For, in contrast to natural law,

positivistic social science … is characterized by the abandonment of reason or the flight from reason….

According to the positivistic interpretation of relativism which prevails in present-day social science … reason can tell us which means are conducive to which ends; it cannot tell us which attainable ends are to be preferred to other attainable ends. Reason cannot tell us that we ought to choose attainable ends; if someone 'loves him who desires the impossible' reason may tell him that he acts irrationally, but it cannot tell him that he ought to act rationally, or that acting irrationally is acting badly or basely. If rational conduct consists in choosing the right means for the right end, relativism teaches in effect that rational conduct is impossible.16

Finally, the unique place of reason in natural-law philosophy has been affirmed by the modern Thomistic philosopher, the late Father John Toohey. Toohey defined sound philosophy as follows: "Philosophy, in the sense in which the word is used when scholasticism is contrasted with other philosophies, is an attempt on the part of man's unaided reason to give a fundamental explanation of the nature of things."17

2. Natural Law as "Science"

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It is indeed puzzling that so many modern philosophers should sniff at the very term "nature" as an injection of mysticism and the supernatural. An apple, let fall, will drop to the ground; this we all observe and acknowledge to be in the nature of the apple (as well as the world in general). Two atoms of hydrogen combined with one of oxygen will yield one molecule of water—behavior that is uniquely in the nature of hydrogen, oxygen, and water. There is nothing arcane or mystical about such observations. Why then cavil at the concept of "nature"? The world, in fact, consists of a myriad number of observable things, or entities. This is surely an observable fact. Since the world does not consist of one homogenous thing or entity alone, it follows that each one of these different things possesses differing attributes, otherwise they would all be the same thing. But if A, B, C, etc., have different attributes, it follows immediately that they have different natures.1819 It also follows that when these various things meet and interact, a specifically delimitable and definable result will occur. In short, specific, delimitable causes will have specific delimitable effects.20

The observable behavior of each of these entities is the law of their natures, and this law includes what happens as a result of the interactions. The complex that we may build up of these laws may be termed the structure of natural law. What is "mystical" about that?21

In the field of purely physical laws, this concept will usually differ from modern positivistic terminology only on high philosophical levels; applied to man, however, the concept is far more controversial. And yet, if apples and stones and roses each have their specific natures, is man the only entity, the only being, that cannot have one? And if man does have a nature, why cannot it too be open to rational observation and reflection? If all things have natures, then surely man's nature is open to inspection; the current brusque rejection of the concept of the nature of man is therefore arbitrary and a priori.

One common, flip criticism by opponents of natural law is: who is to establish the alleged truths about man? The answer is not who but what: man's reason. Man's reason is objective, i.e., it can be employed by all men to yield truths about the world. To ask what is man's nature is to invite the answer. Go thou and study and find out! It is as if one man were to assert that the nature of copper were open to rational investigation and a critic were to challenge him to "prove" this immediately by setting forth on the spot all the laws that have been discovered about copper.

Another common charge is that natural-law theorists differ among themselves, and that therefore all natural-law theories must be discarded. This charge comes with peculiar ill grace when it comes, as it often does, from utilitarian economists. For economics has been a notoriously contentious science—and yet few people advocate tossing all economics therefore into the discard. Furthermore, difference of opinion is no excuse for discarding all sides to a dispute; the responsible person is the one who uses his reason to examine the various contentions and make up his own mind.22 He does not simply say a priori, "a plague on all your houses!" The fact of man's reason does not mean that error is impossible. Even such "hard" sciences as physics and chemistry have had their errors and their fervent disputes.23 No man is omniscient or infallible—a law, by the way, of man's nature.

The natural law ethic decrees that for all living things, "goodness" is the fulfillment of what is best for that type of creature; "goodness" is therefore relative to the nature of the creature concerned. Thus, Professor Cropsey writes:

The classical [natural law] doctrine is that each thing is excellent in the degree to which it can do the things for which its species is naturally equipped…. Why is the natural good? … [Because] there is neither a way nor a reason to prevent ourselves from distinguishing between useless and serviceable beasts, for example; and … the most empirical and … rational standard of the serviceable, or the limit of the thing's activity is set by its nature. We do not judge elephants to be good because they are natural; or because nature is morally good—whatever that would mean. We judge a particular elephant to be good by the light of what elephant nature makes it possible for elephants to do and to be.24

In the case of man, the natural-law ethic states that goodness or badness can be determined by what fulfills or thwarts what is best for man's nature.25

The natural law, then, elucidates what is best for man—what ends man should pursue that are most harmonious with, and best tend to fulfill, his nature. In a significant sense, then, natural law provides man with a "science of happiness," with the paths which will lead to his real happiness. In contrast praxeology or economics as well as the utilitarian philosophy with which this science has been closely allied, treat "happiness" in the purely formal sense as the fulfillment of those ends which people happen—for whatever reason—to place high on their scales of value. Satisfaction of those ends yields to man his "utility" or "satisfaction" or "happiness."26 Value in the sense of valuation or utility is purely subjective, and decided by each individual. This procedure is perfectly proper for the formal science of praxeology, or economic theory, but not necessarily elsewhere. For in natural-law ethics, ends are demonstrated to be good or bad for man in varying degrees; value here is objective—determined by the natural law of man's being, and here "happiness" for man is considered in the commonsensical, contentual sense. As Father Kenealy put it:

This philosophy maintains that there is in fact an objective moral order within the range of human intelligence, to which human societies are bound in conscience to conform and upon which the peace and happiness of personal, national and international life depend.27

And the eminent English jurist, Sir William Blackstone, summed up the natural law and its relation to human happiness as follows:

This is the foundation of what we call ethics, or natural law … demonstrating that this or that action tends to man's real happiness, and therefore very justly concluding that the performance of it is a part of the law of nature; or, on the other hand, that this or that action is destruction of man's real happiness, and therefore that the law of nature forbids it.28

Without using the terminology of natural law, psychologist Leonard Carmichael has indicated how an objective, absolute ethic can be established for man on scientific methods, based upon biological and psychological inquiry:

because man has an unchanging and an age-old, genetically determined anatomical, physiological, and psychological make-up, there is reason to believe that at least some of the "values" that he recognized as good or bad have been discovered or have emerged as human individuals have lived together for thousands of years in many societies. Is there any reason to suggest that these values, once identified and tested, may not be thought of as essentially fixed and unchanging? For example, the wanton murder of one adult by another for the purely personal amusement of the person committing the murder, once it is recognized as a general wrong, is likely always to be so recognized. Such a murder has disadvantageous individual and social effects. Or to take a milder example from esthetics, man is always likely to recognize in a special way the balance of two complementary colors because he is born with specially constituted human eyes.29

One common philosophic objection to natural law ethics is that it confuses, or identifies, the realism of fact and value. For purposes of our brief discussion, John Wild's reply will suffice:

In answer we may point out that their [natural law] view identifies value not with existence but rather with the fulfillment of tendencies determined by the structure of the existent entity. Furthermore, it identifies evil not with non-existence but rather with a mode of existence in which natural tendencies are thwarted and deprived of realization…. The young plant whose leaves are withering for lack of light is not nonexistent. It exists, but in an unhealthy or privative mode. The lame man is not nonexistent. He exists, but with a natural power partially unrealized…. This metaphysical objection is based upon the common assumption that existence is fully finished or complete…. [But] what is good is the fulfillment of being.30

After stating that ethics, for man as for any other entity, are determined by investigating verifiable existing tendencies of that entity, Wild asks a question crucial to all non-theological ethics: "why are such principles felt to be binding on me?" How do such universal tendencies of human nature become incorporated into a person's subjective value scale? Because

the factual needs which underlie the whole procedure are common to man. The values founded on them are universal. Hence, if I made no mistake in my tendential analysis of human nature, and if I understand myself, I must exemplify the tendency and must feel it subjectively as an imperative urge to action.31

David Hume is the philosopher supposed by modern philosophers to have effectively demolished the theory of natural law. Hume's "demolition" was two-pronged: the raising of the alleged "fact-value" dichotomy, thus debarring the inference of value from fact,32 and his view that reason is and can only be a slave to the passions.

In short, in contrast to the natural-law view that man's reason can discover the proper ends for man to follow, Hume held that only the emotions can ultimately set man's ends, and that reason's place is as the technician and handmaiden to the emotions. (Here Hume has been followed by modern social scientists since Max Weber.) According to this view, people's emotions are assumed to be primary and unanalyzable givens.

Professor Hesselberg has shown, however, that Hume, in the course of his own discussions, was compelled to reintroduce a natural-law conception into his social philosophy and particularly into his theory of justice, thus illustrating the gibe of Etienne Gilson: "The natural law always buries its undertakers." For Hume, in Hesselberg's words, "recognized and accepted that the social … order is an indispensable prerequisite to man's well-being and happiness: and that this is a statement of fact." The social order, therefore, must be maintained by man. Hesselberg continues:

But a social order is not possible unless man is able to conceive what it is, and what its advantages are, and also conceive those norms of conduct which are necessary to its establishment and preservation, namely, respect for another's person and for his rightful possessions, which is the substance of justice … But justice is the product of reason, not the passions. And justice is the necessary support of the social order; and the social order is necessary to man's well-being and happiness. If this is so, the norms of justice must control and regulate the passions, and not vice versa.33

Hesselberg concludes that "thus Hume's original 'primacy of the passions' thesis is seen to be utterly untenable for his social and political theory, and … he is compelled to reintroduce reason as a cognitive-normative factor in human social relations."34

Indeed, in discussing justice and the importance of the rights of private property, Hume was compelled to write that reason can establish such a social ethic: "nature provides a remedy in the judgment and understanding for what is irregular and uncommodious in the affections"—in short, reason can be superior to the passions.35

We have seen from our discussion that the doctrine of natural law—the view that an objective ethics can be established through reason—has had to face two powerful groups of enemies in the modern world: both anxious to denigrate the power of man's reason to decide upon his destiny. These are the fideists who believe that ethics can only be given to man by supernatural revelation, and the skeptics who believe that man must take his ethics from arbitrary whim or emotion. We may sum up with Professor Grant's harsh but penetrating view of

the strange contemporary alliance between those who doubt the capacity of human reason in the name of scepticism (probably scientific in origin) and those who denigrate its capacity in the name of revealed religion. It is only necessary to study the thought of Ockham to see how ancient this strange alliance is. For in Ockham can be seen how philosophic nominalism, unable to face the question of practical certainty, solves it by the arbitrary hypothesis of revelation. The will detached from the intellect (as it must be in a nominalism) can seek certainty only through such arbitrary hypotheses.

The interesting fact historically is that these two anti-rationalist traditions—that of the liberal skeptic and the Protestant revelationist—should originally have come from two … opposite views of man. The Protestant dependence upon revelation arose from a great pessimism about human nature…. The immediately apprehended values of the liberal originate in a great optimism. Yet … after all, is not the dominating tradition in North America a Protestantism which has been transformed by pragmatic technology and liberal aspirations?36

3. Natural Law versus Positive Law

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If, then, the natural law is discovered by reason from "the basic inclinations of human nature … absolute, immutable, and of universal validity for all times and places," it follows that the natural law provides an objective set of ethical norms by which to gauge human actions at any time or place.37 The natural law is, in essence, a profoundly "radical" ethic, for it holds the existing status quo, which might grossly violate natural law, up to the unsparing and unyielding light of reason. In the realm of politics or State action, the natural law presents man with a set of norms which may well be radically critical of existing positive law imposed by the State. At this point, we need only stress that the very existence of a natural law discoverable by reason is a potentially powerful threat to the status quo and a standing reproach to the reign of blindly traditional custom or the arbitrary will of the State apparatus.

In fact, the legal principles of any society can be established in three alternate ways: (a) by following the traditional custom of the tribe or community; (b) by obeying the arbitrary, ad hoc will of those who rule the State apparatus; or (c) by the use of man's reason in discovering the natural law—in short, by slavish conformity to custom, by arbitrary whim, or by use of man's reason. These are essentially the only possible ways for establishing positive law. Here we may simply affirm that the latter method is at once the most appropriate for man at his most nobly and fully human, and the most potentially "revolutionary" vis-à-vis any given status quo.

In our century, widespread ignorance of and scorn for the very existence of the natural law has limited people's advocacy of legal structures to (a) or (b), or some blend of the two. This even holds for those who try to hew to a policy of individual liberty. Thus, there are those libertarians who would simply and uncritically adopt the common law, despite its many anti-libertarian flaws. Others, like Henry Hazlitt, would scrap all constitutional limitations on government to rely solely on the majority will as expressed by the legislature. Neither group seems to understand the concept of a structure of rational natural law to be used as a guidepost for shaping and reshaping whatever positive law may be in existence.38

While natural-law theory has often been used erroneously in defense of the political status quo, its radical and "revolutionary" implications were brilliantly understood by the great Catholic libertarian historian Lord Acton. Acton saw clearly that the deep flaw in the ancient Greek—and their later followers'—conception of natural law political philosophy was to identify politics and morals, and then to place the supreme social moral agent in the State. From Plato and Aristotle, the State's proclaimed supremacy was founded in their view that "morality was undistinguished from religion and politics from morals; and in religion, morality, and politics there was only one legislator and one authority."39

Acton added that the Stoics developed the correct, non-State principles of natural law political philosophy, which were then revived in the modern period by Grotius and his followers. "From that time it became possible to make politics a matter of principle and of conscience." The reaction of the State to this theoretical development was horror:

When Cumberland and Pufendorf unfolded the true significance of [Grotius's] doctrine, every settled authority, every triumphant interest recoiled aghast … It was manifest that all persons who had learned that political science is an affair of conscience rather than of might and expediency, must regard their adversaries as men without principle.40

Acton saw clearly that any set of objective moral principles rooted in the nature of man must inevitably come into conflict with custom and with positive law. To Acton, such an irrepressible conflict was an essential attribute of classical liberalism: "Liberalism wishes for what ought to be, irrespective of what is."41 As Himmelfarb writes of Acton's philosophy:

the past was allowed no authority except as it happened to conform to morality. To take seriously this Liberal theory of history, to give precedence to "what ought to be" over "what is" was, he admitted, virtually to install a "revolution in permanence."42

And so, for Acton, the individual, armed with natural law moral principles, is then in a firm position from which to criticize existing regimes and institutions, to hold them up to the strong and harsh light of reason. Even the far less politically oriented John Wild has trenchantly described the inherently radical nature of natural-law theory:

the philosophy of natural law defends the rational dignity of the human individual and his right and duty to criticize by word and deed any existent institution or social structure in terms of those universal moral principles which can be apprehended by the individual intellect alone.43

If the very idea of natural law is essentially "radical" and deeply critical of existing political institutions, then how has natural law become generally classified as "conservative"? Professor Parthemos considers natural law to be "conservative" because its principles are universal, fixed, and immutable, and hence are "absolute" principles of justice.44 Very true—but how does fixity of principle imply "conservatism"? On the contrary, the fact that natural-law theorists derive from the very nature of man a fixed structure of law independent of time and place, or of habit or authority or group norms, makes that law a mighty force for radical change. The only exception would be the surely rare case where the positive law happens to coincide in every aspect with the natural law as discerned by human reason.45

4. Natural Law and Natural Rights

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As we have indicated, the great failing of natural-law theory—from Plato and Aristotle to the Thomists and down to Leo Strauss and his followers in the present day—is to have been profoundly statist rather than individualist. This "classical" natural-law theory placed the locus of the good and of virtuous action in the State, with individuals strictly subordinated to State action. Thus, from Aristotle's correct dictum that man is a "social animal," that his nature is best fitted for social cooperation, the classicists leaped illegitimately to a virtual identification of "society" and "the State," and thence to the State as the major locus of virtuous action.46 It was, in contrast, the Levellers and particularly John Locke in seventeenth-century England who transformed classical natural law into a theory grounded on methodological and hence political individualism. From the Lockean emphasis on the individual as the unit of action, as the entity who thinks, feels, chooses, and acts, stemmed his conception of natural law in politics as establishing the natural rights of each individual. It was the Lockean individualist tradition that profoundly influenced the later American revolutionaries and the dominant tradition of libertarian political thought in the revolutionary new nation. It is this tradition of natural-rights libertarianism upon which the present volume attempts to build.

Locke's celebrated "Second Treatise on Government" was certainly one of the first systematic elaborations of libertarian, individualistic, natural-rights theory. Indeed, the similarity between Locke' s view and the theory set forth below will become evident from the following passage:

[E]very man has a property in his own person. This nobody has any right to but himself. The labour of his body and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature placed it in, it hath by this labour something annexed to it that excludes the common right of other men. For this labour being the unquestionable property of the labourer; no man but he can have a right to what that is once joined to….

He that is nourished by the acorns he picked up under an oak, or the apples he gathered from the trees in the wood, has certainly appropriated them to himself. Nobody can deny but the nourishment is his. I ask then when did they begin to be his? And 'tis plain, if the first gathering made them not his, nothing else could. That labour put a distinction between them and common. That added something to them more than nature, the common mother of all, had done: and so they become his private right. And will any one say he had no right to those acorns or apples he thus appropriated, because he had not the consent of all mankind to make them his? … If such a consent as that was necessary man had starved, notwithstanding the plenty God had given him. We see in commons, which remain so by compact, that 'tis the taking part of what is common, and removing it out of the state Nature leaves it in, which begins the property; without which the common is of no use.47

It should not be surprising that Locke's natural-rights theory, as historians of political thought have shown, was riddled with contradictions and inconsistencies After all, the pioneers of any discipline, any science, are bound to suffer from inconsistencies and lacunae that will be corrected by those that come after them. Divergences from Locke in the present work are only surprising to those steeped in the unfortunate modern fashion that has virtually abolished constructive political philosophy in favor of a mere antiquarian interest in older texts. In fact, libertarian natural-rights theory continued to be expanded and purified after Locke, reaching its culmination in the nineteenth century works of Herbert Spencer and Lysander Spooner.48

The myriad of post-Locke and post-Leveller natural-rights theorists made clear their view that these rights stem from the nature of man and of the world around him. A few strikingly worded examples: nineteenth-century German-American theorist Francis Lieber, in his earlier and more libertarian treatise, wrote: "The law of nature or natural law … is the law, the body of rights, which we deduce from the essential nature of man." And the prominent nineteenth-century American Unitarian minister, William Ellery Channing: "All men have the same rational nature and the same power of conscience, and all are equally made for indefinite improvement of these divine faculties and for the happiness to be found in their virtuous use." And Theodore Woolsey, one of the last of the systematic natural rights theorists in nineteenth-century America: natural rights are those "which, by fair deduction from the present physical, moral, social, religious characteristics of man, he must be invested with … in order to fulfill the ends to which his nature calls him."49

If, as we have seen, natural law is essentially a revolutionary theory, then so a fortiori is its individualist, natural-rights branch. As the nineteenth-century American natural-rights theorist Elisha P. Hurlbut put it:

The laws shall be merely declaratory of natural rights and natural wrongs, and … whatever is indifferent to the laws of nature shall be left unnoticed by human legislation … and legal tyranny arises whenever there is a departure from this simple principle.50

A notable example of the revolutionary use of natural rights is, of course, the American Revolution, which was grounded in a radically revolutionary development of Lockean theory during the eighteenth century.51 The famous words of the Declaration of Independence, as Jefferson himself made clear, were enunciating nothing new, but were simply a brilliantly written distillation of the views held by the Americans of the day:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness [the more common triad at the lime was "Life, Liberty and Property"]. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed. That whenever any form of Government becomes destructive of these ends, it is the Right of the people to alter or to abolish it.

Particularly striking is the flaming prose of the great abolitionist William Lloyd Garrison, applying natural-rights theory in a revolutionary way to the question of slavery:

The right to enjoy liberty is inalienable…. Every man has a right to his own body—to the products of his own labor—to the protection of law…. That all these laws which are now in force, admitting the right of slavery are, therefore, before God, utterly null and void … and therefore they ought instantly to be abrogated.52

We shall be speaking throughout this work of "rights," in particular the rights of individuals to property in their persons and in material objects. But how do we define "rights"? "Right" has cogently and trenchantly been defined by Professor Sadowsky:

When we say that one has the right to do certain things we mean this and only this, that it would be immoral for another, alone or in combination, to stop him from doing this by the use of physical force or the threat thereof. We do not mean that any use a man makes of his property within the limits set forth is necessarily a moral use.53

Sadowsky's definition highlights the crucial distinction we shall make throughout this work between a man's right and the morality or immorality of his exercise of that right. We will contend that it is a man's right to do whatever he wishes with his person; it is his right not to be molested or interfered with by violence from exercising that right. But what may be the moral or immoral ways of exercising that right is a question of personal ethics rather than of political philosophy—which is concerned solely with matters of right, and of the proper or improper exercise of physical violence in human relations. The importance of this crucial distinction cannot be overemphasized. Or, as Elisha Hurlbut concisely put it: "The exercise of a faculty [by an individual] is its only use. The manner of its exercise is one thing; that involves a question of morals. The right to its exercise is another thing."54

5. The Task of Political Philosophy

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It is not the intention of this book to expound or defend at length the philosophy of natural law, or to elaborate a natural-law ethic for the personal morality of man. The intention is to set forth a social ethic of liberty i.e., to elaborate that subset of the natural law that develops the concept of natural rights, and that deals with the proper sphere of "politics," i.e., with violence and non-violence as modes of interpersonal relations. In short, to set forth a political philosophy of liberty.

In our view the major task of "political science" or better, "political philosophy" is to construct the edifice of natural law pertinent to the political scene. That this task has been almost completely neglected in this century by political scientists is all too clear. Political science has either pursued a positivistic and scientistic "model building," in vain imitation of the methodology and content of the physical sciences, or it has engaged in purely empirical fact-grubbing. The contemporary political scientist believes that he can avoid the necessity of moral judgments, and that he can help frame public policy without committing himself to any ethical position. And yet as soon as anyone makes any policy suggestion, however narrow or limited, an ethical judgment—sound or unsound—has willy-nilly been made.55

The difference between the political scientist and the political philosopher is that the "scientist's" moral judgments are covert and implicit, and therefore not subject to detailed scrutiny, and hence more likely to be unsound. Moreover, the avoidance of explicit ethical judgments leads political scientists to one overriding implicit value judgment—that in favor of the political status quo as it happens to prevail in any given society. At the very least, his lack of a systematic political ethics precludes the political scientist from persuading anyone of the value of any change from the status quo.

In the meanwhile, furthermore, present-day political philosophers generally confine themselves, also in a Wertfrei manner, to antiquarian descriptions and exegeses of the views of other, long-gone political philosophers. In so doing, they are evading the major task of political philosophy, in the words of Thomas Thorson, "the philosophic justification of value positions relevant to politics."56

In order to advocate public policy, therefore, a system of social or political ethics must be constructed. In former centuries this was the crucial task of political philosophy. But in the contemporary world, political theory, in the name of a spurious "science," has cast out ethical philosophy, and has itself become barren as a guide to the inquiring citizen. The same course has been taken in each of the disciplines of the social sciences and of philosophy by abandoning the procedures of natural law. Let us then cast out the hobgoblins of Wertfreiheit, of positivism, of scientism. Ignoring the imperious demands of an arbitrary status quo, let us hammer out—hackneyed cliché though it may be—a natural-law and natural-rights standard to which the wise and honest may repair. Specifically, let us seek to establish the political philosophy of liberty and of the proper sphere of law, property rights, and the State.

  • 1. The political theorist was the late Hannah Arendt. For a typical criticism of natural law by a legal Positivist, see Hans Kelsen, General Theory of Law and State (New York: Russell and Russell, 1961), pp. 8ff.
  • 2. And yet, Black's Law Dictionary defines the natural law in a purely rationalistic and non-theological manner:
    Jus Naturale, the natural law, or law of nature; law, or legal principles, supposed to be discoverable by the light of nature or abstract reasoning, or to be taught by nature to all nations and men alike, or law supposed to govern men and peoples in a state of nature, i.e., in advance of organized governments or enacted laws (3rd ed., p. 1044).Professor Patterson, in Jurisprudence: Men and Ideas of the Law (Brooklyn: Foundation Press, 1953), p. 333, defines the natural law cogently and concisely as:
    Principles of human conduct that are discoverable by "reason" from the basic inclinations of human nature, and that are absolute, immutable and of universal validity for all times and places. This is the basic conception of scholastic natural law … and most natural law philosophers.
  • 3. Supporters of theological ethics nowadays typically strongly oppose the concept of natural law. See the discussion of casuistry by the neo-orthodox Protestant theologian Karl Barth, Church Dogmatics 3, 4 (Edinburgh: 11 and T. Clark, 1961), pp. 7ff.
  • 4. For a discussion of the role of reason in the philosophy of Aquinas, see Etienne Gilson, The Christian Philosophy of St. Thomas Aquinas (New York: Random House, 1956). An important analysis of Thomistic natural law theory is Germain Grisez, "The First Principle of Practical Reason," in Anthony Kenny, ed., Aquinas: A Collection of Critical Essays (New York: Anchor Books, 1969), pp. 340–82. For a history of medieval natural law, see Odon Lottin, Psychologie et morale aux xiie et xiiie siècles, 6 vols. (Louvain, 1942–1960).
  • 5. From Franciscus Suarez, De Legibus ac Deo Legislatore (1619), lib. II, Cap. vi. Suarez also noted that many Scholastics "seem therefore logically to admit that natural law does not proceed from God as a lawgiver, for it is not dependent on God's will." Quoted in A.P. d'Enfreves, Natural Law (London: Hutchinson University Library, 1951), p. 71.
  • 6. Thomas E Davitt, S.J., "St. Thomas Aquinas and the Natural Law," in Arthur L. Harding, ed., Origins of the Natural Law Tradition (Dallas, Tex.: Southern Methodist University Press, 1954), p. 39. Also see Brendan F. Brown, ed., The Natural Law Reader (New York: Oceana Pubs., 1960), pp. 101–4.
  • 7. Quoted in d'Entrèves, Natural Law, pp. 52–53. See also Otto Gierke, Natural Law and the Theory of Society, 1500 to 1800 (Boston: Beacon Press, 1957), pp. 98–99.
  • 8. D'Entrèves, Natural Law, pp. 51–52. Also see A.H. Chroust, "Hugo Grotius and the Scholastic Natural Law Tradition," The New Scholasticism (1943), and Frederick C. Copleston, S.J., A History of Philosophy (Westminster, Md.: Newman Press, 1959), 2, pp. 330f. On the neglected influence of the Spanish Scholastic Suarez on modern philosophers, see Jose Ferrater Mora, "Suarez and Modern Philosophy," Journal of the History of Ideas (October 1953): 528–47.
  • 9. See Gierke, Natural Law and the Theory of Society, p. 289. Also see Herbert Spencer, An Autobiography (New York: D. Appleton, 1904), vol. 1, p. 415.
  • 10. Thus, see Carl L. Becker, The Heavenly City of the Eighteenth-Century Philosophers (New Haven, Conn.: Yale University Press, 1957), p. 8.
  • 11. The late realist philosopher John Wild, in his important article, "Natural Law and Modern Ethical Theory," Ethics (October 1952), states:
    Realistic [natural law] ethics is now often dismissed as theological and authoritarian in character. But this is a misunderstanding. Its ablest representatives, from Plato and Aristotle to Grotius, have defended it on the basis of empirical evidence alone without any appeal to supernatural authority (p. 2, and pp. 1–13).Also see the denial of the existence of such a thing as "Christian philosophy" any more than "Christian hats and shoes" by the Catholic social philosopher Orestes Brownson. Thomas T. McAvoy, C.S.C., "Orestes A. Brownson and Archbishop John Hughes in 1860," Review of Politics (January 1962): 29.
  • 12. Frederick C. Copleston, S.J., Aquinas (London: Penguin Books, 1955), p. 204.
  • 13. Ibid., pp. 204–5.
  • 14. Ibid., p. 212.
  • 15. Thus Copleston:
    Inanimate bodies act in certain ways precisely because they are what they are, and they cannot act otherwise; they cannot perform actions which are contrary to their nature. And animals are governed by instinct. In fine, all creatures below man participate unconsciously in the eternal law, which is reflected in their natural tendencies, and they do not possess the freedom which is required in order to be able to act in a mariner incompatible with this law. It is therefore essential that he [man] should know the eternal law in so far as it concerns himself. Yet, how can he know it? He cannot read, as it were, the mind of God… [but] he can discern the fundamental tendencies and needs of his nature, and by reflecting on them he can come to a knowledge of the natural moral law…. Every man possesses … the light of reason whereby he can reflect … and promulgate to himself the natural law, which is the totality of the universal precepts or dictates of right reason concerning the good which is to be pursued and the evil which is to be shunned (Ibid., pp. 213–14).
  • 16. Leo Strauss, "Relativism," in H. Schoeck and J. W. Wiggins, eds., Relativism and the Study of Man (Princeton, NJ.: D. Van Nostrand, 1961), pp. 144–45. For a devastating critique of an attempt by a relativistic political scientist to present a "value-free" case for freedom and the self-development of the person, see Walter Berns, "The Behavioral Sciences and the Study of Political Things: The Case of Christian Bay's The Structure of Freedom," American Political Science Review (September 1961): 550–59.
  • 17. Toohey adds that "scholastic philosophy is the philosophy which teaches the certitude of human knowledge acquired by means of sense experience, testimony, reflection, and reasoning." John J. Toohey, S.J., Notes on Epistemology (Washington, D.C.: Georgetown University, 1952), pp. 111–12.
  • 18. Henry B. Veatch, in his For an Ontology of Morals: A Critique of Contemporary Ethical Theory (Evanston, Ill.: Northwestern University Press, 1971), p. 7, states:
    Recourse must be had to an older notion than that which has now come to be in fashion among contemporary scientists and philosophers of science…. Surely, in that everyday world of common-sense existence in which, as human beings, and for all of cur scientific sophistication, we can hardly cease to live and move and have our being, we do indeed find ourselves constantly invoking an older and even a decidedly common sense notion of "nature" and "natural law." For don't we all recognize that a rose is different from an eggplant, and a man from a mouse, and hydrogen from manganese? To recognize such differences in things is surely to recognize that they behave differently: one doesn't expect of a man quite the same things that one does of a mouse, and vice versa. Moreover, the reason our expectations thus differ as to what various types of things or entities will do, or how they will act and react, is simply that they just are different kinds of things. They have different "natures," as one might say, using the old-fashioned terminology.Leo Strauss (Natural Right and History [Chicago: University of Chicago Press, 1953]) adds:
    Socrates deviated from his predecessors by identifying the science of … everything that is, with the understanding of what each of the beings is. For "to be" means "to be something" and hence to be different from things which are "something else": "to be" means therefore "to be a part" (p. 122).
  • 19. For a defense of the concept of nature, see Alvin Plantinga, The Nature of Necessity (Oxford: Clarendon Press, 1974), pp. 71–81.
  • 20. See H.W.B. Joseph, An Introduction to Logic, 2nd rev. ed (Oxford: Clarendon Press, 1916), pp. 407–9. For a hard-hitting defense of the view that causation states a necessary relation among entities, see R. Harre and E. H. Madden, Causal Powers: A Theory of Natural Necessity (Totowa, N.J.: Rowman and Littlefield, 1975).
  • 21. See Murray N. Rothbard, Individualism and the Philosophy of the Social Sciences (San Francisco: Cato Institute, 1979), p. 5.
  • 22. And there is a further point: the very existence of a difference of opinion seems to imply that there is something objective about which disagreement can take place; for otherwise, there would be no contradictions in the different "opinions" and no worry about these conflicts. For a similar argument in refutation of moral subjectivism see G.E. Moore, Ethics (Oxford, 1963 [1912)), pp. 63ff.
  • 23. The psychologist Leonard Carmichael, in "Absolutes, Relativism and the Scientific Psychology of Human Nature," in H. Schoeck and J. Wiggins, eds., Relativism and the Study of Man (Princeton, N.J.: 1). Van Nostrand, 1961), p. 16, writes:
    We do not turn aside from what we know about astronomy at any time because there is a great deal we do not know, or because so much that we once thought we knew is no longer recognized as true. May not the same argument be accepted in our thinking about ethical and esthetic judgments?
  • 24. Joseph Cropsey, "A Reply to Rothman," American Political Science Review (June 1962): 355. As Henry Veatch writes, in For an Ontology of Morals, pp. 7–8:
    Moreover, it is in virtue of a thing's nature—i.e., of its being the kind of thing that it is—that it acts and behaves the way it does. Is it not also in virtue of a thing's nature that we often consider ourselves able to judge what that thing might or could be, but perhaps isn't? A plant, for example, may be seen to be underdeveloped or stunted in its growth. A bird with an injured wing is quite obviously not able to fly as well as others of the same species…. And so it is that a thing's nature maybe thought of as being not merely that in virtue of which the thing acts or behaves in the way it does, but also as a sort of standard in terms of which we judge whether the thing's action or behavior is all that it might have been or could have been.
  • 25. For a similar approach to the meaning of goodness, see Peter Geach, "Good and Evil," in Philippa R. Foot, ed., Theories of Ethics (London: Oxford University Press, 1967), pp. 74–82.
  • 26. Contrast John Wild, in "Natural Law and Modern Ethical Theory," Ethics (October 1952): 2, who says:
    Realistic ethics is founded on the basic distinction between human need and uncriticized individual desire or pleasure, a distinction not found in modern utilitarianism. The basic concepts of so-called "naturalistic" theories are psychological whereas those of realism are existential and ontological.
  • 27. William J. Kenealy, S.J., "The Majesty of the Law," Loyola Law Review (1949–50): 112–13; reprinted in Brendan F. Brown, ed., The Natural Law Reader (NewYork: Oceana, 1960), p. 123.
  • 28. Blackstone, Commentaries on the Laws of England, Book 1: quoted in Brown, Natural Law Reader, p. 106.
  • 29. Carmichael, "Absolutes," p. 9. 
  • 30. Wild, "Natural Law," pp. 4–5. Wild continues on p.11:
    Existence is … not a property but a structuralized activity. Such activities are a kind of fact. They can be observed and described by judgments that are true or false: human life needs material artifacts; technological endeavors need rational guidance; the child has cognitive faculties that need education. Value statements are founded on the directly verifiable fact of tendency or need. The value or realization is required not merely by us but by the existent tendency for its completion. From a sound description and analysis of the given tendency we can infer the value founded upon it This is why we do not say that moral principles are mere statements of fact, but rather that they are "founded" on facts.
    On pp. 2–4, Wild says:
    The ethics of natural law … recognizes prescriptive moral laws but asserts that these are founded on tendential facts which may be described…. Goodness … must … be conceived dynamically as an existential mode, the realization of natural tendency. In this view, the world is not made up of determinate structures alone, but of determinate structures in an act of existing which they determine toward further appropriate acts of existing…. No determinate structure cart be given existence without determining active tendencies. When such a tendency is fulfilled in accordance with natural law, the entity is said to be in a stable, healthy, or sound condition—adjectives of value. When it is obstructed or distorted, the entity is said to be in an unstable, diseased or unsound condition—adjectives of disvalue. Goodness and badness in their ontological sense are not phases of abstract structure, but rather modes of existence, ways in which the existential tendencies determined by such structures are either fulfilled or barely sustained in a deprived, distorted state.
  • 31. Ibid., p. 12. For more on a defense of natural law ethics, see John Wild, Plato's Modern Enemies and the Theory of Natural Law (Chicago: University of Chicago Press, 1953); Henry Veatch, Rational Man: A Modern Interpretation of Aristotelian Ethics (Bloomington: University of Indiana Press, 1962); and Veatch, For An Ontology of Morals.
  • 32. Hume in fact failed to prove that values cannot be derived from facts. It is frequently alleged that nothing can be in the conclusion of an argument which was not in one of the premises; and that therefore, an "ought" conclusion cannot follow from descriptive premises. But a conclusion follows from both premises taken together; the "ought" need not be present in either one of the premises so long as it has been validly deduced. To say that it cannot be so deduced simply begs the question. See Philippa R. Foot, Virtues and Vices (Berkeley: University of California Press, 1978), pp. 99–105.
  • 33. A. Kenneth Hesselberg, "Hume, Natural Law and Justice," Duquesne Review (Spring 1961): 46–47.
  • 34. Ibid.
  • 35. David Hume, A Treatise of Human Nature, quoted in Hesselberg, "Hume, Natural Law, and Justice," p. 61. Hesselberg adds perceptively that Hume's sharp ought-is dichotomy in the earlier chapters of Hume's Treatise stemmed from his restricting the meaning of "reason" to finding pleasure—pain objects, and determining the means to achieve them. But, in the later chapters on justice, the very nature of the concept compelled Hume "to assign a third role to reason, namely its power to judge actions in terms of their suitability, or conformity or disconformity, to man's social nature, and thus paved the way for the return to a natural law concept of justice." Ibid., pp. 61–62.
    For some doubt whether or not Hume himself intended to assert the fact-value dichotomy, see A.C. MacIntyre, "Hume on 'Is' and 'Ought," in W.D. Hudson, ed., The Is-Ought Question (London: Macmillan, 1969), pp. 35–50.
  • 36. George P. Grant, "Plato and Popper," The Canadian Journal of Economics and Political Science (May 1954): 191–92.
  • 37. Edwin W. Patterson, Jurisprudence Men and Ideas of the Law (Brooklyn, N.Y.: Foundation Press, 1953), p. 333.
  • 38. Hazlitt's reaction to my own brief discussion of the legal norms essential to any free-market economy [in Man, Economy, and State: A Treatise on Economic Principles (Princeton, N.J.: D. Van Nostrand, 1962] was a curious one. While critical of blind adherence to common law in other writers, Hazlitt could only react in puzzlement to my approach; calling it "abstract doctrinaire logic" and "extreme a priorism," he chided me for "trying to substitute his own instant jurisprudence for the common law principles built up through generations of human experience." It is curious that Hazlitt feels common law to be inferior to arbitrary majority will, and yet to be superior to human reason! Henry Hazlitt, "The Economics of Freedom," National Review (September 25, 1962): 232.
  • 39. John Edward Emerich Dalberg-Acton, Essays on Freedom and Power (Glencoe, Ill.: Free Press, 1948), p. 45. Also see Gertrude Himmelfarb, Lord Acton: A Study in Conscience and Politics (Chicago: University of Chicago Press, 1962), p. 135.
  • 40. Acton, Essays, p. 74. Himmelfarb correctly noted that "for Acton, politics was a science, the application of the principles of morality." Gertrude Himmelfarb, "Introduction," ibid., p. xxxvii
  • 41. Himmelfarb, Lord Acton, p. 204. Contrast the exclamation of bewilderment and horror by the leading nineteenth-century German Conservative, Adam Muller: "A natural law which differs from the positive law!" See Robert W. Lougee, "German Romanticism and Political Thought," Review of Politics (October 1959): 637.
  • 42. Himmelfarb, Lord Acton, p. 205.
  • 43. John Wild, Plato's Modern Enemies and the Theory of Natural Law (Chicago: University of Chicago Press, 1953), p. 176. Note the similar assessment by the conservative Otto Gierke, in Natural Law and the Theory of Society, 1500 to 1800 (Boston: Beacon Press, 1957), pp. 35–36, who was for that reason hostile to natural law:
    In opposition to positive jurisprudence which still continued to show a Conservative trend, the natural-law theory of the State was Radical to the very core of its being … It was also directed… not to the purpose of scientific explanation of the past, but to… the exposition and justification of a new future which was to be called into existence.
  • 44. George S. Parthemos, "Contemporary Juristic Theory, Civil Rights, and American Politics," Annals of the American Academy of Political and Social Science (November 1962): 101–2.
  • 45. The conservative political scientist Samuel Huntington recognizes the rarity of this event:
    No ideational theory can be used to defend existing institutions satisfactorily, even when those institutions in general reflect the values of that ideology. The perfect nature of the ideology's ideal and the imperfect nature and inevitable mutation of the institutions create a gap between the two. The ideal becomes a standard by which to criticize the institutions, much to the embarrassment of those who believe in the ideal and yet still wish to defend the institutions.Huntington then adds the footnote: "Hence any theory of natural law as a set of transcendent and universal moral principles is inherently non-conservative…. Opposition to natural law [is] … a distinguishing characteristic of conservatism." Samuel P. Huntington "Conservatism as an Ideology," American Political Science Review (June 1957): 458–59. See also Murray N. Rothbard, "Huntington on Conservatism: A Comment," American Political Science Review (September 1957): 784–87.
  • 46. For a critique of such typical confusion by a modern Thomist, see Murray N. Rothbard, Power and Market, 2nd ed. (Kansas City: Sheed Andrews and McMeel, 1977), pp. 237–38. Leo Strauss's defense of classical natural law and his assault on individualistic natural-rights theory may be found in his Natural Rights and History (Chicago: University of Chicago Press, 1953).
  • 47. John Locke, An Essay Concerning the True Origin, Extent, and End of Civil Government, V. pp.27–28, in Two Treatises of Government, P. Laslett, ed. (Cambridge: Cambridge University Press, 1960), pp. 305–7.
  • 48. Current scholars, ranging from Marxists to Straussians consider Thomas Hobbes rather than Locke as the founder of systematic individualist, natural rights theory. For a refutation of this view and a vindication of the older view of Hobbes as a statist and a totalitarian see Williamson M. Evers, "Hobbes and Liberalism," The Libertarian Forum (May 1975): 4–6 [available in PDF]. Also see Evers, "Social Contract: A Critique," The Journal of Libertarian Studies 1 (Summer 1977): 187–88 [available in PDF]. For a stress upon Hobbes's absolutism by a pro-Hobbesian German political theorist, see Carl Schmitt, Der Leviathan in der Staatslehre Thomas Hobbes (Hamburg, 1938). Schmitt was for a time a pro-Nazi theorist.
  • 49. Francis Lieber, Manual of Political Ethics (1838); Theodore Woolsey, Political Science (1877); cited in Benjamin F. Wright, Jr., American Interpretations of Natural Law (Cambridge, Mass.: Harvard University Press, 1931), pp. 261ff., 255ff., 276ff. William Ellery Channing, Works (Boston: American Unitarian Association, 1895), p. 693.
  • 50. Elisha P. Hurlbut, Essays on Human Rights and Their Political Guarantees (1845), cited in Wright, American Interpretations, pp. 257ff.
  • 51. See Bernard Bailyn, The Ideological Origins of the American Revolution (Cambridge, Mass.: Belknap Press of Harvard University Press, 1967).
  • 52. William Lloyd Garrison, "Declaration of Sentiments of the American Anti-Slavery Convention" (December 1833), cited in W. and J. Pease, eds., The Antislavery Argument (Indianapolis: Bobbs-Merrill, 1965).
  • 53. James A. Sadowsky, S.J., "Private Property and Collective Ownership," in Tibor Machan, ed., The Libertarian Alternative (Chicago: Nelson-Hall, 1974), pp. 120–21.
  • 54. Hurlbut, cited in Wright, American Interpretations, pp. 257 ff.
  • 55. Cf. W. Zajdlic, "The Limitations of Social Sciences," Kyklos 9 (1956): 68–71.
  • 56. Hence, as Thorson points out, political philosophy is a subdivision of the philosophy of ethics, in contrast to "political theory" as well as positivistic analytic philosophy. See Thomas Landon Thorson, "Political Values and Analytic Philosophy," Journal of Politics (November 1961): 712n. Perhaps Professor Holton is right that "the decline in political philosophy is one part of a general decline," not only in philosophy itself, but also "in the status of rationality and ideas as such." Holton goes on to add that the two major challenges to genuine political philosophy in recent decades have come from historicism—the view that all ideas and truths are relative to particular historical conditions—and scientism, the imitation of the physical sciences. James Holton, "Is Political Philosophy Dead?" Western Political Quarterly (September 1961): 75ff.

Austrian Axioms 101

Posted: 27 Nov 2021 08:45 AM PST

This article is unashamedly in Friedrich von Hayek's category of "second-hand dealers of ideas." In fact, it is lower than that being third-hand. More specifically, I, as the third-hand dealer, intend to summarize the axioms of Austrian economics by a secondhand dealer, by the name of Percy Greaves, who first laid these out (in parts throughout) his 302-page book from 1973 entitled Understanding the Dollar Crisis.

In doing so, he was "standing on the shoulders of giants" such as Ludwig von Mises who, in fact, wrote the foreword to this book. I first read this book by Greaves in 2013. Despite the title, it is really more of an intermediate introduction to Austrian economics, and an excellent one at that. Greaves lays out many of the important Austrian axioms (which he called "postulates"), but in a remarkably simple and clear manner.

This article serves as a "public service announcement" of sorts. This is because I have been wondering for many years why somebody had not already identified an listed these axioms in a simple format. And why hasn't that somebody been one of the "big hitters" of Austrian economics? Apparently it is up to me, despite my third-hand status as an Austrian economist, to list them here as Austrian Axioms 101.

Note that I first did this listing in a 2017 presentation to the Liberal Democrats Party of Australia entitled "Austrian School Libertarianism." I then wrote this up for a 2018 article for the Aussie think tank LibertyWorks entitled "Austrian Economics: Please Explain?," which is sadly no longer available online. Also note that at this stage I am not offering my interpretation, criticism or suggestions. Perhaps this will come in time: even though I am mainly an Austrian economist, I also draw upon other schools of thought to a lesser extent, including English and French classical, neoclassical, public choice, transaction costs and especially Christian.

A Priori Axioms

The following were explicitly referred to as "a priori postulates" or axioms by Greaves in his book:

  1. Human Action – All men seek to improve their situation from their viewpoint. [From page 10 as a priori postulate #1.]

  2. Action Scarcity – The factors available for improving men's situations are scarce. [From page 11 as a priori postulate #2.]

  3. Human Fallibility – Men make mistakes. [From page 12 as a priori postulate #3.]

Deduced Axioms

The following were explicitly referred to as "deduced postulates" or axioms by Greaves in his book:

  1. Human Rationality – All men are rational beings. [From pages 13-14 as deduced postulate #1.]

  2. Action Time – All human actions take time. [From page 14 as deduced postulate #2.]

  3. Action Consequences – All human actions have consequences. [From page 15 as deduced postulate #3.]

  4. Action Choices – Men choose those actions they believe will best improve their situation. [From page 16 as deduced postulate #4.]

  5. Action Ideas – The ideas men hold determine their actions. [From pages 16-17 as deduced postulate #5.]

Value and Exchange Axioms

The following were explicitly referred to as "some more deduced" or "value and exchange postulates" or axioms by Greaves in his book:

  1. Ordinal Value – Men have value scales. [From page 42 as some more deduced or value and exchange postulate #1.]

  2. Marginal Value – Each additional unit of any economic good is of diminishing importance, or use value. [From page 44 as value and exchange postulate #2.]

  3. Subjective Value – Different men have different value scales and the same men have different value scales at different times. [From page 48 as value and exchange postulate #3.]

  4. Exchange Value – Only men with different value scales can and do exchange for mutual advantage. [From page 49 as value and exchange postulate #4.]

Market Place Axioms

The following were explicitly referred to as "market place postulates" or axioms by Greaves in his book:

  1. Exchange Exists – Man will exchange only if he can exchange for an advantage. [From page 70 as market place postulate #1.]

  2. Exchange Preferences – Man will exchange for a greater advantage, in preference to an exchange for a lesser advantage. [From page 70 as market place postulate #2.]

  3. Exchange Occurs – Man will exchange for a small advantage in preference to not exchanging at all. [From page 71 as market place postulate #3.]

Conclusion

Greaves also wrote in his 1973 book:

All science aims at tracing back every phenomenon to its cause. There will always be some irreducible and unanalyzable phenomena, some ultimate given, some a priori postulate beyond which you cannot go back any further. In all science, if it is "D" that you want and "C" produces "D," then you strive for "C." If you learn that "B" produces "C," you seek "B," and if "A" produces "B," you seek "A." You go back to "A." So that "A" gives you "B," which gives you "C," which gives you "D," which is what you want. In science we go back regressus in infinitum. We go back to a point beyond which we cannot go back any further. This is true in economics as it is in every other science.

In addition, as I said in my 2017 presentation:

All of life's fundamental political problems, about which there are so many disagreements, are basically economic problems. The best answers can be found only by resorting to the study of sound economics. Economics is not a study of opinions. Economics is a science, and as a science it deals with eternal laws —laws that people are not able to change —laws that remain constant.

How the Austrian School is the best can be seen from, amongst other things, its axioms. An axiom is a universal principle or rule.

Finally, I will conclude this Austrian Axioms 101, as I did in my 2018 article, by quoting the great twentieth-century Christian thinker and literary genius, C.S. Lewis from Mere Christianity, in support of the axioms of human action:

There is one thing, and only one, in the whole universe which we know more about than we could learn from external observation. That one thing is Man. We do not merely observe men, we are men. In this case we have, so to speak, inside information; we are in the know.1

  • 1. And Lewis added immediately after that: And because of that, we know that men find themselves under a moral law, which they did not make, and cannot quite forget even when they try, and which they know they ought to obey.

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The Oklahoma National Guard Refused the Vax Mandate. The Pentagon Is Not Pleased.

Posted: 27 Nov 2021 05:00 AM PST

Combined with the US military's turn toward "woke" politics, this latest episode around vaccine mandates will further help to undermine support for military institutions among conservatives and Republicans.

Original Article: "The Oklahoma National Guard Refused the Vax Mandate. The Pentagon Is Not Pleased."

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

The Heroic Draft Dodgers of the American Civil War

Posted: 27 Nov 2021 03:45 AM PST

In the wake of the American Civil War, one's status as a veteran could bring significant social and economic benefits. Indeed, the Grand Army of the Republic would become an extremely influential interest group and helped fuel the early creation of an American welfare state for veterans. "Do it for the veterans" became a common plea delivered to politicians of the time.

Yet, it was also the case that actively avoiding military service—what we might call today "draft dodging"—during the war was not an impediment to popularity. Mark Twain was a bona fide "perpetrator" who fled his home state in order to avoid military service. Other celebrated authors of the period—namely Henry Adams and William Dean Howells—conveniently managed to obtain jobs outside the United States during the duration of the war. Novelist Henry James claimed to have suffered a vague nonspecific injury that kept him out of military service.

Moreover, two later US presidents avoided service during the war, namely Chester A. Arthur and Grover Cleveland. Their political careers apparently didn't suffer much from their lack of military experience.

Perhaps the lack of general disdain for those who never wore a federal uniform can be found in the fact that avoiding enlistment was not exactly unheard of during the war. That's not to say the regime was incapable of finding hundreds of thousands of willing recruits and volunteers. Many happily signed up. 

Yet not all of America's young men bought into the propaganda. 

Riots and Attacks on Draft Agents

The first national draft in the Union began with the militia law of July 1862, which allowed for a draft if states did not meet their quotas of three-year volunteers.1 A draftee could obtain a "commutation" with the payment of $300, or hire a substitute at the same price. 

Riots against these impositions soon flared up. 

The New York draft riot is the most commonly cited example—because it was so deadly. But scattered draft riots occurred in other cities and towns throughout the US.

Many draft riots were highly targeted, seeking to prevent draft agents from carrying out their duties. In Boston in 1863, for example, working-class Irish Americans—many of them women who feared economic ruin if their wage-earning men were sent off to war—attacked the local draft agents.

Midwesterners were in many cases similarly opposed to conscription.

One example was the riot of November 1862 in Ozaukee County, Wisconsin. The local newspaper—a paper unsympathetic to the rioters—describes how the local draft commissioner and district attorney was assaulted as he tried to conduct a draft in the county:

Mr. Pors then spoke to [the crowd of men and women] in a mild manner, requesting them to stand back a little and they could all see that the draft was conducted properly. At this was a rush forward. Many of them were armed with clubs, many had huge stones in their hands, and others had various implements. The first thing done was to demolish the draft box with a club, and they seized hold of Mr. Pors, and rather trampled upon him, the women vieing [sic] with the men in the brutish assault.

The crowd then proceeded to hurl Pors down the courthouse steps. He fled for his life as rioters hurled heavy stones at his head. The crowd then turned to the courthouse and tore up the enrollment lists.

In Wisconsin, as elsewhere, many also resisted more passively. One historian recounts how "[m]en possessed of robust health suddenly discovered some terrible ailment and had to seek treatment in a different climate. Canada at once became a Mecca for such invalids."2

Many local governments offered cash bonuses in exchange for enlistment. It was hoped this would furnish enough recruits so that the use of a draft could be avoided altogether. It was known an active draft would incite rage from many voters. The payment of bounties became a significant cost for many state and municipal governments in the face of public resistance to enlistment. Indeed, as the war continued, "bounties and special offerings from the local governments" were increasingly necessary to spur recruiting.

The Chicago area, for example, experienced rising resistance into 1863 and beyond. The initial enthusiasm for war had dissipated and Chicagoans began to feel they had already given enough to the war effort. As Bessie Louis Pierce noted in her history of Chicago, "Reports that Chicago soldiers in the field were refusing to obey orders and had suffered arrest were added proof that many were becoming weary of the war."3

The local media in Chicago began to protest ongoing efforts at recruitment as well. The Chicago Tribune came out against the draft in 1864, and Pierce writes:

Chicago faced the draft when Lincoln again called for troops [in December 1864]. For the next few weeks defiance was the controlling emotion. Three years before Chicagoans had begged the privilege of going to war; now mass meetings protested what was considered an unfair assessment upon her man power…. as many as three or four hundred men liable to conscription were reported as leaving daily for Canada or "for parts unknown"; aliens, particularly the Irish, eagerly sought papers which ensured freedom from call.4

The undercurrent of resistance took its toll on draft effectiveness. Timothy Perri, for example, has shown that 20 percent of men called by the draft simply never showed up.

The Economics of Substitutes

Whenever Civil War draft policies are mentioned, one invariably hears about substitutes. This was the policy under which a draftee could pay another man to enlist instead. The official price of a substitute was $300, which many have pointed out was equal to a year's wages in manufacturing.

Not surprisingly, the substitute policy is thus often criticized for not being sufficiently egalitarian, and many have contended only the wealthy could afford this option. In practice, however, the ability to hire a substitute was not unattainable for the middle class.

Pierce mentions that "[m]utual protective associations were organized to buy freedom for draftees." These associations functioned as a type of "draft insurance" affordable to ordinary, middle-class families. Perri notes fees (i.e., premiums) for draft insurance "ranged from $10 to $50 in Ohio…. Late in the war, firms in Illinois and Indiana sold explicit draft insurance. Draftees who purchased insurance had substitutes hired for them."5

Moreover, the substitute strategy gave families options they would not otherwise have had. That is, extended families could pool their resources to substitute one son for another if the drafting of a particular high-earning son could lead to financial ruin for the family.

The competition for substitutes also drove up effective wages for military service, which made military service less financially onerous, if nonetheless still fundamentally compulsory. Pierce notes, "As the war wore on prices for these substitutes followed the market…. By summer, 1864, three-year men could demand from $550 to $650, and by spring of the next year $900 was sometimes asked."6

 

This likely reflected a general decline of willingness to enlist among young men, meaning potential substitutes could demand higher and higher rewards for an unpopular job. Local governments nonetheless felt the political pressure to provide escapes from the draft, and some jurisdictions budgeted funds "to purchase substitutes for married men."7

All of this, of course, proved to make the business of recruiting soldiers more complex and more costly to the regime in terms of time and resources. While also costly to ordinary people, the substitute policy did nonetheless provide flexibility that would not otherwise have been available. 

Ultimately, though, this patchwork of bounties, commutations, and substitutions was necessary to prevent even more enthusiastic opposition. After all, by the mid-nineteenth century, Americans had been moving in the opposite direction of a national draft: voluntary militias had become the rule in the North, and the US in the 1840s had fought a war staffed only by volunteers. 

Thus, many Americans in the 1860s viewed conscription with dismay and an attitude of defiance to a degree that would become largely unknown again until the Vietnam War. Regrettably, however, the Civil War draft would prove to be instrumental in normalizing federal conscription. It succeeded in this endeavor, and in the twentieth century commutations and substitutions were outlawed. A national "selective service" registration system was imposed. By the First World War—and for decades afterward—America had become willing to tolerate a far more draconian and widespread draft than had ever been implemented during the Civil War. 

  • 1. The first national military draft in America was actually instituted in the Confederacy in early 1862. Moreover, Confederate conscription—at least on paper—was more draconian and with fewer loopholes than was the case in the rump United States. But in this article we will look only at Northern conscription.
  • 2. John W. Oliver, "Draft Riots in Wisconsin during the Civil War," Wisconsin Magazine of History 2, no. 3 (March 1919): 334–37, esp. 335.
  • 3. Bessie Louise Pierce, A History of Chicago, vol. 2, From Town to City, 1848–1871 (Chicago: University of Chicago Press, 1940), p. 273.
  • 4. Ibid., p. 274.
  • 5. Timothy J. Perri, "The Evolution of Military Conscription in the United States," Independent Review 17, no. 3 (Winter 2013): 429–39, 431.
  • 6. Pierce, A History of Chicago, p. 273.
  • 7. Ibid., p. 273.

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Housing Hubris: Can Home Prices Spiral upward Forever?

Posted: 27 Nov 2021 03:00 AM PST

For the Wall Street sequel, the subtitle was Money Never Sleeps. But the Oliver Stone reprisal of Gordon Gecko was the stuff of 2010. In America, a decade plus ago, money slept. Now, it truly doesn't, with cryptocurrency prices gyrating 24/7/365. This frantic activity has spread to other asset markets.

Once real estate was stable and slow moving. Buyers would walk through a home, and walk it again with someone they trusted, before making an offer. But, as Francesca Mari titles his lengthy New York Times Magazine article, "In Austin and cities round the country, the crazy real estate market has forced regular people to act like speculators." He wonders, "Will home buying ever be 'normal' again?"

Mari's piece chronicles the trials and tribulations of millennials (who are now the largest generation) simply trying to buy a home. In some cases, the offers are made long distance on the basis of images from their computer screens. Nationwide home prices have soared nearly 25 percent. But, where the jobs are, in medium-size metropolitan areas such as Boise, Phoenix, Austin, and Salt Lake City, prices have soared 46 percent, 36 percent, 35 percent, and 33 percent, respectively. 

Amena Sengal and her husband, Drew, did what 63 percent of North American home buyers in 2020 did, making offers on homes they had never visited. Covid has forced buyers to speed up. The flood of millennials demanding homes is facing a supply shortage of 3.8 million housing units according to Fannie Mae and Freddie Mac. Plus, there are investors, who are buying one of every six homes, to compete against. 

Followers of the Austrian school are likely saying, "This is a repeat of 2008. Low interest rates lead to malinvestment, and this boom will lead to bust again." However, there are no cheap, easy-to-qualify-for loans to fuel this boom. Mortgage rates are low, but the loans are hard to obtain. And builders are being stingy with supply and in some cases building neighborhoods that will be entirely rental homes. 

Local government policy is steering the market in the opposite direction this time. Mari explains that there is "high demand, low supply and a dysfunctional economy in which wages are stagnant while restrictive zoning and poor public policy have turned housing into an artificially scarce commodity."

And then there is the pandemic. "After a decade of too little development, the pandemic made the low inventory lower. Construction stopped," Mari writes. "Sellers, afraid of inviting the virus into their homes or reluctant to move in uncertain times, didn't list, and inventory declined by nearly a third from February 2020 to February 2021, falling to the lowest level relative to demand since the National Association of Realtors began record-keeping almost 40 years ago."

Neighborhoods don't want poor people living next to them. So, builders pitch higher-end product to city hall in order to gain approvals. The result: "An estimated 65,000 starter homes were completed nationwide in 2020, less than a fifth of the number built annually in the late 1970s and early 1980s."

With technology and financialization, the result is "[w]e're gamifying real estate investment to the point that it's almost like throwing money at the stock market," a thirty-five-year-old tech worker told Mari. The days of paper and ink are over. It's FaceTime, DocuSign, and electronic fund transfers, making everything seamless. Real estate money can now move easily, meaning your parent's real estate investing—stability and relative slowness—is no longer true. 

What does ring a bell from 2008 is today's Austin office market. Somewhere between 6.2 million to 9 million square feet of office space is being built downtown. "And it's being built, like, it's not occupied. So those jobs are coming. People are telling me, like, Oh, you know, we peaked…. As far as the metrics, the Texodus is not slowing down. We're about to get a tidal wave," Matt Holm, Austin's "Tesla realtor" told Mari. He continued his bullish banter, citing the Elon [Musk] effect. I remember billions of dollars' worth of casinos in Las Vegas were being built in 2008. They didn't all get finished and one, the Fontainebleau, has just restarted construction, thirteen years later. 

Another red flag is the number of investors in Mari's piece who have or intend to turn their purchases into Airbnbs (short-term rentals). Holm the Tesla Realtor is quoted as saying about one investor, "He doesn't take any Airbnb bookings that don't gross rent $30,000 a month." Really? A thousand dollars a day, every day? Neighborhoods hate short-term rentals, and in many municipalities vocal opponents will force governments to ban or restrict them. 

And, of course, Mari's story is full of people leaving perfectly good jobs to sell or invest in real estate or provide online courses on how to invest in property. For instance, Stephanie Douglass loved teaching fourth graders, but, "Remodeling this house was the first time I had been passionate about anything," Douglass told Mari. With real estate, "I'd figured out how to take control of my life, and it was insanely exciting. I thought, This is cool, and everyone needs to know there's another way."

Another example of how booms lead to malinvestment. In this case labor.

In September Michael Kolomatsky wondered, "Is the Seller's Market Over?" 

Market dynamics are certainly different, but the hubris looks very familiar. 

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The Classical Liberal Theory of Empire

Posted: 26 Nov 2021 12:00 PM PST

Ralph Raico examines the history and ideology of imperialism—and why the state loves war and empire so much. From the 2006 Supporters Summit: Imperialism: Enemy of Freedom, 27–28 October 2006, Auburn, Alabama. [33 minutes.]

Murray Rothbard versus the Public Choice School

Posted: 26 Nov 2021 09:00 AM PST

Murray Rothbard was at one time good friends with Gordon Tullock, one of the founders of the public choice analysis of government, and he also corresponded on friendly terms with James Buchanan, another of the founders. Both Rothbard and the public choice movement look with suspicion on claims by agents of the government to be acting for the common good, and both support the free market, though Rothbard does so to a much greater degree. Despite these points of agreement, Rothbard has some fundamental criticisms of public choice, and I'd like to look at one of these in this week's column.

What I take to be the most important disagreement between Rothbard and public choice is this: Rothbard doesn't take a value neutral attitude toward the state: he hates it. He sees the state as predatory. As he puts it in Anatomy of the State, "The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively 'peaceful' the lifeline of the parasitic caste in society." By contrast, he views people outside the state, aside from criminals, as engaged in peaceful exchange. There is, then, a dichotomy between people in the state and nonstate actors.

The public choice school denies that this dichotomy exists. The key point of their analysis of government is that people in government act to promote their private interests, in the same way as private actors. That is to say, government officials aren't more "public spirited" than private businessmen, but neither are they worse in their motives. The basic distinction, emphasized by Rothbard, that the state's activities are coercive, in contrast to the peaceful exchanges in the free market, is glossed over.

More than this, the distinction is denied to exist, especially in the work of Buchanan. He considers the state to be a voluntary institution. You might ask, How can he possibly think this? Does he imagine that if you refuse to pay your taxes, government agents will just let you alone?

Buchanan is well aware that the government can forcibly extract resources from you while private actors cannot, but he thinks this distinction doesn't matter because you have agreed to allow the state do this. Of course you will deny that you have made such as an agreement, but Buchanan has an argument that, despite what you might think, you have indeed.

Suppose, contrary to Rothbard, that you believe there are certain "public goods" that people will not voluntarily produce on the free market because they are nonrivalrous and nonexcludable, but you and others think it would be desirable to produce these goods. You could then make an agreement with these people to allow an agency to take money from you to pay for the public goods, so long as it does so from everyone else who signed the agreement as well. In this way, the alleged problems posed by the nonrivalrousness and nonexcludability of the public good would be overcome.

A simpler example may make voluntary acceptance of coercion clearer. Suppose people in an anarcho-capitalist society want to join a private protection agency that enforces a law code. The agency will have a list of the actions it will take in response to violations of this code. If you agree to join the agency, you have agreed that these actions can be taken against you, if you violate the law code. It is in exactly this way that Buchanan thinks that even though the state extracts resources from you, it is noncoercive: you agreed to be taxed and to be subject to the penalties for nonpayment.

The main objection to this is obvious and well brought out by Rothbard. People haven't made an agreement of the sort Buchanan assumes. As Rothbard points out in a memo for the Volker Fund, available now in Economic Controversies, in The Calculus of Consent, Buchanan gets around this by weakening the conditions for the agreement. If the tax agents could say to you, "You, along with everyone else, agreed to be taxed and now we have come to collect," they might have a case against you; but if it is just the case that a substantial number of people have agreed, but you haven't, the matter is quite otherwise. As Rothbard says,

In short, despite a lot of talk about unanimity being called for, the upshot of the discussion is that (a) unanimity is weakened by numerous qualifications and circumlocutions—and that (b) much of the existing structure of government is endorsed as being "really" unanimity! This, of course, is worse than simply adhering to majority rule, and comes perilously close to the "we owe it to ourselves," "we are the government" position of the Left. The worst example of this, including the definite tendency to rationalize the existing situation as reflecting unanimity, is the concept of "income insurance" to justify actions of government that "redistribute" income. Now it is obvious that when government takes from A and deliberately gives to B, this can hardly be called a gesture of unanimity, or people voluntarily banding together to purchase a service from government. But Buchanan and Tullock try to say this, by asserting that the wealthy really favor being taxed more than the poor, because they are taking out "income insurance," knowing that when they will be poor, the government, like an insurance company, will help them. And, in another place, they say that people really want to be coerced so long as they are all coerced, so that, everybody is really not being coerced. Not only do I consider all this nonsense, but it is dangerous nonsense as well, because it provides new support for the idea that anything that the State does, no matter how blatantly coercive, is "really" backed by everyone.

There is a further problem with the argument. Even if we confine ourselves to the less than fully unanimous agreement discussed in The Calculus of Consent, and consider only people who would have entered into it, it doesn't follow that the state may coerce them to pay taxes. Even if they would have found it rational to enter the agreement, they in fact haven't. No such agreement exists, and only explicit agreements bind. Lysander Spooner long ago made this point. Buchanan ignores it, but Rothbard affirms it.

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Homicide Rates in 2020 Surged to a 24-Year High. It's Another Sign of a Failing Regime.

Posted: 26 Nov 2021 07:00 AM PST

Homicide rose at a remarkably fast rate in 2020. This may be a sign that the public is losing faith in the legitimacy of the regime. We see this from doubts about elections to outrage over riots and police abuse.

Original Article: "Homicide Rates in 2020 Surged to a 24-Year High. It's Another Sign of a Failing Regime."

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Is the Constitution Broken beyond Repair?

Posted: 26 Nov 2021 05:00 AM PST

"No one, including Andrew Jackson, had ever explicitly argued before [Lincoln] that the Constitution authorized or obligated full-scale invasion and coercive measures."

Original Article: "Is the Constitution Broken beyond Repair?"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Monetary Policy Is in Turmoil

Posted: 26 Nov 2021 04:00 AM PST

Monetary policy is in turmoil. Ever since the financial crisis erupted eight years ago,* major central banks have fundamentally reformed the way they create and absorb money. Their activism has failed to extinguish the fires. There are already plans to equip monetary policy with new tools, such as the elimination of cash and "helicopter money" in order to face the challenges of the moment and the near future.

One thing seems to be clear: the monetary policy of tomorrow will still be very different from that of today. The monetary system and the economy of tomorrow will be profoundly different from those of today. Can we predict this future?

The future is the result of the previous choices. Where there are choices, the future is in principle uncertain. But this matter of fact needs to be put into perspective. Monetary history has been forged under the impact of certain forces that tirelessly push for an inflation of the money supply. These forces are at work today as at the dawn of time, and they will not disappear tomorrow. It is therefore interesting to identify them, to imagine their extension into the future and to assess them in the light of economic analysis.

This is what we propose to do in this article. In the first part, we will study the main forces at work in the production of money, as well as the resulting trends. Part two will be devoted to analysing the current situation and shorter-term trends. In conclusion, we will contrast two interpretations of this evolution: the classical vision, anchored in the conviction that the production of money is not a cause of the wealth of nations, and the mercantilist-Keynesian vision, based on the opposite conviction.

Causes and Finality of Inflation

The word inflation is today commonly defined as a sustained increase in the level of money prices (price-inflation). But its etymological root refers to an artificial expansion of the money supply which results most notably from state interventions (see Hülsmann, The Ethics of Money Production, chaps 5 and 7). It is this phenomenon that is at the heart of world monetary history. Always and everywhere, political power seeks to stimulate the production of money for its own benefit. We must therefore first and foremost consider the economic mechanisms that are at work here.

The Root Mechanism: Cantillon Effects

Money is an economic good that is generally used as a medium of exchange. It represents a very liquid and desired purchasing power. Its production is therefore a source of income. Today the most important producers of money are central banks (which create base money) and commercial banks (which create money substitutes). Banks produce money because this production is a source of income for them, just as miners remove silver and gold from the ground because this extraction is a source of income for them.

One might object that this would not hold true if money were strictly neutral with respect to the real economy. For example, suppose that an increase in the money stock of 10 percent eventually leads to an increase in all money prices, also by 10 percent. At the end of this process, all market participants would therefore be in the exact same real situation as at the beginning. Everyone's money income would have increased by 10%, but costs would have kept pace. Therefore, in this light, it seems that increasing the money stock is in vain, because it cannot create any real income for anyone.

However, it must be taken into account that, following an expansion of the money stock, individual prices do not increase at the same time and in the same proportion, but at different points of time and in different proportions. This effect is called the "Cantillon Effect" after Richard Cantillon who described it at the beginning of the 18th century in his book Essai sur la nature du commerce en général (An Essay on Economic Theory). The uneven impact of money production on individual prices creates winners and losers. Winners are those who sell at prices that increase faster or more sharply than the prices at which they buy; and losers those who suffer the reverse.

This redistribution of income takes place in particular for the benefit of the first owners of the new units produced. Indeed, these can exchange the new units as long as the price level is still at its initial level; while those who use the new units last have to pay higher purchase prices already before they can increase their spending.

The Long-Run Tendency: Forced Socialisation of Money

Whatever the monetary system, any production of money leads to a redistribution of income in favour of the producers and the first users of the new units. But this effect is particularly pronounced in the case of "cheap" monies, which have the form of tokens, banknotes, or accounting money. The only problem is that such monies, precisely because they can be multiplied very easily, do not normally have the confidence that is necessary to give them general circulation. If they do not have political backing, they tend to be rejected by users.

However, with the support of state interventions, it is possible, within certain limits (competition from other currencies, hyperinflation, etc.), to impose them on the market. Then the state benefits, and the agents in charge of the technical execution of this imposition can also profit from this imposition.

There is therefore a general tendency for the state to get ever more involved in the production of money, in order to obtain these benefits. This tendency can be observed in monetary history from antiquity to the present day. It is a tendency. The men and women in political power understood very early on the material advantages that spring from monetary interventions. But their political opposition understood this, too. Accordingly, states have seldom been able to impose overnight a monetary system that leaves them free to increase the money supply as they see fit. The evolution of monetary systems has been made by trial and error around a general trend. Sometimes it was interrupted very abruptly (for example, during the abandonment of the Assignats and Territorial Mandates at the end of the French Revolution), but it immediately continued its expansionist trend.

The Final State of Monetary Interventionism: The Monetary System of the Future

In view of the facts that we have just established, we consider that the general tendency of monetary development is towards the monetary system which provides the greatest liberty of action to political power; or, to say the same thing from the opposite political point of view, towards the monetary system which subjects the population to the most arbitrary choices of political power and which therefore creates the greatest monetary tyranny. In order to form a fairly correct idea of the future of money, it is therefore necessary to imagine such a system. In our opinion, it is distinguished by five characteristic features:

(1) There is only one base money and there are no money substitutes (no secondary currencies).

(2) This money can be produced without cost.

(3) Political power controls the production of money.

(4) Political power is completely free as to how to use any new units: it can give them away, exchange them, or lend them.

(5) Political power can also control, without cost, all the already existing units of money, which are held by the agents of the private sector: individuals, associations and firms.

Such a system could be set up on a national or regional level. In this case, the monetary freedom of the state would still be limited by competition from other monies. But this system can also be achieved globally, and then the monetary freedom of the state would be at its apex.

It is clear that such a system has never existed. However, today, the monetary systems of the civilised world have come closer to it, most notably because of the technical progress of the last fifty years, especially in information and payment systems. Let us therefore take a closer look at current practice, both to assess the gap that still prevails between it and our future monetary system, and in order to anticipate the next steps in monetary development.

The Current Situation

The various monetary systems that exist today in different countries of the world are variants of the same model that has emerged over the last two centuries. This model first appeared in the Anglo-Saxon countries before it spread more widely throughout the West and then around the rest of the world.

The Prevailing Model of a Monetary System at the Onset of the 21st Century

This model is distinguished by strong state interventionism in regard to institutions (central banks and various public banks) and in regard to monetary and financial regulations; by the presence of a hierarchical banking system involving central banks on one side, and commercial banks on the other; by a parallel circulation of base monies, produced by central banks, and multiple money substitutes, produced by commercial banks (notably current accounts created by commercial banks); by the global imposition of fiat monies to the detriment of traditional metallic currencies; by close cooperation between the central banks of the richest regions; by a growing central intelligence of financial flows and a growing hold by central institutions over the monetary and financial assets of citizens; and by the principle of money production by way of credit.

What separates this model from the monetary system of the future that we have sketched above? On the one hand, the political control of the money units that are already in circulation, while quite strong, is not yet fully achieved. On the other hand, and above all, the state's liberty to produce money is still quite limited, in particular by the principle of money production by way of credit. Let us look at these two points in a bit more detail.

The political control of money held by private agents is already quite firmly entrenched, although it is not yet perfect. Today most of the money stock is produced by private banks, and central banks themselves have a status of relative independence from governments. However, this independence of central banks stands on shaky grounds. It can be abrogated overnight by simple parliamentary majorities, and the appointment of their directors remains subject to political validation. As for the commercial banks, they are already very strongly constrained by financial regulations, and they are dependent on refinancing from central banks. In addition, thanks to advances in information technology, all money units that exist in scriptural form (accounting money), whether in a central bank account or a commercial bank account, are, on a purely technical level, modifiable (in particular taxable) according to the political imperatives of the moment. The only money units which escape this control are those which exist in the form of banknotes, held in a more or less anonymous way in the purses and treasure chests of the private sector.

As far as the liberty to produce money is concerned, the action of banks is always limited, somewhat by competition and much more so by the principle of producing money by way of credit.

In the current situation, there is not just one money. There is a multitude of base monies and an even greater multitude of monetary substitutes. This competition undoubtedly places limits on the liberty of action of each of the central banks. But the increased cooperation between central banks and financial regulation in recent years have created strong tendencies towards the cartelisation of the banking sector, both public and private.

The most important constraint weighing on the production of money lies in the fact that this production must occur, in principle, by way of credit (this is the principle of the banking-style production of money, see Mises, Theory of Money and Credit, chap. 16, section 1). Neither public nor commercial banks are free to create money by unilateral acts. To create money, they must find a borrower. They are therefore constrained by the consent of potential borrowers, respectively by the latter's capacity to take on more debt.

Traditionally, this constraint has been eased by lowering interest rates to mobilise marginal borrowers who previously were not yet willing to take on debt. But after the onset of the 2008 crisis, central banks pushed interest rates close to zero, yet they struggled to find borrowers.

This constraint of the "zero frontier" of the interest rate is reinforced, on the one hand, by the prudential approach to credit which has traditionally dominated banking practice and according to which bank loans should be granted only in the short term, only to creditworthy counterparties, and only secured by first-rate collateral. On the other hand, this constraint is reinforced by the conventional practice of central banks, which is not to lend directly to governments, but only through the interposition of commercial banks.

It is true that these limitations have been softened in recent years in the context of the fight against the crisis. The central banks of the Eurosystem have started to lend on a longer-term basis, to clearly insolvent firms and states, and against low-quality collateral. They began to lend more directly to governments in the Eurozone, bypassing commercial bank intermediation. They have also circumvented the very principle of banking-style money creation, especially through currency-swap operations with other central banks. Some central banks (notably those of Switzerland, Japan and the United States) have even started buying company shares on the stock markets.

All the same, the principle of money creation by way of credit remains in force. It constrains the liberty of action of central banks and thus slows down the expansion of the money supply. What are the possible solutions? There are two, one which respects the traditional principle of banking-style creation of money, and one which requires its abandonment. The first is that of negative interest rates, the second that of "helicopter money." Both require a prior elimination of cash and the establishment of a monopoly of accounting money. Let us explain this in more detail.

Negative Interest Rates and the Elimination of Cash

Negative interest rates have long been used (in Switzerland and Japan) to penalise money hoarding. What is new about the current situation is that they are also used to encourage debt. The idea is that a borrower receives 100 euros today to return 98 euros tomorrow. Instead of paying the lender to save, it is the borrower who is paid to get into debt, because this debt goes hand in hand with an expansion of the money supply.

This approach does not pose any particular technical difficulties for central banks. On the one hand, they enjoy a monopoly and their clients are forced to have accounts with them. On the other hand, they can create fiat money—an economic good in its own right and which is not a claim on any underlying good. Since fiat money can be produced almost free of charge, it can also be lent at negative rates (therefore at a loss) without entailing any life-and-death problems for central banks.

Things are much more difficult for commercial banks. These do not have a monopoly position on the market. Above all, they do not create fiat monies, but only money substitutes. The latter are claims on fiat money and can therefore be converted into cash at the simple request of account owners. Commercial banks could grant loans at negative rates only if they could also tax the assets in their customers' accounts, with even more negative rates. For example, to profitably lend 100 dollars to Smith at -2%, it would be necessary to impose a rate of -3% on Brown's 100 dollar checking account. However, negative rates on checking accounts are not achievable as long as there is the option of cash withdrawal. Brown, in our example, would simply make a withdrawal. Instead of holding 100 dollars in his bank account, where this sum would be taxed at 3%, he would hold it in cash without paying this tax. For commercial banks, this would have a negative consequence: they would lose the funds they need to make loans.

One could imagine that central banks would fill the void left by fleeing bank customers, by lending generously, at negative rates, to customer-deprived commercial banks. However, as long as there is the possibility of cash withdrawals, this approach would quickly lead to hyper-inflation: any sum borrowed at –3% from the central bank and loaned at –2% to a client would be immediately withdrawn in cash. Customers would be relentlessly asking for new loans—after all, they are being paid to go into debt—and thus the central bank would be forced to increase the money supply at an accelerating rate. The end result would be an inflationary spiral followed by a collapse of the demand for money, and therefore of the monetary system.

This difficulty could be avoided by outlawing cash withdrawals and, ultimately, any use of banknotes and coins. As a result, the customers of commercial banks could no longer avoid being taxed by negative rates on the value of their checking account holdings. Even if they left their bank and opened another account elsewhere, they could not escape the tax. Another advantage of eliminating cash, at least from the point of view of central banks, would be the facilitation of "bail-ins" to save over-indebted commercial banks.

Helicopter Money and the Elimination of Cash

Hence, we see the central role played by the abolition of cash in facilitating the further expansion of money and credit today. But outlawing cash would play an almost equally important role if ever it were decided to throw overboard the principle of money creation by way of credit and adopt what in current jargon is called "helicopter money."

This expression refers to a famous article by Milton Friedman on the optimal amount of money. Issuing money by the helicopter means issuing money without going through credit. Friedman had in mind to issue new money by way of a gift: drop 1000 dollars in banknotes from a helicopter and that money is going to be collected for free by the people who are luckily standing just below. But fiat money can also be issued by purchasing all kinds of economic goods that are not debt securities. For example, the central bank could simply pay all new money units into the personal accounts of its directors and managers. Or it could give blank checks to the finance ministry which would spend them on public investments or for other purposes.

There are therefore many "non-banking-style" techniques for issuing fiat currency. They were known long before 1969, when Friedman's article appeared. Indeed, in the 19th century and before, it was not unusual for banknotes, whether convertible or not into precious metals, to be issued in a non-banking-style manner. Perhaps the most famous example is that of the Assignats.

Repealing the principle of banking-style money creation in favour of the principle of non-banking-style money creation would all at once create greater liberty of action for central banks. There would be no more constraints, neither technical, nor commercial, nor legal on the expansion of the money supply. There would only be one technical problem: it would be difficult for central banks to control the money units that are already held by the public. Under the banking-style creation of money, central banks can absorb sums already in circulation, by tightening the conditions for granting credit. Under the principle of non-banking-style money creation, this possibility would no longer exist.

However, this problem could be solved by outlawing cash. If all money units had to be held in bank accounts, then it would be possible to regulate the money stock by taxing the accounts. Thus, we see again the central issue of the elimination of cash at this current moment in monetary history.

How to Assess This Transformation?

We have just analysed the forces at work in the transformation of monetary systems and the resulting trends. The long-term trend is towards greater liberty of action for the state. We have seen that this trend implies, in the short term which is ours, that monetary authorities have an incentive to outlaw cash and also to suppress the principle of the banking-style creation of money.

We have intentionally side-stepped the question how these trends stand up to scrutiny from an overall economic, political, and social perspective. But this question does arise and the answers are very different depending on the schools of economic thought.

From the point of view of present-day standard macroeconomics, which is Keynesian to the core, monetary history is a succession of technical changes to facilitate an increasingly large inflation of the money supply for the benefit of the greatest number, yet without running the danger of hyperinflation, because this would risk destroying the tool of the printing press. From this point of view, monetary policy has the delicate task of finding the transmission channels which allow the greatest increase in aggregate revenue with the least expansion of the money supply and the least increase in the level of prices.

From the perspective of the classical economists and, today, of the Austrian School, monetary history is an ongoing struggle between those who use political power to generate illegitimate incomes and those who oppose any such attempts. In the eyes of the Austrians, the inflation of the money stock does not have a positive overall impact. It stimulates employment and growth only in the short run, and invariably at the cost of capital consumption, which will hurt growth and real wages in the longer run. In addition, the Austrians consider that monetary inflation causes multiple forms of collateral damage at the political, economic and cultural levels. Let us mention some of them in conclusion.

The increased monetary liberty of action of the state necessarily goes hand in hand with the monetary enslavement of the rest of the population. When the state possesses the liberty to control all bank accounts, the citizens do not have the liberty to use their money as they see fit, no matter what. When the state has the liberty to produce as much money as it wishes, then the monetary purchasing power held by citizens is subject to the arbitrariness of government intervention.

The rise of fiat monies reinforces the dependence of money users on banks. The establishment of central banks reinforces the tendencies of political and banking centralisation. It also gives rise to a kind of institutionalised irresponsibility, today called "moral hazard." Indeed, all market participants are used to the presence of "lenders of last resort" and neglect their own precautions. Under the inflationary expansion of money and credit, the financial system is therefore weakening all the while it is centralising. The appearance of periodic banking crises in the 19th century, and the persistence of these crises until the present day, provides an illustration.

The principle of banking-style money creation has joined at their hips the expansion of the money stock and the growth of the credit market. The consequence is the so-called financialization of the economy, so decried since the 1990s, but already at work in the 19th century. And last but not least, monetary expansionism is at the root of significant income and wealth inequalities.

  • *. This paper was first published under the title "L'avenir de la monnaie" in "Comprendre la finance," special issue, Problèmes économiques, hors-série no. 10 (September 2016): 96–103.

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Literature and the "Class War"

Posted: 25 Nov 2021 12:00 PM PST

[Editor's Note: This essay, a prescient blast at the then growing problem of Marxism in literary criticism, was published as an appendix in Henry Hazlitt's 1933 book The Anatomy of Criticism: A Trialogue. The same arguments, of course, apply to claims used in criticism that certain literature is worthless because it supports "the patriarchy" or other modern stand-ins for "the bourgeoisie."]

The astonishingly rapid spread, in the last two or three years, of the application of so-called social standards in literary criticism, and particularly of so-called Marxian standards, makes it desirable that these standards should be submitted to a critical examination. In undertaking such an examination, one is confronted at the very beginning by a formidable difficulty.

One feels that few of the writers whose theories are being examined will trouble to weigh on their merits any of the specific objections offered. For most of the nouveau-Marxists know all the answers in advance. They know that any critic who questions any item in the Marxian ideology is a "bourgeois" critic, and that his objections are "bourgeois" criticisms, and from that terrible and crushing adjective there is no appeal. For the bourgeois critic, if I understand the nouveau-Marxists rightly, has less free will than a parrot. He is a mere phonograph, who can only repeat the phrases and opinions with which he has been stuffed from his reading of bourgeois literature and his contacts with bourgeois science and bourgeois art. All these make up bourgeois culture, which is a mere class culture, i.e., an elaborate and colossal system of apologetics; worse, an instrument for class dominance and class oppression.

The bourgeois critic, in brief, is a mere automaton, incapable of surmounting or of escaping from the bourgeois ideology in which he is imprisoned; and the poor fool's delusion that he is capable of seeing any problem with relative objectivity and disinterestedness is simply one more evidence that he cannot pierce beyond the walls of his ideological cell. (Of course it does seem possible for a few of the chosen, by an act of grace, to receive the revelation and jump suddenly into a complete acceptance of the Marxian ideology; otherwise it would be impossible to account for the bourgeois-Marxists themselves. But we may return to such miracles later.)

In such an atmosphere, I hope I may be forgiven if I begin with an ad hominem argument, for in such an atmosphere ad hominem arguments are the only kind likely to make any impression. Now the first article in the Marxian credo is that there is but one Karl Marx and that Lenin is his prophet. One would suppose, therefore, that the critics who call themselves Marxists would trouble to learn what their master and his greatest disciple thought on cultural questions. Did Marx himself reject the culture of his age on the ground that it was bourgeois culture? Did he flee from its contamination as from a plague? Did he repudiate it as mere apologetics?

The evidence against any such assumption is overwhelming. Wilhelm Liebknecht, in his delightful biographical memoir, tells us that Marx read Goethe, Lessing, Shakespeare, Dante, and Cervantes "almost daily," and that he was fond of reciting scenes from Shakespeare, and long passages from the "Divina Commedia" that he knew almost entirely by heart. Marx's son-in-law, Paul Lafargue, in his personal recollections (which appear in Karl Marx: Man, Thinker, and Revolutionist, a symposium edited by D. Ryazanoff), confirms this and supplements it in more detail. Marx, he tells us,

knew much of Heine and Goethe by heart, and would even quote these poets in conversation. He read a great deal of poetry, in most of the languages of Europe. Year after year he would read Aeschylus again in the original text, regarding this author and Shakespeare as the two greatest dramatic geniuses the world had ever known. For Shakespeare he had an unbounded admiration.

Sometimes he would lie down on the sofa and read a novel, and had often two or three novels going at the same time, reading them by turns. He had a preference for eighteenth-century novels, and was especially fond of Fielding's Tom Jones. Among modern novelists, his favorites were Paul de Kock, Charles Lever, the elder Dumas, and Sir Walter Scott, whose Old Mortality he considered a masterpiece.

He had a predilection for tales of adventure and humorous stories. The greatest masters of romance were for him Cervantes and Balzac. His admiration for Balzac was so profound that he had planned to write a critique of La comédie humaine as soon as he finished his economic studies.

Even more direct evidence of Marx's literary tastes is furnished by a "confession" which he signed at the insistence of two of his daughters. It was a game, popular in the early sixties, and still often revived, of answering a set of leading questions; and from what we know of Marx there can be no doubt that his answers, while in one or two instances playful, were fundamentally serious.

Asked who his "favorite poet" was, he answered: "Shakespeare, Aeschylus, Goethe." He gave his favorite prose writer as Diderot, his favorite occupation as "book worming," and—what ought to interest those critics who seem to have decided that nothing outside of the class struggle is now worth discussing—he set down his favorite maxim as "Nihil humanum a me alienum tuto"—"I regard nothing human as alien to me."

Lenin was as little disposed to reject bourgeois culture as Marx himself. In her biographical memoir, Lenin's widow, N.K. Krupskaya, tells us that "Vladimir Ilyich [Lenin] not only read, but many times reread, Turgenev, L. Tolstoy, Chernyshevsky's What Is to Be Done? and in general had a fine knowledge of, and admiration for, the classics."

We learn also that at one time he was very much taken up with Latin and the Latin authors; that he eagerly scanned Goethe's "Faust" in German, Heine's poems, and Victor Hugo's poems; that he liked Chekhov's Uncle Vanya; and that he "placed the works of Pushkin, Lermontov, and Nekrasov by the side of his bed, along with Hegel".

Madame Lenin tells an amusing story of his encounter with some young communists. "Do you read Pushkin?" he asked them. "Oh, no, he was a bourgeois. Mayakovsky for us." Lenin smiled: "I like Pushkin better." But he admired Mayakovsky, and even praised him once for some verses deriding Soviet bureaucracy.

If supplementary evidence is needed on this point, we have it in the list published by Joshua Kunitz in the New Masses of January, 1932, of the volumes which Lenin ordered for his library in 1919—"a year," Mr. Kunitz reminds us, "of economic disorganization, political counter-revolution, and impending civil war." Among the poets whose collected works were ordered were Pushkin, Lermontov, Tuitshev, and Fet, and among the prose writers Gogol, Dostoevsky, Turgenev, Tolstoy, Alsakov, and Chekhov.

Even when we pass from this record of the personal tastes of Marx and Lenin to questions of theory, we find that the author of the doctrine of Economic Determinism was far from applying it with the crude, rigid and dogmatic directness of many of those who now profess to be his followers. Unfortunately, Marx's views on the relation of literature to class are less fully set forth than we should like, but in a paper published as an appendix to The Critique of Political Economy he makes this significant statement:

It is well known that certain periods of highest development of art stand in no direct connection with the general development of society, nor with the material basis and the skeleton structure of its organization. Witness the example of the Greeks as compared with the modern nations or even Shakespeare.

Here is a clear acknowledgment that a work of literature is not necessarily to be dismissed as inferior because it grows out of a society in which social injustice prevails, even if it is the product of an oppressing class or of a slave-holding class. To call a work of literature "bourgeois," in other words, would not have meant for Marx that it was necessarily not a great work. And as a corollary, to call a work of art "proletarian" would not have meant for him that it was necessarily admirable.

Now that Leon Trotsky is a political exile, his ideas on any subject are presumably not as widely popular among communists, and certainly not among the party hacks, as they once were; but his remarkable volume Literature and Revolution, published in America in 1925, was written when he still held office, and seems to me at bottom a development of the attitude already implicit in Marx.

Like Marx himself, Trotsky is not free from inconsistencies. Certainly he often mistakes political for aesthetic criticism. He has a curiously ambivalent attitude toward the "fellow-travelers," at times praising, at times deriding them, and at times engaging in an unattractive heresy hunt. He insists, especially in the early part of his volume, on the essential class character of art. Social landslides, he says, reveal this as clearly as geologic landslides reveal the deposits of earth layers. But he has a genuine feeling for literature and brilliant analytical powers, and the common sense and courage to contradict the dogmas of the extremists in his own party. The italics in the following quotations are mine:

It is not true that we regard only that art as new and revolutionary which speaks of the worker, and it is nonsense to say that we demand that the poets should describe inevitably a factory chimney, or the uprising against capital! … Personal lyrics of the very smallest scope have an absolute right to exist within the new art….

It is very true that one cannot always go by the principles of Marxism in deciding whether to reject or to accept a work of art. A work of art should, in the first place, be judged by its own law, that is, by the law of art.

Every ruling class creates its own culture, and consequently its own art…. Bourgeois culture … has existed five centuries, but it did not reach its greatest flowering until the nineteenth century, or, more correctly, the second half of it. History shows that the formation of a new culture which centers around a ruling class demands considerable time and reaches completion only at the period preceding the political decadence of that class….

The period of the social revolution, on a world scale, will last … decades, but not centuries. … Can the proletariat in this time create a new culture? It is legitimate to doubt this, because the years of social revolution will be years of fierce class struggles in which destruction will occupy more room than new construction. At any rate, the energy of the proletariat itself will be spent mainly in conquering power…. The cultural reconstruction which will begin when the need of the iron clutch of a dictatorship unparalleled in history will have disappeared, will not have a class character. This seems to lead to the conclusion that there is no proletarian culture and that there never will be any, and in fact there is no reason to regret this. The proletariat acquires power for the purpose of doing away forever with class culture and to make way for human culture. We frequently seem to forget this.

The main task of the proletarian intelligentsia in the immediate future is not the abstract formation of a new culture regardless of the absence of a basis for it, but definite culture-bearing, that is, a systematic, planful, and, of course, critical imparting to the backward masses of the essential elements of the culture which already exists….

It would be monstrous to conclude … that the technique of bourgeois art is not necessary to the workers….

It is childish to think that bourgeois belles-lettres can make a breach in class solidarity. What the worker will take from Shakespeare, Goethe, Pushkin, or Dostoevsky, will be a more complex idea of human personality, of its passions and feelings, a deeper and profounder understanding of its psychic forces and of the role of the subconscious, …

The proletariat also needs a continuity of creative tradition. At the present time the proletariat realizes this continuity not directly, but indirectly, through the creative bourgeois intelligentsia….

I apologize for these long quotations, but as I remarked at the beginning, the majority of our own so-called Marxists are so impervious to arguments from liberal and bourgeois sources that it is necessary to direct their attention at least to the tastes and opinions of the leaders they profess to follow. These leaders, obviously, dispose of a good deal of the nonsense about "proletarian literature." Those who seek to dismiss practically all existing culture by the mere process of labeling it "bourgeois" are not necessarily Marxists. They are simply new barbarians, celebrants of crudity and ignorance.

There is in most of the new American "Marxist" critics a deplorable mental confusion, and this mental confusion, as I have hinted, is not necessarily connected with Marxism. Marx himself would probably be distressed by the manner in which they abuse Marxian terms. A proletarian, for example, in Marx's use of the term, is an exploited manual worker, a factory "hand," and he remains a proletarian regardless of his political or economic views.

A communist, on the other hand, is a person who, regardless of his economic position, holds a certain definite set of opinions. Most of the new "Marxian" critics use these terms interchangeably, as if they were synonyms, and as a result some very strange things happen. A Harvard graduate like Dos Passos, for example, is hailed as a great "proletarian" novelist. Still more abusive, in a double sense, is the use of "bourgeois" to mean either a person of a certain economic status or a non-communist.

Now it should not seem particularly disgraceful not to be a sweated factory worker. In this simple, descriptive, and Marxian sense of the word, Marx himself was a bourgeois economist. (As Trotsky remarks in Literature and Revolution, "Marx and Engels came out of the ranks of the petty bourgeois democracy and, of course, were brought up on its culture and not on the culture of the proletariat.") If this economic-status meaning were adhered to, the adjective "bourgeois" would not seem particularly damning. But it is, as I have said, used also as an emotive word, a blackjack to describe non-communists. Full advantage is taken of its historic, non-Marxian connotations—an uncultured shopkeeper, a provincial, a timidly conventional person, a non-Bohemian, a philistine.

This emotive use of words is bound to lead to mental confusion. It is impossible to make out, for example, exactly what the new Marxists mean by a "proletarian literature." Most of them, most of the time, appear to mean a literature about proletarians. Some of them, some of the time, seem to mean a literature by proletarians. Some of them, part of the time, mean a communist or revolutionary literature; and a few of them demand nothing less than a combination of all three of these. This hardly seems to leave much room for most of what used to be called literature.

It may be well at this point to ask just how much a culture is invalidated or suspect because it is a "class" culture. We are led to suppose, under extreme interpretations of the doctrine of economic determinism, that our economic status inevitably determines our opinions, that those opinions are mere rationalizations of our class status. Let us admit the element of truth in this; let us admit that our economic status influences the opinions of each of us, in various unconscious and subtle—and sometimes not so subtle—ways.

Is it impossible for the individual to surmount these limitations? Is it impossible for him, once he has recognized this prejudice, to guard against it as he guards against other prejudices? Is the limitation of class necessarily any more compelling than the limitation of country, of race, of age, of sex? Because Proust was a Frenchman, his writing is naturally colored by his French environment; it is different from what it would have been had he lived all his life in England. But does Proust's Frenchness diminish, to any extent worth talking of, his value to American readers?

Shakespeare, as a seventeenth-century writer, was naturally limited by the lack of knowledge and many of the prejudices of his age; his age colors his work. Does that mean that he is of little value to the twentieth-century reader? Because Dreiser is a man, does he lose his value for women readers? Does Willa Cather lose hers for men readers? The answers to these questions are so obvious that it seems almost childish to ask them. The great writer with great imaginative gifts may universalize himself. If not in a literal sense, then certainly in a functional sense, he can transcend the barriers of nationality, age, and sex. And certainly he can, in the same functional sense and to the same degree, transcend the barrier of class.

Indeed, the barrier of class is perhaps in some respects less difficult to surmount than the barriers of nationality, historic era, personal age, and sex. This is no place to examine the entire basis of communism, but it can be said that it is simply not true that the modern world, particularly the American world, consists of just two sharply defined classes. Our class boundaries are notoriously vague, loose, and shifting. No doubt the contrast between those at the top and those at the bottom is just as great as the communists say it is, but the division into just two contrasted classes is a child of the Hegelian dialectic rather than of objective fact.1

There is the further question, never satisfactorily dealt with and perhaps not even clearly recognized by most communist critics, of the distinction between genesis and value. Every opinion, stated or implied, has a right to be dealt with purely on its own merits, and must be so dealt with if there is to be any intellectual clarity. The truth or value of an idea or an attitude must ultimately be judged wholly apart from the prejudices, the interests, or the income of the man who expresses it.

All this is not to say that the question of class bias is not important in literature, science, or art; it is simply to subordinate it to its proper place. It is silly and practically meaningless, for example, to say that we have a bourgeois astronomy, a bourgeois physics, a bourgeois mathematics. Here the class bias enters to so infinitesimal an extent that it is not worth talking about. But the elements of class bias may be larger in biology—as, for example, in its answers to problems of environment and heredity.

When we come to the social sciences, particularly economics, the elements of class bias may be very large. In the arts they will be present less directly: they will be smaller in poetry than in fiction, smaller in painting than in poetry, smaller in music than in painting. This distinction is clearly admitted by Trotsky. What must be decided in each case is the question of the degree of class bias and the real relevance of it. It may be sometimes relevant for the critic to point out the class bias or the class sympathy in any writer and just how it affects his work.

It may be sometimes even more relevant, for that matter, to point to his religious bias, his nationalistic bias, his sexual bias, or the influence upon him of the particular historic era in which he writes. There is no reason why any one of these should receive exclusive or constant emphasis. The greatest danger, in short, of so-called Marxian criticism in literature is that the critics who make a fetish or a cult of it will in time become infinitely boring. When we are told that Emerson was bourgeois, Poe bourgeois, Mark Twain bourgeois, Proust bourgeois, Thomas Mann bourgeois, we can only reply that this may all be very true, but that we knew it in advance and that it tells us nothing. It is like telling us that Rousseau was an eighteenth-century writer, that Goethe was a German, and that atheists are not Catholics. What we are interested in is what distinguishes the great writer from other persons of his class, what gives him his individuality—in brief, what makes him still worth talking about at all.

  • 1. Certainly that division would be completely arbitrary if made on the basis of income, for one may just as well divide the American population into seventy-four "income classes" — as the National Bureau of Economic Research actually has — as into two. Nor can the division be made purely on the basis of employer and employed. A bootblack with one assistant is an "employer"; a railroad president on salary an "employee."

Joe Weisenthal Thinks Debasing the Dollar Is the Moral Thing to Do

Posted: 25 Nov 2021 09:00 AM PST

Joe Weisenthal is an editor and host at Bloomberg who has recently been using his large Twitter platform to cast stones at the inflation hawks. In one recent thread, Weisenthal mocked the people worried about the falling purchasing power of the US dollar, and claimed in fact that it would be immoral for currency to maintain its value over time.

As we'll see, although Weisenthal's thought experiment of a time traveler is a bit whimsical, it provides a good opportunity for us to explore the underlying economics. The whole episode underscores, once again, why the Austrian school provides the public with a beacon of light amid the confusion of our financial punditry.

Weisenthal's Time Traveler

Below is the original tweet, which is largely self-explanatory, though interested readers can see me grappling with Weisenthal by clicking here.

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In context, Weisenthal (and Adam Singer) are poking fun at the Ron Paul–types who are upset at the steady decline in the dollar's purchasing power since the Fed was formed in late 1913. Weisenthal thinks it is absurd to expect that actual currency would maintain its market value over the course of a century. Why, what would such a "hoarder" have done to benefit society all that while?

Shrinking the Time Scale

To cut to the chase, Weisenthal is completely mistaken: there was nothing immoral about the classical gold standard and its maintenance of the dollar's purchasing power over long stretches. But it will be easier to pinpoint the flaw in Weisenthal's thinking if we first consider a simple story.

Suppose Joey is a teenager who cuts lawns for extra income and he typically makes $25 a weekend. Joey wants to buy a $300 Xbox, so he saves his weekly lawn-mowing money under his mattress. After three months, Joey takes the saved $300 in cash to the mall and buys the coveted electronics.

Does Joe Weisenthal have a problem with this scenario? Did the market economy function immorally by allowing Joey to transfer his purchasing power from the start of the summer to the end of the summer? Was Joey supposed to have done something in addition to cutting lawns to earn the ability to defer his potential consumption through time?

I trust Weisenthal would not object to Joey saving up his currency over the summer. But then, what is the principled difference between Joey's three-month deferral and Weisenthal's time traveler who executed a hundred-year consumption deferral?

Present Goods Trade at a Premium for Future Goods

In fact, not only should a time traveler not be penalized for deferring consumption a century, he should be actively rewarded. This is because present goods are more valuable than future goods. (Note that we are here getting into some very technical issues. The interested reader can check out my three-part podcast series—one, two, and three—to hear the intricate details of interest theory in the Austrian tradition.)

So to go back to the original tweets, if a guy in 1921 has two quarters in his pocket, and that would be enough for him to buy a delicious hamburger, then for his willingness to effectively trade away his 1921 hamburger for a burger to be delivered in 2021, the guy should at least get to trade at par. And in fact, he would (normally) be able to obtain a promise for more than one burger in the future, since the former are more valued. (This is no more mysterious than one present burger trading for more than one present hot dog.)

It's easy to understand why, subjectively, people would need to be promised a greater number of goods in the future to give up potentially consuming their goods today. But how, mechanically, can the borrowers deliver on these promises? How is it possible, technologically speaking, to transform 100 units of present goods into (say) 150 units of future goods?

The answer is that the longer we are willing to wait, generally speaking, the greater physical output we can obtain for a given amount of today's inputs. Eugen von Böhm-Bawerk famously referred to the superior physical productivity of wisely chosen, more roundabout processes. For example, if a man is in the woods and wants to get water from a stream into his nearby cabin, he has different techniques he could use.

A very fast and direct method is to cup his hands and run back and forth from the stream to his cabin. This delivers some water to his cabin very quickly, but the yield—measured in gallons of water per hour of his labor—is also very low.

An intermediate method would be to hollow out two coconuts to make little buckets, and then go back and forth armed with the newly created capital goods. This would take longer to get the initial water to his cabin, but once the process is underway, it would deliver far more gallons per hour of invested labor—even including the time spent constructing the buckets.

Finally, the man might take several months digging a small path from the stream to his cabin, so that the water flowed directly to him. Once completed, his renovations would be extremely productive if we measure in terms of water volume per hour of his labor time.

And so we see society would be willing and able to reward Weisenthal's hypothetical time traveler for earning $100 in 1921 and then postponing his consumption for a century. The real resources that would have gone into satisfying him in 1921 would be freed up to be invested in longer processes, which had a higher physical yield. To put it simply, it makes perfect sense that a 1921 hamburger would trade on the forward market for several 2021 hamburgers.

Bonds versus Cash

We can really see the weakness in Weisenthal's analysis if we suppose the time traveler took his original cash and deposited it into a savings account at the bank. Would it be immoral for a bank account to have $100 in 1921, and to grow to more than that amount by 2021?

Or for another example, what if the time traveler from 1921 initially bought a very long-term bond that would come due in 2021? The time traveler jams the bond into his pocket, activates the time machine, and shows up at Weisenthal's doorstep. He asks Joe to help him cash his matured bond (and working at Bloomberg, Weisenthal is just the guy). The time traveler is pleased to discover that the nominal interest he earned on the hundred-year bond is just enough to have maintained his purchasing power, since goods are much more expensive than the traveler is used to seeing. Has the market economy behaved immorally by allowing such a transaction to occur?

In principle, the same type of intertemporal trade occurs if people invest their savings not in bank account balances or bonds, but instead in the accumulation of actual cash. Even here, the initial drop in consumption frees up real resources that can be channeled into the production of a greater amount of future goods. As Ludwig von Mises explains in Human Action:

If an individual employs a sum of money not for consumption but for the purchase of factors of production, saving is directly turned into capital accumulation. If the individual saver employs his additional savings for increasing his cash holding because this is in his eyes the most advantageous mode of using them, he brings about a tendency toward a fall in commodity prices and a rise in the monetary unit's purchasing power. If we assume that the supply of money in the market system does not change, this conduct on the part of the saver will not directly influence the accumulation of capital and its employment for an expansion of production. The effect of our saver's saving, i.e., the surplus of goods produced over goods consumed, does not disappear on account of his hoarding. The prices of capital goods do not rise to the height they would have attained in the absence of such hoarding. But the fact that more capital goods are available is not affected by the striving of a number of people to increase their cash holdings. If nobody employs the goods—the nonconsumption of which brought about the additional saving—for an expansion of his consumptive spending, they remain as an increment in the amount of capital goods available, whatever their prices may be. Those two processes—increased cash holding of some people and increased capital accumulation—take place side by side.

It is a fascinating topic to ponder the ideal money (if such a concept makes sense) and whether its purchasing power would fall, rise, or remain steady over long periods. What we can say for certain is that rapid and unpredictable changes are undesirable, because a wildly fluctuating money defeats the effectiveness of monetary calculation, which is one of the underpinnings of civilization itself. To wit, double-entry bookkeeping only works when the money units of revenues and costs are comparable.

Conclusion

Contrary to Joe Weisenthal's musings, there is nothing immoral if a money retains its purchasing power over long stretches. In general, when people channel their savings into conventional vehicles (such as bank accounts or bonds), this frees up real resources that can be used to yield a greater physical amount of output down the road. In principle, holding currency could be merely a different financial asset for achieving the same purpose.

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Nullification Works: Republicans Look to Legalize Marijuana as States Ignore Federal Drug War

Posted: 25 Nov 2021 07:00 AM PST

The ongoing success of the cannabis nullification effort has shown the uselessness of those who repeatedly chant slogans about "federal supremacy" and "If you don't like the (federal) law, change it."

Original Article: "Nullification Works: Republicans Look to Legalize Marijuana as States Ignore Federal Drug War"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Since 2008, Monetary Policy Has Cost American Savers about $4 Trillion

Posted: 25 Nov 2021 05:00 AM PST

After thirteen years with on average negative real returns to conservative savings, it is time to require the Federal Reserve to address its impact on savers.

Original Article: "Since 2008, Monetary Policy Has Cost American Savers about $4 Trillion"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Why Don’t Police Unions Protect Whistleblowers?

Posted: 25 Nov 2021 04:00 AM PST

Sergeant Javier Esqueda of the Joliet Police Department in Illinois thought he was doing the right thing by leaking a video recorded from inside of a squad car that showed a black man, Eric Lurry, in medical distress from a drug overdose being slapped and having a police baton forced in his mouth. Lurry later died from the overdose. Sergeant Esqueda received an award from the Lamplighter Project, an advocacy group for police whistleblowers. After an internal affairs investigation, the officers involved received minor punishments, one of them a six-day suspension for turning off the sound on the camera after a sergeant slapped Lurry and called him a "bitch."

The minor slap on the wrist for the officers is not the only questionable aspect of this situation. Sergeant Esqueda's department opened a criminal investigation and prosecutors have charged him with four counts of official misconduct, with a maximum sentence of twenty years in prison, because he was not authorized to access this footage. He is currently on paid administrative leave as he awaits the results of his trial and internal affairs investigation. Joliet Police chief Alan Roechner says that he does not believe Esqueda is a whistleblower, and some of his coworkers reported that they believe that Esqueda obtained the video in order to use it as a "trump card" to avoid discipline in an unrelated case. And in November, Sergeant Esqueda was expelled from his union, the Joliet Fraternal Order of Police Supervisor's Association, by a 35–1 vote. His excommunication is significant because his union will no longer provide him counsel in the event that proceedings go against him and he faces termination.

This may seem strange in light of how police unions will fight tooth and nail for officers accused of egregious misconduct. But it makes perfect sense from the perspective of the organizational goals of police unions. Unions seek to maximize the wages, benefits, and job security of their members. Presented in the most charitable sense, the job protections for which police unions negotiate prevent things such as arbitrary discipline by police supervisors and shield officers from harm from malicious or dubious complaints. Since police unions are often prohibited from striking, which likely reduces their wages, they bargain harder on job protections.

However, these protections also have the potential to shield officers from accountability for misconduct. Given municipal police organizations' taxpayer funding and privileged status, the market cannot decide whether officers are "overprotected" according to the desires of consumers. Market competition puts an upper limit on what unions in the private sector can demand. For example, the demands of the United Auto Workers arguably contributed to the bankrupting of General Motors by increasing labor costs to levels that were uncompetitive with foreign automakers. There is no such competition among police departments, and cities are able to make more concessions to unions. As a consequence, police departments may find it impossible to fire officers that demonstrate poor decision-making. The Pittsburgh Police Bureau, for example, fired Officer Paul Abel, who pistol-whipped and accidentally shot a man whom he had mistaken for someone else, only for Abel to be reinstated by an arbitrator. Abel has been the target of many complaints, most recently a retaliatory arrest, and is currently on suspension, which the Fraternal Order of Police have said they will fight.

The answer to why police unions protect officers who engage in conduct like Paul Abel's but not whistleblowers like Javier Esqueda is clear. Whistleblowers in the ranks of police undermine the police union's goal of protecting officers from disciplinary action. Sergeant Esqueda was not loyal to his fellow officers. While individual police officers may value protections for whistleblowers, unions do not want to negotiate for whistleblower protections because that would undermine the union. For an analogy to private sector unions, individual union members may value the right to work during a work stoppage, but the unions have incentives to declare anyone who does so a "scab," since such choice would undermine the union's bargaining power.

It is clear that there are situations in which the unions' interests diverge from the public's interest in transparency and good policing. But what may be less obvious is that the unions' interests can diverge from the interests of individual members. Esqueda's situation is another illustration of something the great economist Walter E. Williams pointed out: "labor," as such, does not have fully unified interests. Popular narratives paint labor disputes as conflicts between labor and management, but in reality, it is laborers competing against other laborers. Labor unions are cartels that reduce the supply of labor by keeping competitors out. And while W.H. Hutt's classic study of labor unions found that the threat of strike was the most significant source of social costs from unions, police unions illustrate that even when the threat to strike is removed, unions can still be a substantial source of social costs. In Sergeant Esqueda's case, we see how the threat to any officer who violates the blue wall can be as much a source of social costs, in this instance shielding officers who engage in criminal conduct from appropriate penalties when they fail to protect and serve citizens.

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Garet Garrett's "The Revolution Was"

Posted: 24 Nov 2021 12:00 PM PST

Garet Garrett was among the most important figures from the literary, political, and laissez-faire economic traditions of the Old Right, but his name is hardly known today. In 1938 he penned "The Revolution Was," a remarkable essay about FDR's revolutionary New Deal and, more importantly, how it was accomplished. FDR's revolution had already happened, though few Americans  understood it or grasped what the triumph of an administrative state would mean. The New Deal was a revolution "with the form," because the old trappings of constitutionalism and separation of powers remained intact. What had changed was the substance of American government, engineered through skillful propaganda and marked by radically increased control over the nation's capital and businesses. This essay is entirely relevant to our current politics, and explains with tremendous clarity the the ongoing revolution happening under our noses today. Ryan McMaken joins Jeff Deist for a deep exploration of the essay and its lessons for us today. 

You owe it to yourself to read this masterpiece.

Read Garet Garrett's prescient essay: Mises.org/GaretWas

The Inca Empire: An Indigenous Leviathan State

Posted: 24 Nov 2021 09:00 AM PST

One of the realities that nullifies persistent interpretations of the European colonization of the Americas as a cataclysm of subjugation is the existence of state exploitation in the precontact New World. As I have recently shown, many common Indians lived in banal slavery to a political class—the same servitude that every "citizen" of a state lives under, compelled to labor for the benefit of others, albeit with its own unique packaging and set of justifications. What this means is that there were also many politicians in the precontact world, with the same base lust for power that drives so many contemporary rulers.

When the agents of European states dropped anchor off the American littoral and proceeded to survey the interior, many were welcomed by various political leaders. These politicians were not naïvely offering hospitality. Indeed, the lack of women and children on these expeditions was often a conspicuous red flag to tread lightly.1 Rather chiefs often had expansionist ambitions and knew that the strangers' military support and trade goods could turn the local geopolitical tables in their favor.

So they strategically courted the newcomers, seeking alliances.2 Sixteenth- and seventeenth-century accounts of expeditions are peppered with reports of Indian leaders trying to extract political commitments from the leaders of the missions or otherwise trying to draw them into their military network.3 Europeans were not unilaterally repelled, not even when their mission was outright conquest, as in the case of the aptly named Spanish conquistadors, who were to claim land in the name of the crown, get the inhabitants to submit to the distant ruler's "protection," and baptize them to convert them into Catholics, a condition of their vassalage. (Hernán Cortés and his men, for example, gained many native allies as they marched to the Aztec imperial capital of Tenochtitlán in 1519.)

The related facts of precontact Indian states and the many diplomatic reconfigurations that followed contact are important, because in some cases they can offer insight on how native lands came under foreign rule. The political infrastructure of states—the reins—can make it easier for whoever can kill the head of state (the horseman) to jump in the saddle and rule (drive) the subject population (the horse). States, of course, can also be riven by internal strife, which can both aid and hinder an outside conquest. At the same time, politicians' thirst for geopolitical gains can drive them to forge alliances that place their people's future in the balance. And the larger and more centralized a state is, the more consequential a victory over it can be.

The Inca Empire is an excellent example of a Leviathan that brought about its own demise. Constituted in the 1430s, the empire had been continually expanding through conquest when Francisco Pizarro and his men came on the scene in 1530. It was a centralized state that extracted tribute and submission through a network of local control. Pizarro also found it wracked by a civil war that had begun in the mid-1520s, precipitated by a succession crisis. Not surprisingly, many subjugated peoples had taken the schism as an opportunity to reassert their autonomy as well, and fighting was widespread.4

As anthropologist Thomas C. Patterson explains, realizing what was going on, the agents of the Spanish crown "enmeshed themselves in the successional dispute, first supporting one faction and then another, and, more importantly, establishing close ties with powerful groups that were disenchanted with Inca rule." Although the Spanish had come out on top by 1533, installing a puppet emperor, they were able to loot the locals only via the established Inca machinery of extortion. The fighting would continue into the 1570s, and only when it ceased were the Spaniards finally able to fully liquidate the structure of the Inca state and supplant it with their own.5

Without a state apparatus binding together the fates of many of the people in the Andean region and creating conflicting interests that could be taken advantage of, the people might never have been conquered (again) or it would have at least been a much taller order. But as things stood, the pattern of the Inca Empire was to subjugate neighboring groups and use their increased resources to repeat the process.6

The empire was divided into a number of corporate landholdings, panaqas and ayllus, whose members were related, internally ranked, and held joint use-rights to land, water, herds, labor, and other resources. The ruling class came from the panaqas, each of which was constituted by a founding patriarch and the property he had amassed to support his descendants (land and servants). Each Inca (emperor) had to found his own panaqa, and the sitting Inca's panaqa was the top one, followed by his father's, his grandfather's, and proceeding in order of patrilineal proximity to the Inca. The people of the panaqas were considered Incas proper, and according to economist Louis Baudin, "most civil and military officials came from their ranks." But each panaqa was connected to an ayllu in or near Cuzco, the imperial capital.7

The people of the Cuzco ayllus were "Incas by privilege," or commoner Incas.8 These people supported the ruling class, providing mercenary services, filling midlevel bureaucratic posts, and acting as "retainers, henchmen, and friends to the lords, captains and servitors of the Inca" in exchange, of course, for a share of the rewards of imperial expansion. Accordingly, the Cuzco ayllus were exempt from tribute, along with the rest of the Inca class, and were part of the elite.9

Foreign ayllus, all beyond Cuzco, comprised the great subject class. These were the kinship-based landholdings of other indigenous peoples that had been absorbed by the empire. When the Incas conquered a nation, its traditional leaders—curacas—were left in place, becoming a part of the imperial apparatus. Curacas who did not cooperate with the state were replaced with puppet leaders. Here the Incas too were clever, plugging into the preexisting order and taking hold of whatever reins existed in these smaller polities to extend their power.10

Curacas ruled alongside local officials sent from Cuzco, who ensured that the ayllu met its tribute obligations and that the curaca did not try to organize a rebellion. The curaca himself had no tribute obligations, was given an Inca wife, had to visit the capital every few years or live there part time, and had to send his sons to Cuzco, where they would be inculcated with the ways and language (Quechua) of the Incas—and eventually come to serve the central state as lesser officials. As a token of their absorption and subjection, the conquered peoples' most sacred religious objects (wak'a) were seized, along with some priests to care for them, and taken to the capital. They were either enshrined in the Temple of the Sun (Coricancha) or in a temple established and maintained by the subject priests.11

Agents of the Inca state would quickly descend on a newly conquered people. They herded scattered Indians into villages. The group's lands and resources were surveyed and recorded, and with this information the emperor would decide what supplies to send out and what public works to undertake in the region. The Inca would also decide whether the frontier needed to be stabilized by settling loyal colonists there, by removing the whole local population inland or just "reactionary elements," or totally dispersing it among more subdued groups (and thereby liquidating the nation). Part of the group's lands and herds was nationalized to support the royal corporations, the state clergy, and the state more broadly. The people were forced to dig canals and build agricultural terraces, as well as a local temple to the sun god (Inti), the official deity, which had to be staffed by local aclla, prepubescent virgins who would spin, weave, prepare food, and brew chicha for the state. Each region also sent aclla to the capital annually, who would either be put in religious-state service there, sacrificed to the Sun, become wives of the Inca, or be given to other prominent men as wives.12

Tribute in the Inca Empire was paid in labor. Like cattle, everyone was neatly taken "stock" of in a census and divided into units of multiples of ten. Using that data, intimidation, and military force, men from twenty-five to fifty were impressed into the army, public works crews (mining, quarrying, guarding state warehouses, constructing buildings, et cetera), and even personal service to members of the political elite for part of the year—this was the mit'a, which the Spanish colonizers would adopt. The other tax was laboring on the state's stolen lands, growing potatoes, quinoa, and corn and caring for llama and alpaca herds. Each age group was assigned certain tasks. Curacas assigned state tasks and distributed the state-supplied raw materials needed to complete them, and there was rotation for the hardest work. People had to do the work of neighbors who could not complete it, whatever the reason. They also owed labor to their curacas. The rest of the time, commoners could finally work for their own subsistence on their household plot (tupu) within the ayllu, and people under twenty-five helped their parents.13

There was little way to escape the part-time slavery of the Inca Empire. There was no free travel. Government thugs were posted at every town and at bridges to make sure people did not leave without permission. People were forced to wear the unique garb of their natal communities so that those who might be travelling illegally could be identified and checked. Both subject people and elites were also moved around like pieces on a chessboard. They were resettled in underpopulated or unproductive areas for "efficiency" and during the process of "pacification," whether as colonists on the frontier (to stabilize the borderland and be teachers to the recalcitrant natives) or as untrustworthy rebels to the secure interior (to be watched over and remade as loyal subjects). At least the colonists and other elites got a temporary tax break for their trouble. Marriage and labor were compulsory for all, education limited to the elite, and resistance punished severely.14

With a system like this—of aggressive incorporation of unique neighboring societies—is it any wonder that it was a struggle for the Inca state to hold its domain, a patchwork of semiacculturated, unwilling denizens, together in 1530? With a system like this, where so much power hinged on becoming the Inca or being connected to him and the royal caste, is it surprising that Pizarro and his men were able to find an in and take over through regime change? Is it surprising that the colonial government proceeded to extract forced labor from Andean people through the encomienda and mit'a labor taxes with the aid of curacas and other elites?15 No. Centralization makes populations vulnerable to conquest, both because of their internal disunity and because they're all yoked together politically. Millions of lives hang in the balance. The state apparatus must be thoroughly shattered and decentralized, both to mitigate domestic tyranny and protect ourselves from regime change conquest. Hopefully the subjects of the large states of our day will see this and start cleaving off.

  • 1. On women as symbols of peace in Hispano-Indian interactions, see, for example, Juliana Barr, Peace Came in the Form of a Woman: Indians and Spaniards in the Texas Borderlands (Chapel Hill: University of North Carolina Press, 2007), esp. p. 13: "Indian peoples in [the Texas borderlands] had long associated women with peace—Cabeza de Vaca's experiences in the sixteenth century indicated how native women moved freely across social and political boundaries as mediators and emissaries."
  • 2. The many interindigenous rivalries that Europeans had to navigate are well documented, for example, in Michael A. McDonnell, Masters of Empire: Great Lakes Indians and the Making of America (New York: Hill and Wang, 2015); and Richard White, The Middle Ground: Indians, Empires, and Republics in the Great Lakes Region, 1650–1815, 20th anniversary ed. (1991; Cambridge: Cambridge University Press, 2011).
  • 3. One good example is Jacques Cartier's experience. See Jacques Cartier, A Shorte And briefe narration of the two Navigations and Discoveries to the Northweast partes called Newe Fraunce…., trans. John Florio (London, 1580). Original: Brief recit, et succinte narration, de la navigation faicte es ysles du Canada, Hochelage et Saugenay et autres, avec particulieres meurs, langaige et cerimonies des habitans d'icelles: fort delectable à veoir (Paris, 1545).
  • 4. Thomas C. Patterson, The Inca Empire: The Formation and Disintegration of a Pre-capitalist State (New York: Berg, 1991), pp. 2–3.
  • 5. Patterson, The Inca Empire, pp. 3–4, 120–26, quote on p. 3.
  • 6. Patterson, The Inca Empire, p. 59.
  • 7. Patterson, The Inca Empire, pp. 55–56, 52, and 86–87; and Louis Baudin, A Socialist Empire: The Incas of Peru, trans. Katherine Woods and ed. Arthur Goddard (Princeton, NJ: D. Van Nostrand, 1961), pp. 46–47, 57–58, and 61.
  • 8. This term comes from Garcilasco de la Vega's well-known account: Primera Parte De Los Comentarios Reales, Que Tratan Del Origen De Los Yncas, Reyes Que Fueron Del Peru, De Su Idolatria, Leyes, y gobierno en paz y en guerra…. (Lisbon, 1609), bk. 7, chap. 1.
  • 9. Sebastian Lorente, Historia antigua del Perú (Lima, 1860), pt. 2, bk. 3, chap. 5, cited in Baudin, A Socialist Empire, p. 47; Patterson, The Inca Empire, pp. 55 and 65; and Baudin, A Socialist Empire, p. 142.
  • 10. Patterson, The Inca Empire, pp. 66 and 78; and Baudin, A Socialist Empire, pp. 37 and 50.
  • 11. Patterson, The Inca Empire, pp. 65–65, 76, 78–79; and Baudin, A Socialist Empire, pp. 49–50, 135–36.
  • 12. Patterson, The Inca Empire, pp. 77–78, 81–83, 99; and Baudin, A Socialist Empire, p. 62–63, 65 and 132.
  • 13. Patterson, The Inca Empire, pp. 76–77 and 153–55; and Baudin, A Socialist Empire, pp. 102–03, 128–29, 140–41.
  • 14. Patterson, The Inca Empire, pp. 77–78, 103; and Baudin, A Socialist Empire, pp. 24, 49, 100, 129, 130–34, 136.
  • 15. Patterson, The Inca Empire, pp. 132, 136, 142–44, 146, 152–56.

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Antitrust Regulation Assumes Bureaucrats Know the "Correct" Amount of Competition

Posted: 24 Nov 2021 08:00 AM PST

The process of learning what's most efficient and profitable includes merging with competitors and taking over different stages of the supply chain—all tactics that would be considered in violation of current antitrust laws.

Original Article: "Antitrust Regulation Assumes Bureaucrats Know the "Correct" Amount of Competition"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Is Price Stability Really a Good Thing?

Posted: 24 Nov 2021 07:15 AM PST

Contrary to popular thinking, there is no such thing as a price level that should be stabilized by the central bank in order to promote economic prosperity.

Original Article: "Is Price Stability Really a Good Thing?"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Menger the Revolutionary

Posted: 24 Nov 2021 07:00 AM PST

"There never lived at the same time," wrote Ludwig von Mises, "more than a score of men whose work contributed anything essential to economics." One of those men was Carl Menger (1840–1921), Professor of Political Economy at the University of Vienna and founder of the Austrian school of economics.

Menger's pathbreaking Grundsätze der Volkswirtschaftslehre [Principles of Economics], published in 1871, not only introduced the concept of marginal analysis, it presented a radically new approach to economic analysis, one that still forms the core of the Austrian theory of value and price.

Unlike his contemporaries William Stanley Jevons and Léon Walras, who independently developed concepts of marginal utility during the 1870s, Menger favored an approach that was deductive, teleological, and, in a fundamental sense, humanistic. While Menger shared his contemporaries' preference for abstract reasoning, he was primarily interested in explaining the real-world actions of real people, not in creating artificial, stylized representations of reality.

Economics, for Menger, is the study of purposeful human choice, the relationship between means and ends. "All things are subject to the law of cause and effect," he begins his treatise. "This great principle knows no exception."

Jevons and Walras rejected cause and effect in favor of simultaneous determination, the idea that complex systems can be modeled as systems of simultaneous equations in which no variable can be said to "cause" another. This has become the standard approach in contemporary economics, accepted by nearly all economists but the followers of Carl Menger.

Menger sought to explain prices as the outcome of the purposeful, voluntary interactions of buyers and sellers, each guided by their own, subjective evaluations of the usefulness of various goods and services in satisfying their objectives (what we now call marginal utility, a term later coined by Friedrich von Wieser). Trade is thus the result of people's deliberate attempts to improve their well-being, not an innate "propensity to truck, barter, and exchange," as suggested by Adam Smith.

The exact quantities of goods exchanged—their prices, in other words—are determined by the values individuals attach to marginal units of these goods. With a single buyer and seller, goods are exchanged as long as participants can agree on an exchange ratio that leaves each better off than he was before.

In a market with many buyers and sellers, the price reflects the valuations of the buyer least willing to buy and the seller least willing to sell, what Böhm-Bawerk would call the "marginal pairs." With each voluntary exchange, then, the gains from trade are momentarily exhausted, regardless of the exact structure of the market. Menger's highly general explanation of price formation continues to form the core of Austrian microeconomics.

Menger's analysis has been labeled "causal-realistic," partly to emphasize the distinction between Menger's approach and that of the neoclassical economists. Besides its focus on causal relations, Menger's analysis is realistic in the sense that he sought not to develop formal models of hypothetical economic relationships, but to explain the actual prices paid every day in real markets. The classical economists had explained that prices are the result of supply and demand, but they lacked a satisfactory theory of valuation to explain buyers' willingness to pay for goods and services.

Rejecting value subjectivism, the classical economists tended to treat demand as relatively unimportant and concentrated on hypothetical "long-run" conditions, in which "objective" characteristics of goods—most importantly, their costs of production—would determine their prices. The classical economists also tended to group factors of production into broad categories—land, labor, and capital—leaving them unable to explain the prices of discrete, heterogeneous units of these factors. Menger realized that the actual prices paid for goods and services reflect not some objective, "intrinsic" characteristics, but rather the uses to which discrete units of goods and services can be put as perceived, subjectively, by individual buyers and sellers.

The Principles was written as an introductory volume in a proposed multi-volume work. Unfortunately, those later volumes were never written. Menger did not explicitly develop the concept of opportunity cost, he did not extend his analysis to explain the prices of the factors of production, and he did not develop a theory of monetary calculation. Those advances would come later from his students and disciples Eugen von Böhm-Bawerk, Friedrich von Wieser, J.B. Clark, Philip Wicksteed, Frank A. Fetter, Herbert J. Davenport, Ludwig von Mises, and F.A. Hayek. Many of the most important ideas are implicit in Menger's analysis, however.

For example, his distinction among goods of lower and higher "orders," referring to their place in the temporal sequence of production, forms the heart of Austrian capital theory, one of its most distinctive and important elements. Indeed, Menger emphasizes the passage of time throughout his analysis, an emphasis that has not yet made its way into mainstream economic theorizing.           

While most contemporary economics treatises are turgid and dull, Menger's book is remarkably easy to read, even today. His prose is lucid, his analysis is logical and systematic, his examples clear and informative. The Principles remains an excellent introduction to economic reasoning and, for the specialist, the classic statement of the core principles of the Austrian school.

As Hayek writes in his Introduction, the significance of the Austrian school is "entirely due to the foundations laid by this one man." However, while Menger is universally recognized as the Austrian school's founder, his causal-realistic approach to price formation is not always appreciated, even within contemporary Austrian economics.

Karen Vaughn, for example, characterizes Menger's price theory as essentially neoclassical, arguing that his distinctive Austrian contribution is "his many references to problems of knowledge and ignorance, his discussions of the emergence and function of institutions, the importance of articulating processes of adjustment, and his many references to the progress of mankind."

These issues, which attracted considerable attention during the "Austrian revival" of the 1970s, appear in Menger's 1883 book Untersuchungen über die Methode der Socialwissenschaften und der politischen Oekonomie insbesondere [Investigations into the Method of the Social Sciences with Special Reference to Economics].

They are largely absent from the Principles, however. The book that founded the Austrian school focuses on the essence of value, exchange, and price, not disequilibrium or tacit knowledge or radical subjectivism.

Another remarkable feature of Menger's contribution is that it appeared in German, while the then-dominant approach in the German-speaking world was that of the "younger" German historical school, which eschewed theoretical analysis altogether in favor of inductive, ideologically driven, historical case studies. The most accomplished theoretical economists, the British classicals such as J.S. Mill, were largely unknown to German-speaking writers.

As Hayek notes, "In England the progress of economic theory only stagnated. In Germany a second generation of historical economists grew up who had not only never become really acquainted with the one well-developed system of theory that existed, but had also learnt to regard theoretical speculations of any sort as useless if not positively harmful." Menger's approach—haughtily dismissed by the leader of the German historical school, Gustav Schmoller, as merely "Austrian," the origin of that label—led to a renaissance of theoretical economics in Europe and, later, in the US.

In short, the core concepts of contemporary Austrian economics—human action, means and ends, subjective value, marginal analysis, methodological individualism, the time structure of production, and so on—along with the Austrian theory of value and price, which forms the heart of Austrian analysis, all flow from Menger's pathbreaking work. As Joseph Salerno has written, "Austrian economics always was and will forever remain Mengerian economics."

This essay originally appeared in the Free Market, February 2007.

Smallpox: The Historical Myths behind Mandatory Vaccines

Posted: 24 Nov 2021 04:00 AM PST

Throughout the corona "pandemic" the Holy Grail of public health officials has been vaccination: only by vaccinating enough people—first the elderly and infirm, then all adults, and now even children—can the nefarious virus be beaten. As vaccination has proven less than wholly successful in preventing the spread of coronavirus, with studies showing rapidly declining protection from the vaccines, governments have doubled down, introducing not only "booster" shots for the vaccinated but also suggesting that the unvaccinated must be pressured and, if necessary, compelled to accept the vaccine.

Rising skepticism of the efficacy of these policies, let alone their morality, is understandable. However, it is not surprising that the medical establishment of modern states is wedded to the idea of vaccination as a panacea for disease prevention. This is, in fact, something close to the founding myth of public health: mandatory vaccination is what saved the world from the great scourges of the past, and it was introduced by heroic doctors in the face of much opposition from the egoistic, the stupid, and the establishment of silly theologians who thought that diseases were the will of God and that suffering humanity simply had to accept it. The core of this myth is the case of smallpox.

The Official History of Smallpox

The legend of smallpox and its eradication as told by most textbooks and virtually the whole medical establishment goes something like this: from about the sixteenth century, Europe was ravaged by periodic epidemics of smallpox (variola major), a disease that caused pustules to erupt all over the skin and very often, in approximately a fifth of all cases, led to death. Those who survived were often scarred for life (pockmarked). Early attempts to combat it through "variolation," i.e., inoculation of healthy adults with puss from infected individuals, proved ineffective—while those who survived this treatment were immune, the practice also served to keep the disease alive and circulating in the population.1

Then, in 1796, the heroic Dr. Edward Jenner made the crucial discovery: anecdotal evidence suggested that milkmaids did not contract smallpox and Dr. Jenner surmised that contact with cattle had exposed them to cowpox (variola vaccinia), a disease that was much milder in humans. He therefore experimented with inoculating children with cowpox, and when he later exposed the same to smallpox through variolation, they proved to be immune. The medical establishment, in the form of the Royal Society, dismissed the good Dr. Jenner, but nothing daunted, he proceeded to promote his new treatment of "vaccination" and quickly received support from enlightened doctors and statesmen, who sponsored his scheme. Thousands were vaccinated in Great Britain within a couple of years, and the treatment spread to other European countries. Childhood vaccination was made mandatory in the "enlightened" despotisms of Bavaria (1807), Prussia (1835), Denmark (1810), and Sweden (1814) in short order and promoted everywhere else if not exactly imposed. Eventually, the English too would impose mandatory vaccination in spite of early opposition from people such as the farmer, journalist, and all-round Chad2 William Cobbett:

I was always, from the very first mention of the thing, opposed to the Cow-Pox scheme…. I, therefore, as will be seen in the pages of the Register of that day, most strenuously opposed the giving of twenty thousand pounds to JENNER out of the taxes, paid in great part by the working people….

…. This nation is fond of quackery of all sorts; and this particular quackery having been sanctioned by King, Lords and Commons, it spread over the country like a pestilence borne by the winds … [I]n hundreds of instances, persons cow-poxed by JENNER HIMSELF, have taken the real small-pox afterwards, and have either died from the disorder, or narrowly escaped with their lives!3

Reactionaries like Cobbett spreading misinformation notwithstanding, vaccination was a great success: the death toll of the smallpox fell drastically across Europe in the first decades of the nineteenth century, despite a few setbacks such as epidemics in the 1860s, the 1870s, and the 1880s. These, of course, simply proved the necessity of revaccination and that the minority of vaccine resisters had to be persuaded and cajoled to take the vaccine. If anyone doubts this, the experience of the Franco-Prussian War, fought in the middle of a Europe-wide smallpox pandemic, provides conclusive proof: the Prussian army, virtually all of whose soldiers had been vaccinated, proved highly resistant to the disease, while the French recruits, often drawn from benighted Catholic families skeptical of the vaccine, fell like flies.

Finally, the campaign led by Donald Henderson to eradicate smallpox worldwide through vaccination proved a great success. In 1980 the World Health Organization declared the disease eradicated.

Realities of Smallpox

The careful reader may have concluded from some injudicious remarks in the previous section, that I do not fully accept this story. Indeed, while some of the major facts are correct—smallpox was a major killer, and it did disappear after the global campaign—the role of vaccination and especially of mandatory vaccination is greatly exaggerated. Two simple facts show this:

  1. The decline in mortality from smallpox across Europe began in 1800, before the vaccine was widely distributed and before it was made mandatory anywhere, and it is therefore simply impossible to credit this decline to Jenner and the vaccine.
  2. There were epidemics in practically every decade thereafter, but in the 1890s fatality fell through the floor—by the early 1900s, smallpox was practically indistinguishable from chicken pox. The reason was that a new strain of the virus, variola minor, developed and outcompeted the lethal strain.

The first point is easily seen in Henderson's own graph:4

Similar graphs could be replicated for all European countries.5 The idea that vaccination caused the decline is obviously untenable, as the practice of vaccination did not spread that widely instantly. Early compulsory vaccination (Bavaria in 1807, Denmark in 1810) also came after the decline.

If the decline in overall mortality is not due to the vaccine, did it not at least limit epidemics when they did occur? The Franco-Prussian War is the clearest indicator of this, as the unvaccinated French succumbed while the Prussians remained healthy. This was and is a main piece of evidence for the efficacy of the vaccine. The only problem with it is that it's entirely false.

First, while the Prussian army did not experience a high mortality rate from smallpox, there was a deadly epidemic in Prussia—in fact, Prussia was the country hardest hit in Europe, with a total death toll above sixty-nine thousand. Perhaps young men did not succumb, but the other Prussians did not prove as hardy. Second, while it is true that there was no compulsory vaccination in France and that rates of vaccination were low, the French soldiers were vaccinated upon enrollment. If anything, the experience of the Franco-Prussian War proved that vaccination was powerless against the epidemic of 1870–71.6

The second point is widely admitted, although Henderson still insinuates that vaccine availability was an important factor to the eradication of smallpox in Europe. Perhaps the argument could be made, though I have nowhere seen it, that vaccination led to the development of variola minor, which eventually displaced the serious strain. However, in order to see how vaccination was unimportant to the end of European smallpox, we need to return to where it all started—England.

The English Experience

While the English were initially enthusiastic for vaccination, compulsion was quickly needed to spread the practice of infant vaccination. The Act of 1840 established payment of public vaccinators out of the rates (i.e., local taxes), and the Acts of 1853, 1867, and 1871 established a system of compulsory vaccination. Parents who refused to have their children vaccinated were punished by heavy fines and imprisonment.

While the English generally complied with vaccine requirements, the compulsory acts led to the establishment of a National Anti-Compulsory Vaccination League. One important center of this league was the large industrial town of Leicester.7 It was only after the epidemic of 1871–72 that resistance to compulsion began to spread: parents asked, not unreasonably, why they should subject their children to the risks of vaccination when they died in the epidemic anyway? The antivaccination agitation culminated with a large demonstration in Leicester in March 1885 with participants from all over the country and many expressions of sympathy from abroad.8 The demonstrators carried banners with slogans such as "Liberty Is Our Birthright, and Liberty We Demand" and "The Three Pillars of Vaccination—Fraud, Force, and Folly."

The antivaccinationists had successfully acquired control of the Corporation of Leicester in 1882, although the Board of Guardians enforcing vaccination was independent of the town council. At the same time, noncompliance with infant vaccination spread: by the mid-1880s, less than half of all infants in Leicester were vaccinated and the trend continued. In 1886, the Board of Guardians in Leicester stopped enforcement of the Vaccination Acts. The citizens of Leicester through a campaign of nonviolent protest and noncompliance had effectively nullified the Vaccination Acts. We might expect that when the next epidemic arrived in England, in 1892–94, Leicester would be particularly hard hit, but not so: only 357 cases, or 20.5 per 10,000, occurred in Leicester as compared to 125.3 and 144.2 per 10,000 in the well-vaccinated towns of Warrington and Sheffield, respectively.9 The fatality rate in Leicester was also low, at only 21 deaths, or 5.8 percent.

That Leicester did not become a plague spot is not simply due to the inefficacy of vaccination. Rather, the town developed a system of dealing with smallpox, the Leicester Method, which subsequently spread to the rest of England from about 1900.

The Leicester Method was organized by Dr. J. W. Crane Johnston, assistant medical officer from 1877–80 and medical officer from 1880–85. Johnston's method was simple: immediate notification when a case of smallpox was discovered, admission to the hospital of the patient, and quarantine of the closest contacts. Notification had already been established, as the Town Council Sanitary Committee in 1876 decided that 2 s. 6 d. should be paid to any case of smallpox, scarlet fever, or erysipelas, who would consent to hospital admission.10 The town council, and the antivaccinationists generally, also stressed the importance of sanitation, good hygiene, and healthy living.

So successful did the Leicester experience prove that other English towns started to copy it and notification became national law in 1899. Meanwhile, vaccination rates steadily declined, but despite epidemics in 1892–94 and 1901 nothing like the old fatality rates reoccurred. Dr. Millard, who became medical officer in Leicester in 1901, spoke frequently about both the benefits of the Leicester Method and the dangers of childhood vaccination, as modified smallpox in a vaccinated adult could be a hidden source of infection and thus place the whole community at risk.

In 1948, compulsory smallpox vaccination was officially abolished, but by then the entire English population was de facto unvaccinated—and untouched by smallpox. Taking stock of the situation in 1946, Dr. G. K. Bowes said:

Its decline in the later decades of the nineteenth century was at one time almost universally attributed to vaccination, but it is doubtful how true this is. Vaccination was never carried out with any degree of completeness, even among infants, and was maintained at a high level for a few decades only. There was therefore always a large proportion of the population unaffected by the vaccination laws. Revaccination affected only a fraction. At present the population is largely entirely unvaccinated. Members of the public health service now flatter themselves that the cessation of such outbreaks as do occur is due to their efforts. But is this so? The history of the rise, the change in age incidence, and the decline of smallpox rather lead to the conclusion that we may here have to do with a natural cycle of disease like plague, and that smallpox is no longer a natural disease for this country.11

Whatever the effects of vaccination, it is clear that it was not the cause of the disappearance of smallpox from England or Europe.12 It may have contributed to the eradication of the disease in the rest of the world, but in Europe and North America, it was clearly unnecessary.

Since the disease has been declared officially eradicated, the original cowpox vaccine no longer forms part of the childhood vaccination program in any country.

Conclusion

Public health and vaccination programs rest on one central story: that they were crucial to the elimination of one of history's greatest killers, smallpox. As we've seen, this is not true: vaccination was never universal across Europe and North America,13 and the decline in mortality and the disease disappeared at the same time everywhere in the Western world, despite whatever variations in public health policies there were. Even countries such as England that had de facto given up on compulsory vaccination were rid of the disease.14 As Ludwig von Mises, and the liberal tradition before him, argued ideas rule the world. The official history of smallpox is a main support for the policies of modern health authorities. If it is exposed as largely mythical, the central ideological justification for compulsory vaccination falls by the wayside.

As well as putting the lie to the official history of smallpox, the English experience shows how local populations imbued with liberal principles15 effectively nullified public health measures dictated by the central government. For those combatting coercive public health measures today, they can in this too provide inspiration.

  • 1. See Donald A. Henderson, Smallpox: The Death of a Disease (New York: Prometheus Books, 2013), EPUB.
  • 2. One example to suggest Cobbett's character: when in exile in Philadelphia in the 1790s for angering the British military establishment, Cobbett ran a bookshop in whose window he proudly displayed a portrait of George III and published much loyalist literature.
  • 3. William Cobbett, Advice to Young Men, and (Incidentally) to Young Women, in the Middle and Higher Ranks of Life. In a Series of Letters Addressed to a Youth, a Bachelor, a Lover, a Husband, a Father, a Citizen, or a Subject (1829; repr. Oxford: Horace Hart, 1906; Project Gutenberg, 2005), pp. 261–63.
  • 4. Henderson, Smallpox, figure 4.
  • 5. See the data in W. Troesken, The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection (Chicago: The University of Chicago Press, 2015), p. 77. Professor Troesken supports the standard narrative, but his data clearly shows that it cannot be true.
  • 6. Encyclopedia Britannica, 9th ed., vol. 24 (1888), s.v. "vaccination."
  • 7. Stuart M. F. Fraser, "Leicester and Smallpox: The Leicester Method," Medical History 24 (1980): 315–32.
  • 8. See S. Humphries and R. Bystrianyk, Dissolving Illusions: Disease, Vaccines, and the Forgotten History (self-pub., 2013), chap. 6, for an account of the Great Demonstration.
  • 9. Fraser, "Leicester and Smallpox," 322.
  • 10. Ibid., 317.
  • 11. G.K. Bowes, "Epidemic Disease: Past, Present and Future," Journal of the Royal Sanitary Institute 66, no. 3 (1946): 174–79, esp. 176. According to Arthur Allen, Vaccine: The Controversial History of Medicine's Greatest Lifesaver (New York: W.W. Norton, 2007), p. 69, the vaccination rate in England was 50 percent in 1914 and 18 percent in 1948.
  • 12. As an aside, it may be mentioned that the low fatality rates touted in support of compulsory vaccination are only in evidence in Scandinavia and (from the late nineteenth century) Germany. This seems a tender reed on which to support this core measure of public health.
  • 13. Troesken, Pox of Liberty, details the American case. He overstates the impotence of national government, however, as mandatory laws on the state and local level can be just as effective as federal legislation.
  • 14. While I have not found numbers for vaccine compliance for other European countries, I have in fact become extremely skeptical of the idea that vaccination was universal, even in the Scandinavian countries. However, as should be clear from this essay, even accepting the record of Germany or Denmark as true, it does not prove that vaccination was necessary, or even contributed to, the end of smallpox in Europe.
  • 15. Fraser, Leicester and Smallpox, argues that the antivaccinationists were a coalition of artisans and laborers objecting to vaccination and middle-class people objecting to compulsion. Leicester was also a center of religious nonconformism.

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With Low Vaccination Rates, Africa's Covid Deaths Remain Far below Europe and the US

Posted: 23 Nov 2021 12:15 PM PST

Since the very beginning of the covid panic, the narrative has been this: implement severe lockdowns or your population will experience a bloodbath. Morgues will be overwhelmed, the death total toll will be astounding. On the other hand, we were assured those jurisdictions that do lock down would see only a fraction of the death toll.

Then, once vaccines became available, the narrative was modified to "Get shots in arms and then covid will stop spreading. Those countries without vaccines, on the other hand, will continue to face mass casualties."

The lockdown narrative, of course, has already been thoroughly overturned. Jurisdictions that did not lock down or adopted only weak and short lockdowns ended up with covid death tolls that were either similar to—or even better than—death tolls in countries that adopted draconian lockdowns. Lockdown advocates said locked-down countries would be overwhelmingly better off. These people were clearly wrong. 

Undaunted by the increasing implausibility of the lockdown narrative, the global health bureaucrats are nonetheless doubling down on forced vaccines—as we now see in Austria—and we continue to be assured that only countries with high vaccination rates can hope to avoid disastrous covid outcomes. 

Yet, the experience in sub-Saharan Africa calls both these narratives into question: Africa's numbers have been far, far lower than the experts warned would be the case. 

For example, the AP reported this week that in spite of low vaccination rates, Africa has fared better than most of the world:

[T]here is something "mysterious" going on in Africa that is puzzling scientists, said Wafaa El-Sadr, chair of global health at Columbia University. "Africa doesn't have the vaccines and the resources to fight COVID-19 that they have in Europe and the U.S., but somehow they seem to be doing better," she said….

Fewer than 6% of people in Africa are vaccinated. For months, the WHO has described Africa as "one of the least affected regions in the world" in its weekly pandemic reports.

Yet disaster for Africa has long been predicted for several reasons even beyond the availability of vaccines. For instance, it is known that lockdowns are especially impractical in the poorest parts of the world. This is because populations in places with undeveloped economies can't simply sit at home and live off savings or debt. Rather, these people must go out into the world and earn a living on a day-to-day basis. Starvation is the alternative. Moreover, much of this work is done in the informal economy, so enforcing lockdowns becomes especially difficult.

afr
Source: Our World in Data (Confirmed Deaths per Million, November 19, 2021;  Share of People Vaccinated against Covid-19, November 19, 2021).

It was also assumed covid would be especially deadly in Africa due to the fact many large households live in small housing units.

But that "conventional wisdom" flies in the face of the reality of covid in Africa, which is that there have been fewer deaths.

The "experts" have groped around, looking for possible explanations.

Some sources, for example, insist that the low death totals are only an artifact of incomplete reporting on covid infections and that "a lack of good qualitative data was the issue."

But Richard Wamai at Northeastern University rejects the claim it's all about case reporting, and says that "local systems for reporting deaths in Africa make it difficult to hide COVID-19 casualties." In a paper for the International Journal of Environmental Research and Public Health, Wamai and his coauthors conclude, "[T]here is no evidence that COVID-19 mortality data is less accurately reported in Africa than elsewhere" and "While the true picture of infections and mortality in the continent has yet to fully emerge, the quality of data for other diseases, such as HIV/AIDS, indicates that Africa has the capacity to collect and report valid disease surveillance data."

In any case, the World Health Organization reports that covid deaths in Africa make up only 2.9 percent of covid deaths, while Africa's population is 16 percent of the global total. Africa's covid total could double or triple, and Africa would still be faring far better than Europe and the Americas.

Wamai et al. also note that at this point "[i]t is likely that SARS-CoV-2 has already been widely disseminated through Africa…. If so, widespread infection is likely to also result in widespread natural immunity."

In other words, continued claims by health officials—both in Africa and elsewhere—that mass death is right around the corner with the "next wave" look increasingly implausible. 

It looks increasingly likely that the lack of covid mortality in Africa is not due to a data issue nor a situation in which covid has been "contained" up until now. So then why is Africa doing so much better than the wealthy West?

Naturally, the advocates of forced lockdowns and coerced vaccines would prefer to ignore this issue altogether, but the undeniable reality of Africa's experience has forced mainstream researchers to publicly admit the many ways that many factors can explain covid's prevalence beyond vaccination rates and mask mandates.

For instance, mentioning that obesity is an important factor in covid mortality has in the past been likely to get one savaged in the media for "fat shaming." Yet the Africa situation has forced the well informed to admit that yes, obese populations clearly suffer more from covid. In Africa, not surprisingly, we find that obesity rates are far below those found in North America and Europe.

Other possible explanations forwarded as reasons for Africa's situation include past exposure to other coronaviruses, youthful populations, fewer patients lacking zinc and vitamin D, past use of the Bacillus Calmette-Guérin vaccination, climate, genetic background, and parasite load. In addressing the African "enigma" one group of researchers in the journal Colombia medica dared even suggest it's possible—although not conclusively shown at this point—that "a mass public health preventive campaign against COVID-19 may have taken place, inadvertently, in some African countries with massive community ivermectin use."

africa
Source: "Global Obesity Levels," ProCon.org, last modified March 27, 2020; Our World in Data (Share of People Vaccinated against Covid-19, November 19, 2021).

In the West, however, the media drumbeat around covid has consistently been "Shut up, stay home, get jabbed, and stop doubting the experts on forced vaccines." Fortunately, however, the African situation has forced many researchers to ask inconvenient questions.

In fact, it's amazing Africa has not been overcome by mass death considering that covid lockdowns and covid "mitigation" measures have contributed to the impoverishment and mass starvation on the continent. Or as Germany's DW News puts it, "Measures put in place to slow the spread of the novel coronavirus are pushing millions of people in Africa into severe hunger." And as Wamai notes, "[S]ome of the excess deaths in Africa "can be attributed not to the disease, but to lockdown measures that cut off access to medical care for other illnesses."

But Africa hasn't gotten the bloodbath that was promised, and as one Nigerian put it, "They said there will be dead bodies on the streets and all that, but nothing like that happened."

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Rethinking Churchill

Posted: 23 Nov 2021 12:15 PM PST

Churchill as Icon

When, in a very few years, the pundits start to pontificate on the great question: "Who was the Man of the Century?" there is little doubt that they will reach virtually instant consensus. Inevitably, the answer will be: Winston Churchill. Indeed, Professor Harry Jaffa has already informed us that Churchill was not only the Man of the Twentieth Century, but the Man of Many Centuries.1

In a way, Churchill as Man of the Century will be appropriate. This has been the century of the State—of the rise and hypertrophic growth of the welfare-warfare state—and Churchill was from first to last a Man of the State, of the welfare state and of the warfare state. War, of course, was his lifelong passion; and, as an admiring historian has written: "Among his other claims to fame, Winston Churchill ranks as one of the founders of the welfare state."2 Thus, while Churchill never had a principle he did not in the end betray,3 this does not mean that there was no slant to his actions, no systematic bias. There was, and that bias was towards lowering the barriers to state power.

To gain any understanding of Churchill, we must go beyond the heroic images propagated for over half a century. The conventional picture of Churchill, especially of his role in World War II, was first of all the work of Churchill himself, through the distorted histories he composed and rushed into print as soon as the war was over.4 In more recent decades, the Churchill legend has been adopted by an internationalist establishment for which it furnishes the perfect symbol and an inexhaustible vein of high-toned blather. Churchill has become, in Christopher Hitchens's phrase, a "totem" of the American establishment, not only the scions of the New Deal, but the neo-conservative apparatus as well—politicians like Newt Gingrich and Dan Quayle, corporate "knights" and other denizens of the Reagan and Bush Cabinets, the editors and writers of the Wall Street Journal, and a legion of "conservative" columnists led by William Safire and William Buckley. Churchill was, as Hitchens writes, "the human bridge across which the transition was made" between a noninterventionist and a globalist America.5 In the next century, it is not impossible that his bulldog likeness will feature in the logo of the New World Order.

Let it be freely conceded that in 1940 Churchill played his role superbly. As the military historian, Major-General J.F.C. Fuller, a sharp critic of Churchill's wartime policies, wrote: "Churchill was a man cast in the heroic mould, a berserker ever ready to lead a forlorn hope or storm a breach, and at his best when things were at their worst. His glamorous rhetoric, his pugnacity, and his insistence on annihilating the enemy appealed to human instincts, and made him an outstanding war leader."6 History outdid herself when she cast Churchill as the adversary in the duel with Hitler. It matters not at all that in his most famous speech—"we shall fight them on the beaches … we shall fight them in the fields and in the streets"—he plagiarized Clemenceau at the time of the Ludendorff offensive, that there was little real threat of a German invasion or, that, perhaps, there was no reason for the duel to have occurred in the first place. For a few months in 1940, Churchill played his part magnificently and unforgettably.7

Opportunism and Rhetoric

Yet before 1940, the word most closely associated with Churchill was "opportunist."8 He had twice changed his party affiliation—from Conservative to Liberal, and then back again. His move to the Liberals was allegedly on the issue of free trade. But in 1930, he sold out on free trade as well, even tariffs on food, and proclaimed that he had cast off "Cobdenism" forever.9 As head of the Board of Trade before World War I, he opposed increased armaments; after he became First Lord of the Admiralty in 1911, he pushed for bigger and bigger budgets, spreading wild rumors of the growing strength of the German Navy, just as he did in the 1930s about the buildup of the German Air Force.10 He attacked socialism before and after World War I, while during the War he promoted war-socialism, calling for nationalization of the railroads, and declaring in a speech: "Our whole nation must be organized, must be socialized if you like the word."11 Churchill's opportunism continued to the end. In the 1945 election, he briefly latched on to Hayek's Road to Serfdom, and tried to paint the Labour Party as totalitarian, while it was Churchill himself who, in 1943, had accepted the Beveridge plans for the post-war welfare state and Keynesian management of the economy. Throughout his career his one guiding rule was to climb to power and stay there.

There were two principles that for a long while seemed dear to Churchill's heart. One was anti-Communism: he was an early and fervent opponent of Bolshevism. For years, he—very correctly—decried the "bloody baboons" and "foul murderers of Moscow." His deep early admiration of Benito Mussolini was rooted in his shrewd appreciation of what Mussolini had accomplished (or so he thought). In an Italy teetering on the brink of Leninist revolution, Il Duce had discovered the one formula that could counteract the Leninist appeal: hypernationalism with a social slant. Churchill lauded "Fascismo's triumphant struggle against the bestial appetites and passions of Leninism," claiming that "it proved the necessary antidote to the Communist poison."12

Yet the time came when Churchill made his peace with Communism. In 1941, he gave unconditional support to Stalin, welcomed him as an ally, embraced him as a friend. Churchill, as well as Roosevelt, used the affectionate nickname, "Uncle Joe"; as late as the Potsdam conference, he repeatedly announced, of Stalin: "I like that man."13 In suppressing the evidence that the Polish officers at Katyn had been murdered by the Soviets, he remarked: "There is no use prowling round the three year old graves of Smolensk."14 Obsessed not only with defeating Hitler, but with destroying Germany, Churchill was oblivious to the danger of a Soviet inundation of Europe until it was far too late. The climax of his infatuation came at the November, 1943, Tehran conference, when Churchill presented Stalin with a Crusader's sword.15 Those who are concerned to define the word "obscenity" may wish to ponder that episode.

Finally, there was what appeared to be the abiding love of his life, the British Empire. If Churchill stood for anything at all, it was the Empire; he famously said that he had not become Prime Minister in order to preside over its liquidation. But that, of course, is precisely what he did, selling out the Empire and everything else for the sake of total victory over Germany.

Besides his opportunism, Churchill was noted for his remarkable rhetorical skill. This talent helped him wield power over men, but it pointed to a fateful failing as well. Throughout his life, many who observed Churchill closely noted a peculiar trait. In 1917, Lord Esher described it in this way:

He handles great subjects in rhythmical language, and becomes quickly enslaved to his own phrases. He deceives himself into the belief that he takes broad views, when his mind is fixed upon one comparatively small aspect of the question.16

During World War II, Robert Menzies, who was the Prime Minister of Australia, said of Churchill: "His real tyrant is the glittering phrase—so attractive to his mind that awkward facts have to give way."17 Another associate wrote: "He is … the slave of the words which his mind forms about ideas…. And he can convince himself of almost every truth if it is once allowed thus to start on its wild career through his rhetorical machinery."18

But while Winston had no principles, there was one constant in his life: the love of war. It began early. As a child, he had a huge collection of toy soldiers, 1500 of them, and he played with them for many years after most boys turn to other things. They were "all British," he tells us, and he fought battles with his brother Jack, who "was only allowed to have colored troops; and they were not allowed to have artillery."19 He attended Sandhurst, the military academy, instead of the universities, and "from the moment that Churchill left Sandhurst … he did his utmost to get into a fight, wherever a war was going on."20 All his life he was most excited—on the evidence, only really excited—by war. He loved war as few modern men ever have21—he even "loved the bangs," as he called them, and he was very brave under fire.

In 1925, Churchill wrote: "The story of the human race is war."22 This, however, is untrue; potentially, it is disastrously untrue. Churchill lacked any grasp of the fundamentals of the social philosophy of classical liberalism. In particular, he never understood that, as Ludwig von Mises explained, the true story of the human race is the extension of social cooperation and the division of labor. Peace, not war, is the father of all things.23 For Churchill, the years without war offered nothing to him but "the bland skies of peace and platitude." This was a man, as we shall see, who wished for more wars than actually happened.

When he was posted to India and began to read avidly, to make up for lost time, Churchill was profoundly impressed by Darwinism. He lost whatever religious faith he may have had—through reading Gibbon, he said—and took a particular dislike, for some reason, to the Catholic Church, as well as Christian missions. He became, in his own words, "a materialist—to the tips of my fingers," and he fervently upheld the worldview that human life is a struggle for existence, with the outcome the survival of the fittest.24 This philosophy of life and history Churchill expressed in his one novel, Savrola.25 That Churchill was a racist goes without saying, yet his racism went deeper than with most of his contemporaries.26 It is curious how, with his stark Darwinian outlook, his elevation of war to the central place in human history, and his racism, as well as his fixation on "great leaders," Churchill's worldview resembled that of his antagonist, Hitler.

When Churchill was not actually engaged in war, he was reporting on it. He early made a reputation for himself as a war correspondent, in Kitchener's campaign in the Sudan and in the Boer War. In December, 1900, a dinner was given at the Waldorf-Astoria in honor of the young journalist, recently returned from his well-publicized adventures in South Africa. Mark Twain, who introduced him, had already, it seems, caught on to Churchill. In a brief satirical speech, Twain slyly suggested that, with his English father and American mother, Churchill was the perfect representative of Anglo-American cant.27

Churchill and the "New Liberalism"

In 1900 Churchill began the career he was evidently fated for. His background—the grandson of a duke and son of a famous Tory politician—got him into the House of Commons as a Conservative. At first he seemed to be distinguished only by his restless ambition, remarkable even in parliamentary ranks. But in 1904, he crossed the floor to the Liberals, supposedly on account of his free-trade convictions. However, Robert Rhodes James, one of Churchill's admirers, wrote: "It was believed [at the time], probably rightly, that if Arthur Balfour had given him office in 1902, Churchill would not have developed such a burning interest in free trade and joined the Liberals." Clive Ponting notes that: "as he had already admitted to Rosebery, he was looking for an excuse to defect from a party that seemed reluctant to recognise his talents," and the Liberals would not accept a protectionist.28

Tossed by the tides of faddish opinion,29 with no principles of his own and hungry for power, Churchill soon became an adherent of the "New Liberalism," an updated version of his father's "Tory Democracy." The "new" liberalism differed from the "old" only in the small matter of substituting incessant state activism for laissez-faire.

Although his conservative idolaters seem blithely unaware of the fact—for them it is always 1940—Churchill was one of the chief architects of the welfare state in Britain. The modern welfare state, successor to the welfare state of 18th-century absolutism, began in the 1880s in Germany, under Bismarck.30 In England, the legislative turning point came when Asquith succeeded Campbell-Bannerman as Prime Minister in 1908; his reorganized cabinet included David Lloyd George at the Exchequer and Churchill at the Board of Trade.

Of course, "the electoral dimension of social policy was well to the fore in Churchill's thinking," writes a sympathetic historian—meaning that Churchill understood it as the way to win votes.31 He wrote to a friend:

No legislation at present in view interests the democracy. All their minds are turning more and more to the social and economic issue. This revolution is irresistible. They will not tolerate the existing system by which wealth is acquired, shared and employed…. They will set their faces like flint against the money power—heir of all other powers and tyrannies overthrown—and its obvious injustices. And this theoretical repulsion will ultimately extend to any party associated in maintaining the status quo…. Minimum standards of wages and comfort, insurance in some effective form or other against sickness, unemployment, old age, these are the questions and the only questions by which parties are going to live in the future. Woe to Liberalism, if they slip through its fingers.32

Churchill "had already announced his conversion to a collectivist social policy" before his move to the Board of Trade.33 His constant theme became "the just precedence" of public over private interests. He took up the fashionable social-engineering clichés of the time, asserting that: "Science, physical and political alike, revolts at the disorganisation which glares at us in so many aspects of modern life," and that "the nation demands the application of drastic corrective and curative processes." The state was to acquire canals and railroads, develop certain national industries, provide vastly augmented education, introduce the eight-hour work day, levy progressive taxes, and guarantee a national minimum living standard. It is no wonder that Beatrice Webb noted that Churchill was "definitely casting in his lot with the constructive state action."34

Following a visit to Germany, Lloyd George and Churchill were both converted to the Bismarckian model of social insurance schemes.35 As Churchill told his constituents: "My heart was filled with admiration of the patient genius which had added these social bulwarks to the many glories of the German race."36 He set out, in his words, to "thrust a big slice of Bismarckianism over the whole underside of our industrial system."37 In 1908, Churchill announced in a speech in Dundee: "I am on the side of those who think that a greater collective sentiment should be introduced into the State and the municipalities. I should like to see the State undertaking new functions." Still, individualism must be respected: "No man can be a collectivist alone or an individualist alone. He must be both an individualist and a collectivist. The nature of man is a dual nature. The character of the organisation of human society is dual."38 This, by the way, is a good sample of Churchill as political philosopher: it never gets much better.

But while both "collective organisation" and "individual incentive" must be given their due, Churchill was certain which had gained the upper hand:

The whole tendency of civilisation is, however, towards the multiplication of the collective functions of society. The ever-growing complications of civilisation create for us new services which have to be undertaken by the State, and create for us an expansion of existing services…. There is a pretty steady determination … to intercept all future unearned increment which may arise from the increase in the speculative value of the land. There will be an ever-widening area of municipal enterprise.

The statist trend met with Churchill's complete approval. As he added:

I go farther; I should like to see the State embark on various novel and adventurous experiments…. I am very sorry we have not got the railways of this country in our hands. We may do something better with the canals.39

This grandson of a duke and glorifier of his ancestor, the arch-corruptionist Marlborough, was not above pandering to lower-class resentments. Churchill claimed that "the cause of the Liberal Party is the cause of the left-out millions," while he attacked the Conservatives as "the Party of the rich against the poor, the classes and their dependents against the masses, of the lucky, the wealthy, the happy, and the strong, against the left-out and the shut-out millions of the weak and poor."40 Churchill became the perfect hustling political entrepreneur, eager to politicize one area of social life after the other. He berated the Conservatives for lacking even a "single plan of social reform or reconstruction," while boasting that he and his associates intended to propose "a wide, comprehensive, interdependent scheme of social organisation," incorporated in "a massive series of legislative proposals and administrative acts."41

At this time, Churchill fell under the influence of Beatrice and Sidney Webb, the leaders of the Fabian Society. At one of her famous strategic dinner parties, Beatrice Webb introduced Churchill to a young protégé, William—later Lord—Beveridge. Churchill brought Beveridge into the Board of Trade as his advisor on social questions, thus starting him on his illustrious career.42 Besides pushing for a variety of social insurance schemes, Churchill created the system of national labor exchanges: he wrote to Prime Minister Asquith of the need to "spread … a sort of Germanized network of state intervention and regulation" over the British labor market.43 But Churchill entertained much more ambitious goals for the Board of Trade. He proposed a plan whereby:

The Board of Trade was to act as the "intelligence department" of the Government, forecasting trade and employment in the regions so that the Government could allocate contracts to the most deserving areas. At the summit … would be a Committee of National Organisation, chaired by the Chancellor of the Exchequer to supervise the economy.44

Finally, well aware of the electoral potential of organized labor, Churchill became a champion of the labor unions. He was a leading supporter, for instance, of the Trades Disputes Act of 1906.45 This Act reversed the Taff Vale and other judicial decisions, which had held unions responsible for torts and wrongs committed on their behalf by their agents. The Act outraged the great liberal legal historian and theorist of the rule of law, A.V. Dicey, who charged that it

confers upon a trade union a freedom from civil liability for the commission of even the most heinous wrong by the union or its servants, and in short confers upon every trade union a privilege and protection not possessed by any other person or body of persons, whether corporate or unincorporate, throughout the United Kingdom…. It makes a trade union a privileged body exempted from the ordinary law of the land. No such privileged body has ever before been deliberately created by an English Parliament.46

It is ironic that the immense power of the British labor unions, the bête noire of Margaret Thatcher, was brought into being with the enthusiastic help of her great hero, Winston Churchill.

World War I

In 1911, Churchill became First Lord of the Admiralty, and now was truly in his element. Naturally, he quickly allied himself with the war party, and, during the crises that followed, fanned the flames of war. When the final crisis came, in the summer of 1914, Churchill was the only member of the cabinet who backed war from the start, with all of his accustomed energy. Asquith, his own Prime Minister, wrote of him: "Winston very bellicose and demanding immediate mobilization…. Winston, who has got all his war paint on, is longing for a sea fight in the early hours of the morning to result in the sinking of the Goeben. The whole thing fills me with sadness."47

On the afternoon of July 28, three days before the German invasion of Belgium, he mobilized the British Home Fleet, the greatest assemblage of naval power in the history of the world to that time. As Sidney Fay wrote, Churchill ordered that:

The fleet was to proceed during the night at high speed and without lights through the Straits of Dover from Portland to its fighting base at Scapa Flow. Fearing to bring this order before the Cabinet, lest it should be considered a provocative action likely to damage the chances of peace, Mr. Churchill had only informed Mr. Asquith, who at once gave his approval.48

No wonder that, when war with Germany broke out, Churchill, in contrast even to the other chiefs of the war party, was all smiles, filled with a "glowing zest."49

From the outset of hostilities, Churchill, as head of the Admiralty, was instrumental in establishing the hunger blockade of Germany. This was probably the most effective weapon employed on either side in the whole conflict. The only problem was that, according to everyone's interpretation of international law except Britain's, it was illegal. The blockade was not "close-in," but depended on scattering mines, and many of the goods deemed contraband—for instance, food for civilians—had never been so classified before.50 But, throughout his career, international law and the conventions by which men have tried to limit the horrors of war meant nothing to Churchill. As a German historian has dryly commented, Churchill was ready to break the rules whenever the very existence of his country was at stake, and "for him this was very often the case."51

The hunger blockade had certain rather unpleasant consequences. About 750,000 German civilians succumbed to hunger and diseases caused by malnutrition. The effect on those who survived was perhaps just as frightful in its own way. A historian of the blockade concluded: "the victimized youth [of World War I] were to become the most radical adherents of National Socialism."52 It was also complications arising from the British blockade that eventually provided the pretext for Wilson's decision to go to war in 1917.

Whether Churchill actually arranged for the sinking of the Lusitania on May 7, 1915, is still unclear.53 A week before the disaster, he wrote to Walter Runciman, president of the Board of Trade that it was "most important to attract neutral shipping to our shores, in the hopes especially of embroiling the United States with Germany."54 Many highly-placed persons in Britain and America believed that the German sinking of the Lusitania would bring the United States into the war.

The most recent student of the subject is Patrick Beesly, whose Room 40 is a history of British Naval Intelligence in World War I. Beesly's careful account is all the more persuasive for going against the grain of his own sentiments. He points out that the British Admiralty was aware that German U-boat Command had informed U-boat captains at sea of the sailings of the Lusitania, and that the U-boat responsible for the sinking of two ships in recent days was present in the vicinity of Queenstown, off the southern coast of Ireland, in the path the Lusitania was scheduled to take. There is no surviving record of any specific warning to the Lusitania. No destroyer escort was sent to accompany the ship to port, nor were any of the readily available destroyers instructed to hunt for the submarine. In fact, "no effective steps were taken to protect the Lusitania." Beesly concludes:

unless and until fresh information comes to light, I am reluctantly driven to the conclusion that there was a conspiracy deliberately to put the Lusitania at risk in the hope that even an abortive attack on her would bring the United States into the war. Such a conspiracy could not have been put into effect without Winston Churchill's express permission and approval.55

In any case, what is certain is that Churchill's policies made the sinking very likely. The Lusitania was a passenger liner loaded with munitions of war; Churchill had given orders to the captains of merchant ships, including liners, to ram German submarines if they encountered them, and the Germans were aware of this. And, as Churchill stressed in his memoirs of World War I, embroiling neutral countries in hostilities with the enemy was a crucial part of warfare: "There are many kinds of maneuvres in war, some only of which take place on the battlefield…. The maneuvre which brings an ally into the field is as serviceable as that which wins a great battle."56

In the midst of bloody conflict, Churchill was energy personified, the source of one brainstorm after another. Sometimes his hunches worked out well—he was the chief promoter of the tank in World War I—sometimes not so well, as at Gallipoli. The notoriety of that disaster, which blackened his name for years, caused him to be temporarily dropped from the Cabinet in 1915.57 His reaction was typical: To one visitor, he said, pointing to the maps on the wall: "This is what I live for … Yes, I am finished in respect of all I care for—the waging of war, the defeat of the Germans."58

Between the Wars

For the next few years, Churchill was shuttled from one ministerial post to another. As Minister of War—of Churchill in this position one may say what the revisionist historian Charles Tansill said of Henry Stimson as Secretary of War: no one ever deserved the title more—Churchill promoted a crusade to crush Bolshevism in Russia. As Colonial Secretary, he was ready to involve Britain in war with Turkey over the Chanak incident, but the British envoy to Turkey did not deliver Churchill's ultimatum, and in the end cooler heads prevailed.59

In 1924, Churchill rejoined the Conservatives and was made Chancellor of the Exchequer. His father, in the same office, was noted for having been puzzled by the decimals: what were "those damned dots"? Winston's most famous act was to return Britain to the gold standard at the unrealistic pre-war parity, thus severely damaging the export trade and ruining the good name of gold, as was pointed out by Murray N. Rothbard.60 Hardly anyone today would disagree with the judgment of A.J.P. Taylor: Churchill "did not grasp the economic arguments one way or the other. What determined him was again a devotion to British greatness. The pound would once more 'look the dollar in the face'; the days of Queen Victoria would be restored."61

So far Churchill had been engaged in politics for 30 years, with not much to show for it except a certain notoriety. His great claim to fame in the modern mythology begins with his hard line against Hitler in the 1930s. But it is important to realize that Churchill had maintained a hard line against Weimar Germany, as well. He denounced all calls for Allied disarmament, even before Hitler came to power.62 Like other Allied leaders, Churchill was living a protracted fantasy: that Germany would submit forever to what it viewed as the shackles of Versailles. In the end, what Britain and France refused to grant to a democratic Germany they were forced to concede to Hitler. Moreover, if most did not bother to listen when Churchill fulminated on the impending German threat, they had good reason. He had tried to whip up hysteria too often before: for a crusade against Bolshevik Russia, during the General Strike of 1926, on the mortal dangers of Indian independence, in the abdication crisis. Why pay any heed to his latest delusion?63

Churchill had been a strong Zionist practically from the start, holding that Zionism would deflect European Jews from social revolution to partnership with European imperialism in the Arab world.64 Now, in 1936, he forged links with the informal London pressure group known as The Focus, whose purpose was to open the eyes of the British public to the one great menace, Nazi Germany. "The great bulk of its finance came from rich British Jews such as Sir Robert Mond (a director of several chemical firms) and Sir Robert Waley-Cohn, the managing director of Shell, the latter contributing £50,000." The Focus was to be useful in expanding Churchill's network of contacts and in pushing for his entry into the Cabinet.65

Though a Conservative MP, Churchill began berating the Conservative governments, first Baldwin's and then Chamberlain's, for their alleged blindness to the Nazi threat. He vastly exaggerated the extent of German rearmament, formidable as it was, and distorted its purpose by harping on German production of heavy-bombers. This was never a German priority, and Churchill's fabrications were meant to demonstrate a German design to attack Britain, which was never Hitler's intention. At this time, Churchill busily promoted the Grand Alliance66 that was to include Britain, France, Russia, Poland, and Czechoslovakia. Since the Poles, having nearly been conquered by the Red Army in 1920, rejected any coalition with the Soviet Union, and since the Soviets' only access to Germany was through Poland, Churchill's plan was worthless.

Ironically—considering that it was a pillar of his future fame—his drumbeating about the German danger was yet another position on which Churchill reneged. In the fall of 1937, he stated:

Three or four years ago I was myself a loud alarmist…. In spite of the risks which wait on prophecy, I declare my belief that a major war is not imminent, and I still believe that there is a good chance of no major war taking place in our lifetime…. I will not pretend that, if I had to choose between Communism and Nazism, I would choose Communism.67

For all the claptrap about Churchill's "farsightedness" during the 30s in opposing the "appeasers," in the end the policy of the Chamberlain government—to rearm as quickly as possible, while testing the chances for peace with Germany—was more realistic than Churchill's.

The common mythology is so far from historical truth that even an ardent Churchill sympathizer, Gordon Craig, feels obliged to write:

The time is long past when it was possible to see the protracted debate over British foreign policy in the 1930s as a struggle between Churchill, an angel of light, fighting against the velleities of uncomprehending and feeble men in high places. It is reasonably well-known today that Churchill was often ill-informed, that his claims about German strength were exaggerated and his prescriptions impractical, that his emphasis on air power was misplaced.68

Moreover, as a British historian has recently noted: "For the record, it is worth recalling that in the 1930s Churchill did not oppose the appeasement of either Italy or Japan."69 It is also worth recalling that it was the pre-Churchill British governments that furnished the material with which Churchill was able to win the Battle of Britain. Clive Ponting has observed:

the Baldwin and Chamberlain Governments … had ensured that Britain was the first country in the world to deploy a fully integrated system of air defence based on radar detection of incoming aircraft and ground control of fighters … Churchill's contribution had been to pour scorn on radar when he was in opposition in the 1930s.70

Embroiling America in War—Again

In September, 1939, Britain went to war with Germany, pursuant to the guarantee which Chamberlain had been panicked into extending to Poland in March. Lloyd George had termed the guarantee "hare-brained," while Churchill had supported it. Nonetheless, in his history of the war Churchill wrote: "Here was decision at last, taken at the worst possible moment and on the least satisfactory ground which must surely lead to the slaughter of tens of millions of people."71 With the war on, Winston was recalled to his old job as First Lord of the Admiralty. Then, in the first month of the war, an astonishing thing happened: the president of the United States initiated a personal correspondence not with the Prime Minister, but with the head of the British Admiralty, by-passing all the ordinary diplomatic channels.72

The messages that passed between the president and the First Lord were surrounded by a frantic secrecy, culminating in the affair of Tyler Kent, the American cipher clerk at the US London embassy who was tried and imprisoned by the British authorities. The problem was that some of the messages contained allusions to Roosevelt's agreement—even before the war began—to a blatantly unneutral cooperation with a belligerent Britain.73

On June 10, 1939, George VI and his wife, Queen Mary, visited the Roosevelts at Hyde Park. In private conversations with the King, Roosevelt promised full support for Britain in case of war. He intended to set up a zone in the Atlantic to be patrolled by the US Navy, and, according to the King's notes, the president stated that "if he saw a U boat he would sink her at once & wait for the consequences." The biographer of George VI, Wheeler-Bennett, considered that these conversations "contained the germ of the future Bases-for-Destroyers deal, and also of the Lend-Lease Agreement itself."74 In communicating with the First Lord of the Admiralty, Roosevelt was aware that he was in touch with the one member of Chamberlain's cabinet whose belligerence matched his own.

In 1940, Churchill at last became Prime Minister, ironically enough when the Chamberlain government resigned because of the Norwegian fiasco—which Churchill, more than anyone else, had helped to bring about.75 As he had fought against a negotiated peace after the fall of Poland, so he continued to resist any suggestion of negotiations with Hitler. Many of the relevant documents are still sealed—after all these years76—but it is clear that a strong peace party existed in the country and the government. It included Lloyd George in the House of Commons, and Halifax, the Foreign Secretary, in the Cabinet. Even after the fall of France, Churchill rejected Hitler's renewed peace overtures. This, more than anything else, is supposed to be the foundation of his greatness. The British historian John Charmley raised a storm of outraged protest when he suggested that a negotiated peace in 1940 might have been to the advantage of Britain and Europe.77 A Yale historian, writing in the New York Times Book Review, referred to Charmley's thesis as "morally sickening."78 Yet Charmley's scholarly and detailed work makes the crucial point that Churchill's adamant refusal even to listen to peace terms in 1940 doomed what he claimed was dearest to him—the Empire and a Britain that was non-socialist and independent in world affairs. One may add that it probably also doomed European Jewry.79 It is amazing that half a century after the fact, there are critical theses concerning World War II that are off-limits to historical debate.

Lloyd George, Halifax, and the others were open to a compromise peace because they understood that Britain and the Dominions alone could not defeat Germany.80 After the fall of France, Churchill's aim of total victory could be realized only under one condition: that the United States become embroiled in another world war. No wonder that Churchill put his heart and soul into ensuring precisely that.

After a talk with Churchill, Joseph Kennedy, American ambassador to Britain, noted: "Every hour will be spent by the British in trying to figure out how we can be gotten in." When he left from Lisbon on a ship to New York, Kennedy pleaded with the State Department to announce that if the ship should happen to blow up mysteriously in the mid-Atlantic, the United States would not consider it a cause for war with Germany. In his unpublished memoirs, Kennedy wrote: "I thought that would give me some protection against Churchill's placing a bomb on the ship."81

Kennedy's fears were perhaps not exaggerated. For, while it had been important for British policy in World War I, involving America was the sine qua non of Churchill's policy in World War II. In Franklin Roosevelt, he found a ready accomplice.

That Roosevelt, through his actions and private words, evinced a clear design for war before December 7, 1941, has never really been in dispute. Arguments have raged over such questions as his possible foreknowledge of the Pearl Harbor attack. In 1948, Thomas A. Bailey, diplomatic historian at Stanford, already put the real pro-Roosevelt case:

Franklin Roosevelt repeatedly deceived the American people during the period before Pearl Harbor…. He was like a physician who must tell the patient lies for the patient's own good…. The country was overwhelmingly noninterventionist to the very day of Pearl Harbor, and an overt attempt to lead the people into war would have resulted in certain failure and an almost certain ousting of Roosevelt in 1940, with a complete defeat of his ultimate aims.82

Churchill himself never bothered to conceal Roosevelt's role as co-conspirator. In January, 1941, Harry Hopkins visited London. Churchill described him as "the most faithful and perfect channel of communication between the President and me … the main prop and animator of Roosevelt himself":

I soon comprehended [Hopkins's] personal dynamism and the outstanding importance of his mission … here was an envoy from the President of supreme importance to our life. With gleaming eye and quiet, constrained passion he said: "The President is determined that we shall win the war together. Make no mistake about it. He has sent me here to tell you that all costs and by all means he will carry you through, no matter what happens to him—there is nothing that he will not do so far as he has human power." There he sat, slim, frail, ill, but absolutely glowing with refined comprehension of the Cause. It was to be the defeat, ruin, and slaughter of Hitler, to the exclusion of all other purposes, loyalties and aims.83

In 1976, the public finally learned the story of William Stephenson, the British agent code named "Intrepid," sent by Churchill to the United States in 1940.84 Stephenson set up headquarters in Rockefeller Center, with orders to use any means necessary to help bring the United States into the war. With the full knowledge and cooperation of Roosevelt and the collaboration of federal agencies, Stephenson and his 300 or so agents "intercepted mail, tapped wires, cracked safes, kidnapped, … rumor mongered" and incessantly smeared their favorite targets, the "isolationists." Through Stephenson, Churchill was virtually in control of William Donovan's organization, the embryonic US intelligence service.85

Churchill even had a hand in the barrage of pro-British, anti-German propaganda that issued from Hollywood in the years before the United States entered the war. Gore Vidal, in Screening History, perceptively notes that starting around 1937, Americans were subjected to one film after another glorifying England and the warrior heroes who built the Empire. As spectators of these productions, Vidal says: "We served neither Lincoln nor Jefferson Davis; we served the Crown."86 A key Hollywood figure in generating the movies that "were making us all weirdly English" was the Hungarian émigré and friend of Churchill, Alexander Korda.87 Vidal very aptly writes:

For those who find disagreeable today's Zionist propaganda, I can only say that gallant little Israel of today must have learned a great deal from the gallant little Englanders of the 1930s. The English kept up a propaganda barrage that was to permeate our entire culture … Hollywood was subtly and not so subtly infiltrated by British propagandists.88

While the Americans were being worked on, the two confederates consulted on how to arrange for direct hostilities between the United States and Germany. In August, 1941, Roosevelt and Churchill met at the Atlantic conference. Here they produced the Atlantic Charter, with its "four freedoms," including "the freedom from want"—a blank-check to spread Anglo-American Sozialpolitik around the globe. When Churchill returned to London, he informed the Cabinet of what had been agreed to. Thirty years later, the British documents were released. Here is how the New York Times reported the revelations:

Formerly top secret British Government papers made public today said that President Franklin D. Roosevelt told Prime Minister Winston Churchill in August, 1941, that he was looking for an incident to justify opening hostilities against Nazi Germany…. On August 19 Churchill reported to the War Cabinet in London on other aspects of the Newfoundland [Atlantic Charter] meeting that were not made public. … "He [Roosevelt] obviously was determined that they should come in. If he were to put the issue of peace and war to Congress, they would debate it for months," the Cabinet minutes added. "The President had said he would wage war but not declare it and that he would become more and more provocative. If the Germans did not like it, they could attack American forces…. Everything was to be done to force an incident."89

On July 15, 1941, Admiral Little, of the British naval delegation in Washington, wrote to Admiral Pound, the First Sea Lord: "the brightest hope for getting America into the war lies in the escorting arrangements to Iceland, and let us hope the Germans will not be slow in attacking them." Little added, perhaps jokingly: "Otherwise I think it would be best for us to organise an attack by our own submarines and preferably on the escort!" A few weeks earlier, Churchill, looking for a chance to bring America into the war, wrote to Pound regarding the German warship, Prinz Eugen: "It would be better for instance that she should be located by a US ship as this might tempt her to fire on that ship, thus providing the incident for which the US government would be so grateful."90 Incidents in the North Atlantic did occur, increasingly, as the United States approached war with Germany.91

But Churchill did not neglect the "back door to war"—embroiling the United States with Japan—as a way of bringing America into the conflict with Hitler. Sir Robert Craigie, the British ambassador to Tokyo, like the American ambassador Joseph Grew, was working feverishly to avoid war. Churchill directed his foreign secretary, Anthony Eden, to whip Craigie into line:

He should surely be told forthwith that the entry of the United States into war either with Germany and Italy or with Japan, is fully conformable with British interests. Nothing in the munitions sphere can compare with the importance of the British Empire and the United States being co-belligerent.92

Churchill threw his influence into the balance to harden American policy towards Japan, especially in the last days before the Pearl Harbor attack.93 A sympathetic critic of Churchill, Richard Lamb, has recently written:

Was [Churchill] justified in trying to provoke Japan to attack the United States? … in 1941 Britain had no prospect of defeating Germany without the aid of the USA as an active ally. Churchill believed Congress would never authorize Roosevelt to declare war on Germany…. In war, decisions by national leaders must be made according to their effect on the war effort. There is truth in the old adage: "All's fair in love and war."94

No wonder that, in the House of Commons, on February 15, 1942, Churchill declared, of America's entry into the war: "This is what I have dreamed of, aimed at, worked for, and now it has come to pass."95

Churchill's devotees by no means hold his role in bringing America into World War II against him. On the contrary, they count it in his favor. Harry Jaffa, in his uninformed and frantic apology, seems to be the last person alive who refuses to believe that the Man of Many Centuries was responsible to any degree for America's entry into the war: after all, wasn't it the Japanese who bombed Pearl Harbor?96

But what of the American Republic? What does it mean for us that a president collaborated with a foreign head of government to entangle us in a world war? The question would have mattered little to Churchill. He had no concern with the United States as a sovereign, independent nation, with its own character and place in the scheme of things. For him, Americans were one of "the English-speaking peoples." He looked forward to a common citizenship for Britons and Americans, a "mixing together," on the road to Anglo-American world hegemony.97

But the Churchill-Roosevelt intrigue should, one might think, matter to Americans. Here, however, criticism is halted before it starts. A moral postulate of our time is that in pursuit of the destruction of Hitler, all things were permissible. Yet why is it self-evident that morality required a crusade against Hitler in 1939 and 1940, and not against Stalin? At that point, Hitler had slain his thousands, but Stalin had already slain his millions. In fact, up to June, 1941, the Soviets behaved far more murderously toward the Poles in their zone of occupation than the Nazis did in theirs. Around 1,500,000 Poles were deported to the Gulag, with about half of them dying within the first two years. As Norman Davies writes: "Stalin was outpacing Hitler in his desire to reduce the Poles to the condition of a slave nation."98 Of course, there were balance-of-power considerations that created distinctions between the two dictators. But it has yet to be explained why there should exist a double standard ordaining that compromise with one dictator would have been "morally sickening," while collaboration with the other was morally irreproachable.99

"First Catch Your Hare"

Early in the war, Churchill, declared: "I have only one aim in life, the defeat of Hitler, and this makes things very simple for me."100 "Victory—victory at all costs," understood literally, was his policy practically to the end. This points to Churchill's fundamental and fatal mistake in World War II: his separation of operational from political strategy. To the first—the planning and direction of military campaigns—he devoted all of his time and energy; after all, he did so enjoy it. To the second, the fitting of military operations to the larger and much more significant political aims they were supposed to serve, he devoted no effort at all.

Stalin, on the other hand, understood perfectly that the entire purpose of war is to enforce certain political claims. This is the meaning of Clausewitz's famous dictum that war is the continuation of policy by other means. On Eden's visit to Moscow in December, 1941, with the Wehrmacht in the Moscow suburbs, Stalin was ready with his demands: British recognition of Soviet rule over the Baltic states and the territories he had just seized from Finland, Poland, and Romania. (They were eventually granted.) Throughout the war he never lost sight of these and other crucial political goals. But Churchill, despite frequent prodding from Eden, never gave a thought to his, whatever they might be.101 His approach, he explained, was that of Mrs. Glass's recipe for Jugged Hare: "First catch your hare."102 First beat Hitler, then start thinking of the future of Britain and Europe. Churchill put in so many words: "the defeat, ruin, and slaughter of Hitler, to the exclusion of all other purposes, loyalties and aims."

Tuvia Ben-Moshe has shrewdly pinpointed one of the sources of this grotesque indifference:

Thirty years earlier, Churchill had told Asquith that … his life's ambition was "to command great victorious armies in battle." During World War II he was determined to take nothing less than full advantage of the opportunity given him—the almost unhampered military management of the great conflict. He was prone to ignore or postpone the treatment of matters likely to detract from that pleasure…. In so doing, he deferred, or even shelved altogether, treatment of the issues that he should have dealt with in his capacity as Prime Minister.103

Churchill's policy of all-out support of Stalin foreclosed other, potentially more favorable approaches. The military expert Hanson Baldwin, for instance, stated:

There is no doubt whatsoever that it would have been in the interest of Britain, the United States, and the world to have allowed—and indeed, to have encouraged—the world's two great dictatorships to fight each other to a frazzle. Such a struggle, with its resultant weakening of both Communism and Nazism, could not but have aided in the establishment of a more stable peace.104

Instead of adopting this approach, or, for example, promoting the overthrow of Hitler by anti-Nazi Germans—instead of even considering such alternatives—Churchill from the start threw all of his support to Soviet Russia.

Franklin Roosevelt's fatuousness towards Joseph Stalin is well-known. He looked on Stalin as a fellow "progressive" and an invaluable collaborator in creating the future New World Order.105 But the neo-conservatives and others who counterpose to Roosevelt's inanity in this matter Churchill's Old World cunning and sagacity are sadly in error. Roosevelt's nauseating flattery of Stalin is easily matched by Churchill's. Just like Roosevelt, Churchill heaped fulsome praise on the Communist murderer, and was anxious for Stalin's personal friendship. Moreover, his adulation of Stalin and his version of Communism—so different from the repellent "Trotskyite" kind—was no different in private than in public. In January, 1944, he was still speaking to Eden of the "deep-seated changes which have taken place in the character of the Russian state and government, the new confidence which has grown in our hearts towards Stalin."106 In a letter to his wife, Clementine, Churchill wrote, following the October, 1944 conference in Moscow: "I have had very nice talks with the old Bear. I like him the more I see him. Now they respect us & I am sure they wish to work with us."107 Writers like Isaiah Berlin, who try to give the impression that Churchill hated or despised all dictators, including Stalin, are either ignorant or dishonest.108

Churchill's supporters often claim that, unlike the Americans, the seasoned and crafty British statesman foresaw the danger from the Soviet Union and worked doggedly to thwart it. Churchill's famous "Mediterranean" strategy—to attack Europe through its "soft underbelly," rather than concentrating on an invasion of northern France—is supposed to be the proof of this.109 But this was an ex post facto defense, concocted by Churchill once the Cold War had started: there is little, if any, contemporary evidence that the desire to beat the Russians to Vienna and Budapest formed any part of Churchill's motivation in advocating the "soft underbelly" strategy. At the time, Churchill gave purely military reasons for it.110 As Ben-Moshe states: "The official British historians have ascertained that not until the second half of 1944 and after the Channel crossing did Churchill first begin to consider preempting the Russians in southeastern Europe by military means."111 By then, such a move would have been impossible for several reasons. It was another of Churchill's bizarre military notions, like invading Fortress Europe through Norway, or putting off the invasion of northern France until 1945—by which time the Russians would have reached the Rhine.112

Moreover, the American opposition to Churchill's southern strategy did not stem from blindness to the Communist danger. As General Albert C. Wedemeyer, one of the firmest anti-Communists in the American military, wrote:

if we had invaded the Balkans through the Ljubljana Gap, we might theoretically have beaten the Russians to Vienna and Budapest. But logistics would have been against us there: it would have been next to impossible to supply more than two divisions through the Adriatic ports…. The proposal to save the Balkans from communism could never have been made good by a "soft underbelly" invasion, for Churchill himself had already cleared the way for the success of Tito … [who] had been firmly ensconced in Yugoslavia with British aid long before Italy itself was conquered.113

Wedemeyer's remarks about Yugoslavia were on the mark. On this issue, Churchill rejected the advice of his own Foreign Office, depending instead on information provided especially by the head of the Cairo office of the SOE—the Special Operations branch—headed by a Communist agent named James Klugman. Churchill withdrew British support from the Loyalist guerrilla army of General Mihailovic and threw it to the Communist Partisan leader Tito.114 What a victory for Tito would mean was no secret to Churchill.115 When Fitzroy Maclean was interviewed by Churchill before being sent as liaison to Tito, Maclean observed that, under Communist leadership, the Partisans'

ultimate aim would undoubtedly be to establish in Jugoslavia a Communist regime closely linked to Moscow. How did His Majesty's Government view such an eventuality? … Mr. Churchill's reply left me in no doubt as to the answer to my problem. So long, he said, as the whole of Western civilization was threatened by the Nazi menace, we could not afford to let our attention be diverted from the immediate issue by considerations of long-term policy…. Politics must be a secondary consideration.116

It would be difficult to think of a more frivolous attitude to waging war than considering "politics" to be a "secondary consideration." As for the "human costs" of Churchill's policy, when an aide pointed out that Tito intended to transform Yugoslavia into a Communist dictatorship on the Soviet model, Churchill retorted: "Do you intend to live there?"117

Churchill's benign view of Stalin and Russia contrasts sharply with his view of Germany. Behind Hitler, Churchill discerned the old specter of Prussianism, which had caused, allegedly, not only the two world wars, but the Franco Prussian War as well. What he was battling now was "Nazi tyranny and Prussian militarism," the "two main elements in German life which must be absolutely destroyed."118 In October, 1944, Churchill was still explaining to Stalin that: "The problem was how to prevent Germany getting on her feet in the lifetime of our grandchildren."119 Churchill harbored a "confusion of mind on the subject of the Prussian aristocracy, Nazism, and the sources of German militarist expansionism … [his view] was remarkably similar to that entertained by Sir Robert Vansittart and Sir Warren Fisher; that is to say, it arose from a combination of almost racialist antipathy and balance of power calculations."120 Churchill's aim was not simply to save world civilization from the Nazis, but, in his words, the "indefinite prevention of their [the Germans'] rising again as an Armed Power."121

Little wonder, then, that Churchill refused even to listen to the pleas of the anti-Hitler German opposition, which tried repeatedly to establish liaison with the British government. Instead of making every effort to encourage and assist an anti-Nazi coup in Germany, Churchill responded to the feelers sent out by the German resistance with cold silence.122 Reiterated warnings from Adam von Trott and other resistance leaders of the impending "bolshevization" of Europe made no impression at all on Churchill.123 A recent historian has written, "by his intransigence and refusal to countenance talks with dissident Germans, Churchill threw away an opportunity to end the war in July 1944."124 To add infamy to stupidity, Churchill and his crowd had only words of scorn for the valiant German officers even as they were being slaughtered by the Gestapo.125

In place of help, all Churchill offered Germans looking for a way to end the war before the Red Army flooded into central Europe was the slogan of unconditional surrender. Afterwards, Churchill lied in the House of Commons about his role at Casablanca in connection with Roosevelt's announcement of the policy of unconditional surrender, and was forced to retract his statements.126 Eisenhower, among others, strenuously and persistently objected to the unconditional surrender formula as hampering the war effort by raising the morale of the Wehrmacht.127 In fact, the slogan was seized on by Goebbels, and contributed to the Germans' holding out to the bitter end.

The pernicious effect of the policy was immeasurably bolstered by the Morgenthau Plan, which gave the Germans a terrifying picture of what "unconditional surrender" would mean.128 This plan, initialed by Roosevelt and Churchill at Quebec, called for turning Germany into an agricultural and pastoral country; even the coal mines of the Ruhr were to be wrecked. The fact that it would have led to the deaths of tens of millions of Germans made it a perfect analog to Hitler's schemes for dealing with Russia and the Ukraine.

Churchill was initially averse to the plan. However, he was won over by Professor Lindemann, as maniacal a German-hater as Morgenthau himself. Lindemann stated to Lord Moran, Churchill's personal physician: "I explained to Winston that the plan would save Britain from bankruptcy by eliminating a dangerous competitor…. Winston had not thought of it in that way, and he said no more about a cruel threat to the German people."129 According to Morgenthau, the wording of the scheme was drafted entirely by Churchill. When Roosevelt returned to Washington, Hull and Stimson expressed their horror, and quickly disabused the president. Churchill, on the other hand, was unrepentant. When it came time to mention the Morgenthau Plan in his history of the war, he distorted its provisions and, by implication, lied about his role in supporting it.130

Beyond the issue of the plan itself, Lord Moran wondered how it had been possible for Churchill to appear at the Quebec conference "without any thought out views on the future of Germany, although she seemed to be on the point of surrender." The answer was that "he had become so engrossed in the conduct of the war that little time was left to plan for the future":

Military detail had long fascinated him, while he was frankly bored by the kind of problem which might take up the time of the Peace Conference…. The P. M. was frittering away his waning strength on matters which rightly belonged to soldiers. My diary in the autumn of 1942 tells how I talked to Sir Stafford Cripps and found that he shared my cares. He wanted the P. M. to concentrate on the broad strategy of the war and on high policy…. No one could make [Churchill] see his errors.131

War Crimes Discreetly Veiled

There are a number of episodes during the war revealing of Churchill's character that deserve to be mentioned. A relatively minor incident was the British attack on the French fleet, at Mers-el-Kebir (Oran), off the coast of Algeria. After the fall of France, Churchill demanded that the French surrender their fleet to Britain. The French declined, promising that they would scuttle the ships before allowing them to fall into German hands. Against the advice of his naval officers, Churchill ordered British ships off the Algerian coast to open fire. About 1500 French sailors were killed. This was obviously a war crime, by anyone's definition: an unprovoked attack on the forces of an ally without a declaration of war. At Nuremberg, German officers were sentenced to prison for less. Realizing this, Churchill lied about Mers-el-Kebir in his history, and suppressed evidence concerning it in the official British histories of the war.132 With the attack on the French fleet, Churchill confirmed his position as the prime subverter through two world wars of the system of rules of warfare that had evolved in the West over centuries.

But the great war crime which will be forever linked to Churchill's name is the terror-bombing of the cities of Germany that in the end cost the lives of around 600,000 civilians and left some 800,000 seriously injured.133 (Compare this to the roughly 70,000 British lives lost to German air attacks. In fact, there were nearly as many Frenchmen killed by Allied air attacks as there were Englishmen killed by Germans.134) The plan was conceived mainly by Churchill's friend and scientific advisor, Professor Lindemann, and carried out by the head of Bomber Command, Arthur Harris ("Bomber Harris"). Harris stated: "In Bomber Command we have always worked on the assumption that bombing anything in Germany is better than bombing nothing."135 Harris and other British airforce leaders boasted that Britain had been the pioneer in the massive use of strategic bombing. J.M. Spaight, former Principal Assistant Secretary of the Air Ministry, noted that while the Germans (and the French) looked on air power as largely an extension of artillery, a support to the armies in the field, the British understood its capacity to destroy the enemy's home-base. They built their bombers and established Bomber Command accordingly.136

Brazenly lying to the House of Commons and the public, Churchill claimed that only military and industrial installations were targeted. In fact, the aim was to kill as many civilians as possible—thus, "area" bombing, or "carpet" bombing—and in this way to break the morale of the Germans and terrorize them into surrendering.137

Harris at least had the courage of his convictions. He urged that the government openly announce that:

the aim of the Combined Bomber Offensive … should be unambiguously stated [as] the destruction of German cities, the killing of German workers, and the disruption of civilized life throughout Germany.138

The campaign of murder from the air leveled Germany. A thousand-year-old urban culture was annihilated, as great cities, famed in the annals of science and art, were reduced to heaps of smoldering ruins. There were high points: the bombing of Lübeck, when that ancient Hanseatic town "burned like kindling"; the 1000-bomber raid over Cologne, and the following raids that somehow, miraculously, mostly spared the great Cathedral but destroyed the rest of the city, including thirteen Romanesque churches; the firestorm that consumed Hamburg and killed some 42,000 people. No wonder that, learning of this, a civilized European man like Joseph Schumpeter, at Harvard, was driven to telling "anyone who would listen" that Churchill and Roosevelt were destroying more than Genghis Khan.139

The most infamous act was the destruction of Dresden, in February, 1945. According to the official history of the Royal Air Force: "The destruction of Germany was by then on a scale which might have appalled Attila or Genghis Khan."140 Dresden, which was the capital of the old kingdom of Saxony, was an indispensable stop on the Grand Tour, the baroque gem of Europe. The war was practically over, the city filled with masses of helpless refugees escaping the advancing Red Army. Still, for three days and nights, from February 13 to 15, Dresden was pounded with bombs. At least 30,000 people were killed, perhaps as many as 135,000 or more. The Zwinger Palace; Our Lady's Church (die Frauenkirche); the Bruhl Terrace, overlooking the Elbe where, in Turgenev's Fathers and Sons, Uncle Pavel went to spend his last years; the Semper Opera House, where Richard Strauss conducted the premiere of Rosenkavalier; and practically everything else was incinerated. Churchill had fomented it. But he was shaken by the outcry that followed. While in Georgetown and Hollywood, few had ever heard of Dresden, the city meant something in Stockholm, Zurich, and the Vatican, and even in London. What did our hero do? He sent a memorandum to the Chiefs of Staff:

It seems to me that the moment has come when the question of bombing of German cities simply for the sake of increasing the terror, though under other pretexts, should be reviewed. Otherwise, we shall come into control of an utterly ruined land…. The destruction of Dresden remains a serious query against the conduct of Allied bombing…. I feel the need for more precise concentration upon military objectives … rather than on mere acts of terror and wanton destruction, however impressive.141

The military chiefs saw through Churchill's contemptible ploy: realizing that they were being set up, they refused to accept the memorandum. After the war, Churchill casually disclaimed any knowledge of the Dresden bombing, saying: "I thought the Americans did it."142

And still the bombing continued. On March 16, in a period of 20 minutes, Würzburg was razed to the ground. As late as the middle of April, Berlin and Potsdam were bombed yet again, killing another 5,000 civilians. Finally, it stopped; as Bomber Harris noted, there were essentially no more targets to be bombed in Germany.143 It need hardly be recorded that Churchill supported the atom-bombing of Hiroshima and Nagasaki, which resulted in the deaths of another 100,000, or more, civilians. When Truman fabricated the myth of the "500,000 U.S. lives saved" by avoiding an invasion of the Home Islands—the highest military estimate had been 46,000—Churchill topped his lie: the atom-bombings had saved 1,200,000 lives, including 1,000,000 Americans, he fantasized.144

The eagerness with which Churchill directed or applauded the destruction of cities from the air should raise questions for those who still consider him the great "conservative" of his—or perhaps of all—time. They would do well to consider the judgment of an authentic conservative like Erik von Kuehnelt-Leddihn, who wrote: "Non-Britishers did not matter to Mr. Churchill, who sacrificed human beings—their lives, their welfare, their liberty—with the same elegant disdain as his colleague in the White House."145

1945: The Dark Side

And so we come to 1945 and the ever-radiant triumph of Absolute Good over Absolute Evil. So potent is the mystique of that year that the insipid welfare states of today's Europe clutch at it at every opportunity, in search of a few much-needed shreds of glory.

The dark side of that triumph, however, has been all but suppressed. It is the story of the crimes and atrocities of the victors and their protégés. Since Winston Churchill played a central role in the Allied victory, it is the story also of the crimes and atrocities in which Churchill was implicated. These include the forced repatriation of some two million Soviet subjects to the Soviet Union. Among these were tens of thousands who had fought with the Germans against Stalin, under the sponsorship of General Vlasov and his "Russian Army of Liberation." This is what Alexander Solzhenitsyn wrote, in The Gulag Archipelago:

In their own country, Roosevelt and Churchill are honored as embodiments of statesmanlike wisdom. To us, in our Russian prison conversations, their consistent shortsightedness and stupidity stood out as astonishingly obvious … what was the military or political sense in their surrendering to destruction at Stalin's hands hundreds of thousands of armed Soviet citizens determined not to surrender.146

Most shameful of all was the handing over of the Cossacks. They had never been Soviet citizens, since they had fought against the Red Army in the Civil War and then emigrated. Stalin, understandably, was particularly keen to get hold of them, and the British obliged. Solzhenitsyn wrote, of Winston Churchill:

He turned over to the Soviet command the Cossack corps of 90,000 men. Along with them he also handed over many wagonloads of old people, women, and children…. This great hero, monuments to whom will in time cover all England, ordered that they, too, be surrendered to their deaths.147

The "purge" of alleged collaborators in France was a blood-bath that claimed more victims than the Reign of Terror in the Great Revolution—and not just among those who in one way or other had aided the Germans: included were any right-wingers the Communist resistance groups wished to liquidate.148

The massacres carried out by Churchill's protégé, Tito, must be added to this list: tens of thousands of Croats, not simply the Ustasha, but any "class-enemies," in classical Communist style. There was also the murder of some 20,000 Slovene anti-Communist fighters by Tito and his killing squads. When Tito's Partisans rampaged in Trieste, which he was attempting to grab in 1945, additional thousands of Italian anti-Communists were massacred.149

As the troops of Churchill's Soviet ally swept through central Europe and the Balkans, the mass deportations began. Some in the British government had qualms, feeling a certain responsibility. Churchill would have none of it. In January, 1945, for instance, he noted to the Foreign Office: "Why are we making a fuss about the Russian deportations in Rumania of Saxons [Germans] and others? … I cannot see the Russians are wrong in making 100 or 150 thousand of these people work their passage…. I cannot myself consider that it is wrong of the Russians to take Rumanians of any origin they like to work in the Russian coal-fields."150 About 500,000 German civilians were deported to work in Soviet Russia, in accordance with Churchill and Roosevelt's agreement at Yalta that such slave labor constituted a proper form of "reparations."151

Worst of all was the expulsion of some 15 million Germans from their ancestral homelands in East and West Prussia, Silesia, Pomerania, and the Sudetenland. This was done pursuant to the agreements at Tehran, where Churchill proposed that Poland be "moved west," and to Churchill's acquiescence in the Czech leader Eduard Benes's plan for the "ethnic cleansing" of Bohemia and Moravia. Around one-and-a-half to two million German civilians died in this process.152 As the Hungarian liberal Gaspar Tamas wrote, in driving out the Germans of east-central Europe, "whose ancestors built our cathedrals, monasteries, universities, and railroad stations," a whole ancient culture was effaced.153 But why should that mean anything to the Churchill devotees who call themselves "conservatives" in America today?

Then, to top it all, came the Nuremberg Trials, a travesty of justice condemned by the great Senator Robert Taft, where Stalin's judges and prosecutors—seasoned veterans of the purges of the 30s—participated in another great show-trial.154

By 1946, Churchill was complaining in a voice of outrage of the happenings in eastern Europe: "From Stettin on the Baltic to Trieste on the Adriatic, an iron curtain has descended over Europe." Goebbels had popularized the phrase "iron curtain," but it was accurate enough.

The European continent now contained a single, hegemonic power. "As the blinkers of war were removed," John Charmley writes, "Churchill began to perceive the magnitude of the mistake which had been made."155 In fact, Churchill's own expressions of profound self-doubt consort oddly with his admirers' retrospective triumphalism. After the war, he told Robert Boothby: "Historians are apt to judge war ministers less by the victories achieved under their direction than by the political results which flowed from them. Judged by that standard, I am not sure that I shall be held to have done very well."156 In the preface to the first volume of his history of World War II, Churchill explained why he was so troubled:

The human tragedy reaches its climax in the fact that after all the exertions and sacrifices of hundreds of millions of people and of the victories of the Righteous Cause, we have still not found Peace or Security, and that we lie in the grip of even worse perils than those we have surmounted.157

On V-E Day, he had announced the victory of "the cause of freedom in every land." But to his private secretary, he mused: "What will lie between the white snows of Russia and the white cliffs of Dover?"158 It was a bit late to raise the question. Really, what are we to make of a statesman who for years ignored the fact that the extinction of Germany as a power in Europe entailed … certain consequences? Is this another Bismarck or Metternich we are dealing with here? Or is it a case of a Woodrow Wilson redivivus—of another Prince of Fools?

With the balance of power in Europe wrecked by his own policy, there was only one recourse open to Churchill: to bring America into Europe permanently. Thus, his anxious expostulations to the Americans, including his Fulton, Missouri "Iron Curtain" speech. Having destroyed Germany as the natural balance to Russia on the continent, he was now forced to try to embroil the United States in yet another war—this time a Cold War, that would last 45 years, and change America fundamentally, and perhaps irrevocably.159

The Triumph of the Welfare State

In 1945, general elections were held in Britain, and the Labour Party won a landslide victory. Clement Attlee, and his colleagues took power and created the socialist welfare state. But the socializing of Britain was probably inevitable, given the war. It was a natural outgrowth of the wartime sense of solidarity and collectivist emotion, of the feeling that the experience of war had somehow rendered class structure and hierarchy—normal features of any advanced society—obsolete and indecent. And there was a second factor—British society had already been to a large extent socialized in the war years, under Churchill himself. As Ludwig von Mises wrote:

Marching ever further on the way of interventionism, first Germany, then Great Britain and many other European countries have adopted central planning, the Hindenburg pattern of socialism. It is noteworthy that in Germany the deciding measures were not resorted to by the Nazis, but some time before Hitler seized power by Bruning … and in Great Britain not by the Labour Party but by the Tory Prime Minister, Mr. Churchill.160

While Churchill waged war, he allowed Attlee to head various Cabinet committees on domestic policy and devise proposals on health, unemployment, education, etc.161 Churchill himself had already accepted the master-blueprint for the welfare state, the Beveridge Report. As he put it in a radio speech:

You must rank me and my colleagues as strong partisans of national compulsory insurance for all classes for all purposes from the cradle to the grave.162

That Mises was correct in his judgment on Churchill's role is indicated by the conclusion of W. H. Greenleaf, in his monumental study of individualism and collectivism in modern Britain. Greenleaf states that it was Churchill who

during the war years, instructed R. A. Butler to improve the education of the people and who accepted and sponsored the idea of a four-year plan for national development and the commitment to sustain full employment in the post-war period. As well he approved proposals to establish a national insurance scheme, services for housing and health, and was prepared to accept a broadening field of state enterprises. It was because of this coalition policy that Enoch Powell referred to the veritable social revolution which occurred in the years 1942–44. Aims of this kind were embodied in the Conservative declaration of policy issued by the Premier before the 1945 election.163

When the Tories returned to power in 1951, "Churchill chose a Government which was the least recognizably Conservative in history."164 There was no attempt to roll back the welfare state, and the only industry that was really reprivatized was road haulage.165 Churchill "left the core of its [the Labour government's] work inviolate."166 The "Conservative" victory functioned like Republican victories in the United States, from Eisenhower on—to consolidate socialism. Churchill even undertook to make up for "deficiencies" in the welfare programs of the previous Labour government, in housing and public works.167 Most insidiously of all, he directed his leftist Labour Minister, Walter Monckton, to appease the unions at all costs. Churchill's surrender to the unions, "dictated by sheer political expediency," set the stage for the quagmire in labor relations that prevailed in Britain for the next two decades.168

Yet, in truth, Churchill never cared a great deal about domestic affairs, even welfarism, except as a means of attaining and keeping office. What he loved was power, and the opportunities power provided to live a life of drama and struggle and endless war.

There is a way of looking at Winston Churchill that is very tempting: that he was a deeply flawed creature, who was summoned at a critical moment to do battle with a uniquely appalling evil, and whose very flaws contributed to a glorious victory—in a way, like Merlin, in C.S. Lewis's great Christian novel, That Hideous Strength.169 Such a judgment would, I believe, be superficial. A candid examination of his career, I suggest, yields a different conclusion: that, when all is said and done, Winston Churchill was a Man of Blood and a politico without principle, whose apotheosis serves to corrupt every standard of honesty and morality in politics and history.

This essay, which originally appears in The Costs of War: America's Pyrrhic Victories, is respectfully dedicated to the memory of Henry Regnery, who was, of course, not responsible for its content.

  • 1. Harry V. Jaffa, "In Defense of Churchill," Modern Age 34, no. 3 (Spring 1992): 281. For what it is worth, Henry Kissinger, "With Faint Praise," New York Times Book Review, July 16, 1995, p. 7, has gone so far as to call Churchill "the quintessential hero."
  • 2. Paul Addison, "Churchill and Social Reform," in Churchill, Robert Blake and William Roger Louis, eds. (New York: Norton, 1993), p. 57.
  • 3. A sympathetic historian, Paul Addison, Churchill on the Home Front 1900–1955 (London: Pimlico, 1993), p. 438, phrases the same point this way: "Since [Churchill] never allowed himself to be hampered by a fixed programme or a rigid ideology, his ideas evolved as he adapted himself to the times." Oddly enough, Churchill himself confessed, in 1898: "I do not care so much for the principles I advocate as for the impression which my words produce and the reputation they give me." Clive Ponting, Churchill (London: Sinclair-Stevenson, 1994), p. 32.
  • 4. For some of Churchill's distortions, see Tuvia Ben-Moshe, Churchill: Strategy and History (Boulder, Colo.: Lynne Rienner, 1992), pp. 329–33; Dietrich Aigner, "Winston Churchill (1874–1965)," in Politiker des 20. Jahrhunderts, 1, Die Epoche der Weltkriege, Rolf K. Hocevar, et al., eds. (Munich: Beck, 1970), p. 318, states that Churchill, in his works on World War II, "laid the foundation of a legend that is nothing less than a straightforward travesty of the historical truth…. But the Churchill version of World War II and its prehistory remains unshaken, the power of his eloquence extends beyond the grave." Aigner, incidentally, is an informed, scholarly critic of Churchill, and by no means a "right-wing radical."
  • 5. Christopher Hitchens, Blood, Class, and Nostalgia: Anglo—American Ironies (New York: Farrar, Straus, and Giroux, 1990), p. 186.
  • 6. J.P.C. Fuller, The Conduct of War 1789–1961 (London: Eyre and Spottiswoode, 1961), p. 253.
  • 7. For a skeptical account of Churchill in this period, see Clive Ponting, 1940: Myth and Reality (Chicago: Ivan R. Dee, 1991).
  • 8. Cf. A.J.P. Taylor, "The Statesman," in idem, et al., Churchill Revised: A Critical Assessment (New York: Dial Press, 1969), p. 26.
  • 9. Henry Pelling, Winston Churchill (New York: Dutton, 1974), pp. 347–48, 355; and Paul Addison, Churchill on the Home Front, pp. 296–99.
  • 10. Taylor, "The Statesman," p. 31; Robert Rhodes James, "Churchill the Politician," in A.J.P. Taylor, et al., Churchill Revised, p. 115, writes of "Churchill's extremely exaggerated claims of German air power."
  • 11. Emrys Hughes, Winston Churchill: British Bulldog (New York: Exposition, 1955), p. 104.
  • 12. "Churchill Extols Fascismo for Italy" New York Times, January 21, 1927. Churchill even had admiring words for Hitler; as late as 1937, he wrote: "one may dislike Hitler's system and yet admire his patriotic achievement. If our country were defeated, I hope we should find a champion as indomitable to restore our courage and lead us back to our place among the nations." James, "Churchill the Politician," p. 118. On the conditions of the Fascist takeover in Italy, see Ralph Raico, "Mises on Fascism and Democracy," Journal of Libertarian Studies 12, no 1 (Spring 1996): 1–27.
  • 13. Robin Edmonds, "Churchill and Stalin," in Churchill, Blake and Louis, eds., p. 326.
  • 14. Norman Rose, Churchill: The Unruly Giant (New York: Free Press, 1994), p. 378.
  • 15. J.F.C. Fuller, The Second World War 1939–45: A Strategical and Tactical History (London: Eyre and Spottiswoode, 1954), p. 218.
  • 16. James, "Churchill the Politician," p. 79. The same quotation from Esher is cited and endorsed by Basil Liddell Hart, "The Military Strategist," in A.J.P Taylor, et al., Churchill Revised, p. 221.
  • 17. David Irving, Churchill's War, vol. 1, The Struggle for Power (Bullsbrook, Western Australia: Veritas, 1987), p. 517.
  • 18. Charles Masterman, cited in James, "Churchill the Politician," p. 71.
  • 19. Hart, "The Military Strategist," pp. 173–74.
  • 20. Ibid., p. 174.
  • 21. Churchill told Asquith's daughter in 1915: "I know this war is smashing and shattering the lives of thousands every moment—and yet—I cannot help it—I love every second I live." Michael Howard, "Churchill and the First World War," in Churchill, Blake and Louis, eds., p. 129.
  • 22. Maurice Ashley, Churchill as Historian (New York: Scribner's, 1968), p. 228.
  • 23. Ludwig von Mises, Liberalism: A Socio-Economic Exposition, Ralph Raico, trans. (Kansas City: Sheed Andrews and McMeel, [1927] 1985), pp. 23–27.
  • 24. Ponting, Churchill, p. 23; Dietrich Aigner, Winston Churchill: Ruhm und Legende (Göttingen: Musterschmidt, 1975), p. 31.
  • 25. Ibid., pp. 40–44.
  • 26. Andrew Roberts, Eminent Churchillians (New York: Simon and Schuster, 1994), pp. 211–15. Roberts finds it ironic that, given Churchill's views on race, it was "he of all Prime Ministers [who] allowed Britain to start to become a multi-racial society" through Commonwealth immigration during his last "Indian Summer" administration, 1951–55.
  • 27. Mark Twain, Mark Twain's Weapons of Satire: Anti-Imperialist Writings on the Philippine-American War, Jim Zwick, ed. (Syracuse, N.Y.: Syracuse University Press, 1992), pp. 9–11.
  • 28. Robert Rhodes James, "Churchill the Parliamentarian, Orator, and Statesman," in Churchill, Blake and Louis, eds., p. 510; Ponting, Churchill, p. 49.
  • 29. Churchill at this time even spoke out in favor of state-enforced temperance, an amusing bit of hypocrisy in a man whose lifelong love of drink became legendary.
  • 30. On the history of the German welfare state, absolutist and modern, see Gerd Habermann, Der Wohlfahrtsstaat: Geschichte eines Irrwegs (Berlin: Propyläen, 1994).
  • 31. Addison, "Churchill and Social Reform," p. 60.
  • 32. Addison, Churchill on the Home Front, 1900–1955, p. 59.
  • 33. Ibid, p. 51.
  • 34. W.H. Greenleaf, The British Political Tradition, vol. 2, The Ideological Heritage (London: Methuen, 1983), pp. 151–54.
  • 35. E.P. Hennock, British Social Reform and German Precedents: The Case of Social Insurance 1880–1914 (Oxford: Clarendon, 1987), pp. 168–69.
  • 36. Gordon A. Craig, "Churchill and Germany," in Churchill, Blake and Louis, eds., p. 24.
  • 37. E.P. Hennock, "The Origins of British National Insurance and the German Precedent 1880–1914," in The Emergence of the Welfare State in Britain and Germany, W.J. Mommsen and Wolfgang Mock, eds. (London: Croom Helm, 1981), p. 88.
  • 38. Winston Churchill, Complete Speeches 1897–1963, vol. 1, 1897–1908, Robert Rhodes James, ed. (New York: Chelsea House, 1974), pp. 1029–30, 1032.
  • 39. Winston Churchill, Liberalism and the Social Problem (London: Hodder and Stoughton, 1909), pp. 80–81.
  • 40. lbid., pp. 78, 226.
  • 41. Ibid., p. 227.
  • 42. Hennock, British Social Reform, pp. 157–60.
  • 43. Ibid., p. 161.
  • 44. Ponting, Churchill, p. 83.
  • 45. See, for instance, Churchill, Liberalism and the Social Problem, pp. 74–75.
  • 46. A.V. Dicey, Lectures on the Relation Between Law and Public Opinion in England during the Nineteenth Century, 2nd. ed. (London: Macmillan, [1914] 1963), pp. xlv—xlvi.
  • 47. Herbert Henry Asquith, Memories and Reflections 1852–1927 (London: Cassell, 1928), 2, pp. 7, 21.
  • 48. Sidney Fay, Origins of the World War, 2nd. rev. ed. (New York: Free Press, [1930] 1966), p. 495.
  • 49. Lady Violet Asquith, cited in Hart, "The Military Strategist," p. 182.
  • 50. C. Paul Vincent, The Politics of Hunger: The Allied Blockade of Germany, 1915–1919 (Athens: Ohio University Press, 1985); see also Ralph Raico, "The Politics of Hunger: A Review," Review of Austrian Economics 3 (1988): 253–59.
  • 51. Aigner, Winston Churchill (1874–1965), pp. 63–64.
  • 52. Vincent, Politics of Hunger, p. 162. See also Peter Loewenberg, "The Psychohistorical Origins of the Nazi Youth Cohort," American Historical Review 76, no. 5 (December 1971): 1457–1502.
  • 53. See Colin Simpson, The Lusitania (London: Penguin, [1972] 1983), who presents the case for Churchill's guilt; and Thomas A. Bailey and Paul B. Ryan, The Lusitania Disaster: An Episode in Modern Warfare and Diplomacy (New York: Free Press, 1975), who attempt to exculpate him. See also Hitchens, Blood, Class, and Nostalgia, pp. 189–90.
  • 54. Patrick Beesly, Room 40: British Naval Intelligence 1914–18 (San Diego: Harcourt, Brace, Jovanovich, 1982), p. 90.
  • 55. Ibid., p. 122. Emphasis in original.
  • 56. Winston Churchill, The World Crisis (New York: Scribner's, 1931), p. 300.
  • 57. On the Dardanelles campaign, cf. Taylor, "The Statesman," pp. 21–22: "Once Churchill took up the idea, he exaggerated both the ease with which it could be carried through and the rewards it would bring. There was no enquiry into the means available. Churchill merely assumed that battleships could force the Straits unaided. When this failed, he assumed that there was a powerful army available for Gallipoli and assumed also that this inhospitable peninsula presented no formidable military obstacles. Beyond this, he assumed also that the fall of Constantinople would inflict a mortal blow on Germany. All these assumptions were wrong."
  • 58. Hughes, Winston Churchill: British Bulldog, p. 78.
  • 59. James, "Churchill the Politician," p. 93.
  • 60. Murray N. Rothbard, America's Great Depression (Princeton, N.J.: Van Nostrand, 1963), pp. 131–37.
  • 61. Taylor, "The Statesman," p. 27.
  • 62. Aigner, Winston Churchill (1874–1965), pp. 100–3. In connection with the Geneva disarmament conference 1931–32, Churchill expressed the same anti-German position as later: Germany would rise again. Aigner sees this as stemming from Churchill's social Darwinist philosophy.
  • 63. Goronwy Rees, "Churchill in der Revision," Der Monat, Nr. 207 (Fall 1965): 12.
  • 64. E.g., in Churchill's essay of February, 1921, "Zionism vs. Bolshevism"; see Aigner, Winston Churchill (1874–1965), p. 79. See also Oskar K. Rabinowicz, Winston Churchill on Jewish Problems: A Half Century Survey, published by the World Jewish Congress, British Section (London: Lincolns-Prager, 1956); and N. A. Rose, The Gentile Zionists: A Study in Anglo—Zionist Diplomacy, 1929–1939 (London: Cass, 1973). Early on, Churchill had shared the view current among many right-wingers of the time, of Bolshevism as a "Jewish" phenomenon: he referred to the Red leaders as "these Semitic conspirators" and "Jew Commissars." Norman Rose, Churchill: The Unruly Giant, p. 180.
  • 65. John Charmley, Chamberlain and the Lost Peace (London: Hodder and Stoughton, 1989), p. 55. See also Irving, Churchill's War, pp. 54–65, 67–68, and 82–83. The group's full name was the Focus for the Defence of Freedom and Peace. For a history, see Eugen Spier, Focus. A Footnote to the History of the Thirties (London: Oswald Wolff, 1963). In March, 1937, after a luncheon meeting with Churchill, Spier came to the conclusion that "destiny had marked him out to become the destroyer of Hitlerism." (Ibid., p. 112) In October, 1937, a representative of the Focus, H. Wickham Steed, toured Canada and the United States. Among those he found "ready to take the Focus line" were Roosevelt, Cordell Hull, and Arthur Sulzberger, owner of the New York Times. In New York, Steed addressed the Council on Foreign Relations. Others with whom Steed met included the financiers Bernard Baruch and Felix Warburg. (Ibid., pp. 124–25.) On The Focus as well as other factors influencing British public opinion in regard to Germany in the 1930s, see Dietrich Aigner, Das Ringen um England. Das deutsch-britische Verhältnis. Die öffentliche Meinung 1933–1939, Tragödie zweier Völker (Munich/Esslingen: Bechtle, 1969).
  • 66. Aigner, Winston Churchill (1874–1965), p. 105–6; see also Irving, Churchill's War, pp. 38–40, 44–45, 78–79.
  • 67. Hart, "The Military Strategist," p. 204.
  • 68. Craig, "Churchill and Germany," p. 35.
  • 69. Donald Cameron Watt, "Churchill and Appeasement," in Churchill, Blake and Louis, eds., p. 214.
  • 70. Ponting, Churchill, p. 464.
  • 71. Winston Churchill, The Gathering Storm, vol. 1, The Second World War (Boston: Houghton Mifflin, 1948), p. 347. Churchill commented that the guarantee was extended to a Poland "which with hyena appetite had only six months before joined in the pillage and destruction of the Czechoslovak State." He was referring to the annexation of the Teschen district, by which Poland had reclaimed the ethnically Polish areas of that bizarre concoction Churchill was pleased to dignify as "the Czechoslovak State."
  • 72. Irving, Churchill's War, pp. 193–96.
  • 73. James Leutze, "The Secret of the Churchill-Roosevelt Correspondence: September 1939—May 1940," Journal of Contemporary History 10, no. 3 (July 1975): 465–91; Leutze concludes that this was the real reason the two governments colluded to silence Tyler Kent.
  • 74. John W. Wheeler-Bennett, King George VI: His Life and Reign (New York: St. Martin's, 1958), pp. 390–92. Wheeler-Bennett added: "On his return to London the King communicated the essence of his talks with the President to the proper quarters, and so greatly did he esteem their importance that he carried the original manuscript of his notes about him in his dispatch case throughout the war."
  • 75. Hart, "The Military Strategist," p. 208.
  • 76. John Charmley, Churchill: The End of Glory (London: Hodder and Stoughton, 1993), p 423.
  • 77. See also Charmley's review of Clive Ponting's work, in the Times Literary Supplement, May 13, 1994, p. 8.
  • 78. Gaddis Smith, "Whose Finest Hour?" New York Times Book Review, August 29, 1993, p. 3.
  • 79. On March 27, 1942, Goebbels commented in his diary on the destruction of the European Jews, which was then underway: "Here, too, the Führer is the undismayed champion of a radical solution necessitated by conditions and therefore inexorable. Fortunately, a whole series of possibilities presents itself for us in wartime that would be denied us in peacetime. We shall have to profit by this." He added: "the fact that Jewry's representatives in England and America are today organizing and sponsoring the war against Germany must be paid for dearly by its representatives in Europe—and that's only right." The Goebbels Diaries, 1942–1943, Louis P. Lochner ed. and trans. (Garden City, N.Y.: Doubleday, 1948), p. 148.
  • 80. Paul Addison, "Lloyd George and Compromise Peace in the Second World War," in Lloyd George: Twelve Essays, A.J.P. Taylor, ed. (New York: Atheneum, 1971), pp 359–84. Churchill himself told Stalin in 1944: "We never thought of making a separate peace even the year when we were all alone and could easily have made one without serious loss to the British Empire and largely at your expense." Ibid, p. 383.
  • 81. Irving, Churchill's War, pp. 193, 207.
  • 82. Thomas A. Bailey, The Man in the Street: The Impact of American Public Opinion on Foreign Policy (New York: Macmillan, 1948), p. 13. A recent writer has commented on Bailey's position: "In reality, when Roosevelt and other presidents lied, they did it for their own good, or what they believed to be their own good. But they were often mistaken because they have tended to be at least as shortsighted as the masses … Roosevelt's destroyer deal marked a watershed in the use and abuse of presidential power, foreshadowing a series of dangerous and often disastrous adventures abroad." Robert Shogan, Hard Bargain (New York: Scribner's, 1995), pp.271, 278. The classical revisionist case on Roosevelt's war policy was presented in Charles A. Beard, President Roosevelt and the Coming of War 1941 (New Haven, Conn.: Yale University Press, 1949); and Perpetual War for Perpetual Peace, Harry Elmer Barnes, ed. (Caldwell, Idaho: Caxton, 1953), among other works.
  • 83. Winston S. Churchill, The Grand Alliance, vol. 3, The Second World War (Boston: Houghton Mifflin, 1950), pp. 23–24.
  • 84. William Stevenson, A Man Called Intrepid (New York: Harcourt Brace Jovanovich, 1976).
  • 85. Irving, Churchill's War, pp. 524–27.
  • 86. Gore Vidal, Screening History (Cambridge, Mass.: Harvard University Press, 1992), p. 40.
  • 87. Ibid., p. 47.
  • 88. Ibid., p. 33.
  • 89. "War-Entry Plans Laid to Roosevelt," New York Times, January 2, 1972.
  • 90. Beesly, Room 40, p. 121 n. 1.
  • 91. See, for instance, William Henry Chamberlin, America's Second Crusade (Chicago: Henry Regnery, 1950), pp. 124–47.
  • 92. Richard Lamb, Churchill as War Leader (New York: Carroll and Graf, 1991), p. 149.
  • 93. Ibid., pp. 147–62.
  • 94. Ibid., p. 162.
  • 95. Chamberlin, America's Second Crusade, p. 177. On Churchill's use of the "backdoor to war" for the United States, see John Costello, Days of Infamy. MacArthur, Roosevelt, Churchill—The Shocking Truth Revealed (New York: Pocket Books, 1994). On the question of Pearl Harbor, it is interesting to note that even as "mainstream" a historian as Warren F. Kimball, editor of the Churchill-Roosevelt correspondence, writes: "Doubts have not yet been laid to rest concerning still-closed British intelligence files about the Japanese attack on Pearl Harbor: information that Churchill may have chosen not to pass on to the Americans in the hope that such an attack would draw the United States into war." See also Warren F. Kimball, "Wheel Within a Wheel: Churchill, Roosevelt, and the Special Relationship," in Churchill, Blake and Louis, eds., p. 298, where Kimball cites James Rusbridger and Eric Nave, Betrayal at Pearl Harbor: How Churchill Lured Roosevelt into World War II (New York: Summit, 1991). Kimball complains that, despite written requests from him and other historians, British government files on relations with Japan in late 1941 remain closed. Churchill, p. 546 n. 29. Robert Smith Thompson, in A Time for War: Franklin Delano Roosevelt and the Path to Pearl Harbor (New York: Prentice Hall, 1991), presents a useful recent account of the coming of the war with Japan.
  • 96. Jaffa, "In Defense of Churchill," p. 277.
  • 97. Charmley, Churchill: The End of Glory, p. 538.
  • 98. Norman Davies, God's Playground: A History of Poland, vol. 2, 1795 to the Present (New York: Columbia University Press, 1982), pp. 447–53.
  • 99. For a critique of the view that Hitler's aim was to "conquer the world," see Geoffrey Stoakes, Hitler and the Quest for World Domination (Leamington Spa, England: Berg, 1986).
  • 100. Taylor, "The Statesman," p. 43.
  • 101. For instance, in May, 1944, Eden protested to Churchill, regarding the prospect of the "Communization of the Balkans": "We must think of the after-effect of these developments, instead of confining ourselves as hitherto to the short-term view of what will give the best dividends during the war and for the war." Charmley, Churchill: The End of Glory, p. 538.
  • 102. Ben-Moshe, Churchill: Strategy and History, pp. 236–37.
  • 103. Ibid., 241.
  • 104. Hanson W. Baldwin, Great Mistakes of the War (New York: Harper, 1949), p. 10.
  • 105. Roosevelt's attitude is epitomized in his statement: "If I give him [Stalin] everything I possibly can, and ask nothing of him in return, [then] noblesse oblige, he won't try to annex anything and will work with me for a world of peace and democracy." Robert Nisbet, Roosevelt and Stalin: The Failed Courtship (Washington, D.C.: Regnery, 1988), p. 6. Joseph Sobran's remarks in his brief essay, "Pal Joey," Sobran's 2, no. 8 (August 1995): pp. 5–6, are characteristically insightful.
  • 106. Ben-Moshe, Churchill: Strategy and History, pp. 287–88, 305–06.
  • 107. Ponting, Churchill, p. 665.
  • 108. Isaiah Berlin, "Winston Churchill," in idem, Personal Impressions, Henry Hardy, ed. (New York: Viking, 1980), p. 16., where Churchill is quoted as saying of Stalin that he is "at once a callous, a crafty, and an ill-informed giant." Note, however, that even this quotation shows that Churchill placed Stalin in an entirely different category from the unspeakably evil Hitler. In fact, as the works by Charmley, Ponting, and Ben-Moshe amply demonstrate, until the end of the war Churchill's typical attitude toward Stalin was friendly and admiring. Berlin's essay, with its mawkish infatuation with "the largest human being of our time," has to be read to be believed. An indication of one source of Berlin's passion is his reference to Churchill's sympathy for "the struggle of the Jews for self-determination in Palestine."
  • 109. Cf. Charmley, Churchill: The End of Glory, pp. 572–73, on "Operation Armpit," the extension of the Italian campaign and a thrust towards Vienna; Charmley concludes that, contrary to Churchill's Cold War defenders: "there is little evidence to show that Churchill's support for 'Armpit' was based upon political motives … [He supported it] for the reason which any student of his career will be familiar with — it fired his imagination."
  • 110. Cf. Taylor, "The Statesman," pp. 56–57: "According to one version, Churchill was alarmed at the growth of Soviet power and tried to take precautions against it, if not in 1942 at least well before the end of the war…. It is hard to sustain this view from contemporary records. Churchill never wavered from his determination that Nazi Germany must be utterly defeated…. Churchill had no European policy in any wider sense. His outlook was purely negative: the defeat of Germany…. With Churchill it was always one thing at a time." See also Ben-Moshe, Churchill: Strategy and History, pp. 292–99, on the southern strategy not being aimed at forestalling Soviet gains.
  • 111. Ibid., p. 287.
  • 112. An instance of the lengths to which Churchill's apologists will go is provided by John Keegan, in "Churchill's Strategy," in Churchill, Blake and Louis, eds., p. 328, where he states of Churchill: "Yet he never espoused any truly unwise strategic course, nor did he contemplate one. His commitment to a campaign in the Balkans was unsound, but such a campaign would not have risked losing the war." Risking losing the war would appear to be an excessively stringent criterion for a truly unwise strategic course.
  • 113. Albert C. Wedemeyer, Wedemeyer Reports! (New York: Holt, 1958), p. 230. Everyone else was against Churchill's plan, including his own military advisors. Brooke pointed out to his chief that, if they followed through with his idea, "we should embark on a campaign through the Alps in winter." Ponting, Churchill, p. 625.
  • 114. Lamb, Churchill as War Leader, pp. 250–75.
  • 115. Churchill's own Foreign Office informed him that: "we would land ourselves with a Communist state closely linked to the USSR after the war who would employ the usual terrorist methods to overcome opposition." Ibid., p. 256. Anthony Eden told the Cabinet in June, 1944: "If anyone is to blame for the present situation in which Communist-led movements are the most powerful elements in Yugoslavia and Greece, it is we ourselves." British agents, according to Eden, had done the work of the Russians for them. Charmley, Churchill: The End of Glory, p. 580.
  • 116. Fitzroy Maclean Eastern Approaches (London: Jonathan Cape, 1949), p. 281.
  • 117. Lamb, Churchill as War Leader, p. 259. Churchill believed Tito's promises of a free election and a plebiscite on the monarchy; above all, he concentrated on a single issue: killing Germans. See also Charmley, Churchill: The End of Glory, p. 558.
  • 118. On September 21, 1943, for instance, Churchill stated: "The twin roots of all our evils, Nazi tyranny and Prussian militarism, must be extirpated. Until this is achieved, there are no sacrifices we will not make and no lengths in violence to which we will not go." Russell Grenfell, Unconditional Hatred (New York: Devin-Adair, 1953), p. 92.
  • 119. Ponting, Churchill, p. 675.
  • 120. Watt, "Churchill and Appeasement," p. 210.
  • 121. In a memorandum to Alexander Cadogan, of the Foreign Office; Richard Lamb, The Ghosts of Peace, 1935–1945 (Salisbury, England: Michael Russell, 1987), p. 133.
  • 122. Peter Hoffmann, German Resistance to Hitler (Cambridge, Mass.: Harvard University Press, 1988), pp. 95–105; idem, The History of the German Resistance, Richard Barry, trans. (Cambridge, Mass.: MIT Press, 1977), pp. 205–48; and idem, "The Question of Western Allied Co-Operation with the German Anti-Nazi Conspiracy, 1938–1944," The Historical Journal 34, no. 2 (1991): 437–64.
  • 123. Giles MacDonogh, A Good German: Adam von Trott zu Solz (Woodstock, N.Y.: Overlook Press, 1992), pp. 236–37.
  • 124. Lamb, Churchill as War Leader, p. 292. Lamb argues this thesis at length and persuasively in his The Ghosts of Peace, 1935–1945, pp. 248–320. A less conclusive judgment is reached by Klemens von Klemperer, German Resistance Against Hitler: The Search for Allies Abroad 1938–1945 (Oxford: Clarendon, 1992), esp. pp. 432–41, who emphasizes the difficulties in the way of any agreement between the British government and the German resistance. These included, in particular, the loyalty of the former to its Soviet ally and the insistence of the latter on post-war Germany's keeping ethnically German areas, such as Danzig and the Sudetenland.
  • 125. Marie Vassiltchikov, who was close to the conspirators, in her Berlin Diaries, 1940–1945 (New York: Knopf, 1987), p. 218, expressed her bafflement at the line taken by the British: "The Allied radio makes no sense to us: they keep naming people who, they claim, took part in the plot. And yet some of these have not yet been officially implicated. I remember warning Adam Trott that this would happen. He kept hoping for Allied support of a 'decent' Germany and I kept saying that at this point they were out to destroy Germany, any Germany, and would not stop at eliminating the 'good' Germans with the 'bad.'"
  • 126. Ben-Moshe, Churchill: Strategy and History, pp. 307–16. See also Anne Armstrong, Unconditional Surrender (Westport, Conn.: Greenwood, [1961] 1974); and Lamb, The Ghosts of Peace, 1935–1945, pp. 215–35. Among the strongest wartime critics of the unconditional surrender policy, as well as of the bombing of civilians, was the military expert, Liddell Hart; see Brian Bond, Liddell Hart: A Study of his Military Thought (New Brunswick, N.J.: Rutgers University Press, 1977), pp. 119–63.
  • 127. Lamb, The Ghosts of Peace, 1935–1945, p. 232.
  • 128. Ibid., pp. 236–45.
  • 129. Lord Moran, Churchill: The Struggle for Survival, 1940–1965 (Boston: Houghton Mifflin, 1966), pp. 190–91. Churchill's ready acceptance of this specious argument casts considerable doubt on the claim of Paul Addison, Churchill on the Home Front, p. 437, that Churchill was "schooled" in free-trade doctrines, which were "ingrained" in him. More consistent with the evidence, including his outright rejection of free trade beginning in 1930, is that Churchill used or cast aside the economic theory of the market economy as it suited his political purposes.
  • 130. Moran, Churchill: The Struggle for Survival, 1940–1965, pp. 195–96.
  • 131. Ibid., p. 193. That the spirit at least of the Morgenthau Plan continued to guide Allied policy in post-war Germany is shown in Freda Utley's The High Cost of Vengeance (Chicago: Henry Regnery, 1949).
  • 132. Lamb, Churchill as War Leader, pp. 63–73. See also Ponting, Churchill, pp. 450–54; and Hart, "The Military Strategist," pp. 210–21.
  • 133. The "British obsession with heavy bombers" had consequences for the war effort as well; it led, for instance, to the lack of fighter planes at Singapore. Taylor, "The Statesman," p. 54. On the whole issue, see Stephen A. Garrett, Ethics and Airpower in World War II: The British Bombing of German Cities (New York: St. Martin's Press, 1993). See also Max Hastings, Bomber Command (New York: Dial Press, 1979); David Irving, The Destruction of Dresden (New York: Ballantine, 1963); and Benjamin Colby, 'Twas a Famous Victory (New Rochelle, N.Y.: Arlington House, 1974), pp. 173–202. On the British use of airpower to "pacify" colonial populations, see Charles Townshend, "Civilization and 'Frightfulness': Air Control in the Middle East Between the Wars," in Warfare, Diplomacy, and Politics: Essays in Honor of A.J.P. Taylor, Chris Wrigley, ed. (London: Hamish Hamilton, 1986), pp. 142–62.
  • 134. Ponting, Churchill, p. 620.
  • 135. Hastings, Bomber Command, p. 339. In 1945, Harris wrote: "I would not regard the whole of the remaining cities of Germany as worth the bones of one British grenadier." Ibid., p. 344. Harris later wrote "The Germans had allowed their soldiers to dictate the whole policy of the Luftwaffe, which was designed expressly to assist the army in rapid advances…. Much too late in the day they saw the advantage of a strategic bombing force." Hughes, Winston Churchill: British Bulldog, p 189.
  • 136. J.M. Spaight, Bombing Vindicated (London: Geoffrey Bles, 1944), p. 70–71. Spaight declared that Britons should be proud of the fact that "we began to bomb objectives on the German mainland before the Germans began to bomb objectives on the British mainland." Hitler, while ready enough to use strategic bombing on occasion, "did not want [it] to become the practice. He had done his best to have it banned by international agreement." Ibid., pp. 68, 60. Writing during the war, Spaight, of course, lied to his readers in asserting that German civilians were being killed only incidentally by the British bombing.
  • 137. On February 14, 1942, Directive No. 22 was issued to Bomber Command, stipulating that efforts were now to be "focused on the morale of the enemy civil population and in particular of the industrial workers." The next day, the chief of the Air Staff added: "Ref the new bombing directive: I suppose it is dear that the aiming points are to be the built-up areas, not, for instance, the dockyards or aircraft factories." Garrett, Ethics and Air Power in World War II, p. 11. By lying about the goal of the bombing and attempting a cover-up after the war, Churchill implicitly conceded that Britain had committed breaches of the rules of warfare. Ibid., pp. 36–37.
  • 138. Ibid., pp. 32–33.
  • 139. Richard Swedberg, Schumpeter: A Biography (Princeton, N.J.: Princeton University Press, 1991), p. 141.
  • 140. Garrett, Ethics and Air Power in World War II, p. 202.
  • 141. Hastings, Bomber Command, pp. 343–44. In November, 1942, Churchill had proposed that in the Italian campaign: "All the industrial centers should be attacked in an intense fashion, every effort being made to render them uninhabitable and to terrorise and paralyse the population." Ponting, Churchill, p. 614.
  • 142. To a historian who wished to verify some details, Churchill replied: "I cannot recall anything about it. I thought the Americans did it. Air Chief Marshal Harris would be the person to contact." Rose, Churchill: The Unruly Giant, p. 338.
  • 143. Garrett, Ethics and Air Power in World War II, p. 21.
  • 144. See Barton J. Bernstein, "A postwar myth: 500,000 U.S. lives saved," Bulletin of the Atomic Scientists 42, no. 6 (June/July 1986): 38–40; and, idem, "Wrong Numbers," The Independent Monthly (July 1995): 41–44. See also, idem, "Seizing the Contested Terrain of Early Nuclear History: Stimson, Conant, and Their Allies Explain the Decision to Use the Atomic Bomb," Diplomatic History 17, no. 1 (Winter 1993): 35–72, where the point is made that a major motive in the political elite's early propaganda campaign justifying the use of the atomic bombs was to forestall a feared retreat into "isolationism" by the American people. It is interesting to note that Richard Nixon, sometimes known as the "Mad Bomber" of Indo-China, justified "deliberate attacks on civilians" by citing the atomic bombings of the Japanese cities, as well as the attacks on Hamburg and Dresden. Richard M. Nixon, "Letters to the Editor," New York Times, May 15, 1983.
  • 145. Erik von Kuehnelt-Leddihn, Leftism Revisited: From de Sade and Marx to Hitler and Pol Pot (Washington, D.C.: Regnery, 1990), p. 281. This work contains numerous perceptive passages on Churchill, e.g., pp. 261–65, 273, and 280–81, as well as on Roosevelt.
  • 146. Aleksandr I. Solzhenitsyn, The Gulag Archipelago, 1918–1956: An Experiment in Literary Investigation, Thomas P. Whitney, trans. (New York: Harper and Row, 1973), 1–2, p. 259n.
  • 147. Ibid., pp. 259–60.
  • 148. Sisley Huddleston, France: The Tragic Years, 1939–1947 (New York: Devin-Adair, 1955), pp. 285–324.
  • 149. See, for instance, Richard West, Tito and the Rise and Fall of Yugoslavia (New York: Carroll and Graf, 1995), pp. 192–93.
  • 150. Ponting, Churchill, p. 665.
  • 151. Herbert Mitzka, Zur Geschichte der Massendeportationen von Ostdeutschen in die Sowjetunion im Jahre 1945 (Einhausen: Atelier Hübner, 1986). On other crimes against German civilians in the aftermath of the war, see, among other works, Heinz Nawratil, Die deutschen Nachkriegsverluste unter Vertriebenen, Gefangenen, und Verschleppten (Munich/Berlin: Herbig, 1986); John Sack, An Eye for an Eye (New York: Basic Books, 1993); and James Bacque, Verschwiegene Schuld: Die allierte Besatzungspolitik in Deutschland nach 1945, Hans-Ulrich Seebohm, trans. (Berlin/Frankfurt a. M.: Ullstein, 1995).
  • 152. Alfred de Zayas, Nemesis at Potsdam: The Anglo-Americans and the Expulsion of the Germans. Background, Execution, Consequences (London: Routledge and Kegan Paul, 1977).
  • 153. Gaspar M. Tamas, "The Vanishing Germans," The Spectator, May 6, 1989, p. 15.
  • 154. Critiques of the Nuremberg Trials are included in Lord Hankey, Politics, Trials, and Errors (Chicago: Henry Regnery, 1950), and F.J.P. Veale, Advance to Barbarism: The Development of Total Warfare from Serajevo to Hiroshima (New York: Devin-Adair, 1968).
  • 155. Charmley, Churchill: The End of Glory, p. 622.
  • 156. Robert Boothy, Recollections of a Rebel (London: Hutchison, 1978), pp. 183–84.
  • 157. Churchill, The Gathering Storm, pp. iv — v.
  • 158. Nisbet, Roosevelt and Stalin: The Failed Courtship, p. 106.
  • 159. Cf. Robert Higgs, "The Cold War Economy: Opportunity Costs, Ideology, and the Politics of Crisis," Explorations in Economic History 31 (1994): 283–312.
  • 160. Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press, 1949), p. 855.
  • 161. Charmley, Churchill: The End of Glory, p. 610, 618. Cf. Peter Clarke, Liberals and Social Democrats (Cambridge: Cambridge University Press, 1978), p. 281: "When the Churchill Coalition was formed in May 1940 it gave progressivism a central political role which it had lacked since 1914…. The people's war brought a people's government in which ordinary Labour and good Liberals were the ascendant elements…. Anti-appeasement was the dominant myth; it helped displace the Guilty Men of Munich; and it prepared the ground for the overthrow of the Chamberlain consensus in domestic policy too. Keynes suddenly moved to a pivotal position inside the Treasury. Labour's patriotic response to the common cause was symbolised by the massive presence of Ernest Bevan as Minister of Labour."
  • 162. Addison, "Churchill and Social Reform," p. 73. Addison states: "By the spring of 1945 the Coalition government had prepared draft bills for comprehensive social insurance, family allowances, and a national health service." As Leader of the Opposition for the next six years, "in social policy [Churchill] invariably contested the Labour Party's claim to a monopoly of social concern, and insisted that the credit for devising the post-war welfare state should be given to the wartime Coalition, and not to the Attlee government." For a contrasting view, see Kevin Jeffreys, The Churchill Coalition and Wartime Politics, 1940–1945 (Manchester: Manchester University Press, 1991).
  • 163. Greenleaf, The British Political Tradition, pp. 254–55.
  • 164. Roberts, Eminent Churchillians, p. 258.
  • 165. Ibid., p. 254. Roberts points out that "when the iron and steel industries were denationalized in 1953, they effectively continued to be run via the Iron and Steel Board."
  • 166. Roy Jenkins, "Churchill: The Government of 1951–1955," in Churchill, Blake and Louis, eds., p. 499.
  • 167. Addison, "Churchill and Social Reform," p. 76.
  • 168. Roberts, Eminent Churchillians, pp. 243–85.
  • 169. C.S. Lewis, That Hideous Strength: A Modem Fairy-Tale for Grown-Ups (New York: Collier, [1946] 1965), p. 291.

It's Time for the US To Stop Courting Conflict with Russia

Posted: 23 Nov 2021 09:00 AM PST

Just as happened this past April, Russian troop levels at the border with Ukraine are rising. Next door in Belarus, the embattled government of Alexander Lukashenko is being accused of launching a "hybrid attack" on its neighbor Poland. Meanwhile, to the south, a constitutional crisis been brewing for months in Bosnia and Herzegovina, with Bosnian Serb leader Milorad Dodik apparently taking the final steps toward the Republika Srpska's separation from the central government. These developments are worrying, particularly the latter two cases. Treaty obligations tie the United States to Poland, and Bosnia and Herzegovina, where the United States intervened multiple times during the wars of Yugoslavia's disintegration in the 1990s, are in the last stages of their applications for both NATO and EU membership. It is all too easy to imagine how the United States could wind up involved in a preventable conflict.

Apart from any treaty obligations or historical precedents, the Biden administration's foreign policy team is dominated by liberal internationalists. And just as their increasingly aggressive, zero-sum approach to China is the wrong one to take in the Indo-Pacific, it has long been counterproductive in eastern and southern Europe. The liberal internationalist desire to control the world is a dangerous delusion where the interests of other nuclear-armed great powers are concerned, and it alienates powerful minority populations who feel locked unwillingly into their existing states by the threat of American intervention or retaliation.

So while the US military, national security, and foreign policy establishment will likely feel the need for the US to be involved in the various concurrent crisis spots in the region, the only realistic policy for peace and stability in the region (so the US government can go back to focusing on the Indo-Pacific and antagonizing China) is one based on de-escalation, decentralization, and a tacit or overt acceptance of a Russian sphere of influence in its immediate neighborhood. For this to even be possible, however, US policy makers need to realistically reflect on how their various actions since the end of the Cold War must look from the Russian perspective, because while Russia and its allies are almost always portrayed as ominous encroachers on Europe's peace, the reality is that Russia sees its moves as defensive, not offensive, and as direct responses to US and European actions and policies.

From NATO and EU expansion deep into eastern and southern Europe to covert and overt support for color revolutions in places like Georgia and Ukraine, to the bombing of Serbia and the waging of economic warfare, Russia feels as though it has been relentlessly battered and beset by the US and its allies since the end of the Cold War. Russians resent having been humiliated during their period of weakness following the Soviet Union's collapse, though they had received assurances from the United States that it would not move its military forces, NATO's forces, into the former Soviet sphere. For most Russians, then and now, the 1990s were a period of predatory "privatization," organized crime, Western debt traps, shortages, poverty, depression, and death. And while Vladimir Putin does repress political opposition, reliable external polling and reporting leaves little doubt about his genuine popularity among a large swathe of the population.

And even though Putin is an authoritarian, contrary to one of the legitimating pillars of liberal internationalism, that democracies do not fight one another, states of every kind compete. Those competitions can intensify, turn violent, and there is no reason to think it's just Putin that the US has a problem with. Any large and powerful Russian state, whether a dictatorship or a democracy, has, does, and would naturally seek to assert its influence in its region to realize its maximal potential. The reality is that it is the United States that is acting as an outside balancer in a region regularly dominated by Moscow for a century and a half. Therefore, if it doesn't get out of the region entirely, what the United States most needs to do to decrease conflict, or the likelihood of future conflict, is accept that Russia has valid interests in eastern Europe and in the Balkans. The only other option is another Cold War we must all pray doesn't inadvertently go hot.

In the three cases at hand, Ukraine, Belarus, and Bosnia and Herzegovina, Russia will continue to act forwardly and intentionally so long as it perceives the US as motivated to prevent its influence or harm its interests. Ukraine can't be a part of NATO or the EU without a larger war than already exists in the country, one that involves the two major powers directly. In the absence of Western interference, Lukashenko will remain in Belarus, poking at Poland, a rude but not terribly destructive situation, save the several hundred unfortunate refugees. If left to themselves, Dodik and the Bosnian Serbs will likely gain at least their de facto independence from the corrupt Bosniak- and Croat-dominated central government. There is no need to escalate any of these situations with provocative statements or stances by the Biden administration.

Putin, or any realist Russian government, could live with an independent array of variously aligned Balkan countries and an independent and westward-facing Poland, but not with a hostile Georgia, Ukraine, or Belarus. Think how the US would feel if Canada started inviting the Chinese military to put bases in Ontario: no matter what any Chinese government said about its intentions, Washington would reject this as utterly unacceptable and intolerable. This leaves the former Soviet and now NATO member Baltic states as the one region where there isn't an obvious solution as things stand. Russia isn't happy, but perhaps the situation would be tolerable to Moscow were US foreign policy to begin taking shape along the lines described above. And it begins by recognizing that—compared to other regimes—Putin's Russia isn't "evil," or an especially bad actor. Rather, the Russian regime is like most other regimes. The difference is, unlike many regimes, it has the military, economic, technological, and diplomatic capacity to pursue the respect it wants and the security it believes it deserves. In the case of the Russians, they believe their blood, spilled in the grueling, solo, eastern-front defeat of the best the Nazi war machine had to offer, bought the right to demand such international prerogatives. 

This posting includes an audio/video/photo media file: Download Now

The Befuddling World of the Antieconomist

Posted: 23 Nov 2021 08:00 AM PST

Time for Socialism: Dispatches from a World on Fire, 2016–2020
By Thomas Piketty
Yale University Press, 2021
352 pages

Thomas Piketty has written a useful book. Readers need no longer plough their way through his vast Capital in the Twenty-First Century, not to mention his even vaster Capital and Ideology, to understand his message. This fairly short book, which consists of his columns for the French newspaper Le Monde written between 2016 and 2020, along with an introductory essay, "Long Live Socialism!," conveys the essence of his ideas. Not that reading this book is fun: Piketty clogs the book with charts and statistics and repeats his main ideas well beyond the point of utter boredom.

Before addressing this message, though, we need to look at his method. Austrian economists proceed by deduction from the concept of action and by doing so arrive at the laws of economics. Not so Piketty: for him there are no laws of economics. "There is no universal law of economics: There is only a multiplicity of historical experiences and imperfect data, which we have to examine patiently to endeavor to draw some provisional and uncertain lessons." Piketty is a historicist or institutionalist, what Mises calls an "antieconomist."

It's bad to be an antieconomist, but if you are one you should get your facts and statistical data right. Suffice it to say that Piketty's grasp of history does not inspire confidence. He says, "In the United States, it was not until the mid-1960s that the former slaves finally obtained the right to sit on the same buses as whites, to go to the same schools, and, at the same time, gained the right to vote." Can he really be unaware that, after the 1870s, legal segregation and franchise restrictions were largely confined to the South? We also learn from him that "as far back as the 1870s, the Democratic Party had begun to reconstruct itself on the basis of an ideology which could be described as social-differentialist: it was violently inegalitarian and segregationist toward Black Americans but more egalitarian than the Republicans toward the white population (in particular the new immigrants from Italy and Ireland)." The influential Bourbon Democrats of that period were classical liberals, and serious debate about immigration restrictions got started after 1900. But who's counting?

We haven't yet reached the strangest of Piketty's historical interpretations. "[B]etween 1929 and 1935," he tells us, "the central banks were shaped by a liberal orthodoxy based on nonintervention and had allowed a wave of bank failures to take place. This precipitated the collapse of the economy, the explosion of unemployment, the rise of Nazism, and the road toward war." Bank failures caused World War II—who knew?

I won't discuss Piketty's use of statistical data, but his blunders and bias have aroused widespread condemnation. One notable essay by Phillip Magness and Robert Murphy comes close to charging him with fraud and deception. (See my discussion of Jean- Philippe Delsol, Nicholas Lacaussin, and Emmanuel Martin's Anti-Piketty: Capital for the 21st Century, in the Quarterly Journal of Austrian Economics 20, no. 4 [2017].) Piketty has responded to some of his critics, though not to Magness and Murphy, but a statement in this book suggests that he is less than surefooted with numbers. He says that there has been in the past decades some progress toward reducing global inequality, but much remains to be done: "The poorest 50% of the population is still the poorest 50% of the population." I'll leave this question as an exercise for the reader: Why is this vacuous remark not a tautology?

Piketty's central idea is that inequality is the supreme social sin and must be radically curtailed. He doesn't deny that capitalism results in economic growth and an enhanced standard of living, but the income and wealth of the rich have grown far faster than that of the poor. You might ask why this matters, even granting his dubious statistics: Don't people care about how well they are doing, much more than they resent the rich, if in fact they resent them at all?

To ask a question like this is, for Piketty, to look at society from the wrong perspective. For him, equality trumps prosperity. If another of his proposals, "greening" the economy in order to reduce carbon emissions, is adopted, most people will need to live with a lower amount of material goods. But, projecting his own egalitarian commitments onto others, he thinks people will be willing to make the sacrifice so long as the rich have to pay their "fair" share of the costs. "[T]he considerable adjustment in lifestyles to deal with global warming will only be acceptable if a fair distribution of the effort is guaranteed. If the rich continue to pollute the planet with their SUVs and their yachts registered in Malta . . . then why should the poor accept the carbon tax, which is likely to be inevitable?"

Piketty often talks about democracy, but it would not occur to him to ask people whether they want to green the economy. Freedom of individual choice needs to be kept within strict limits, on this issue and on another vital issue as well. As even he cannot escape noticing, people around the world favor secession and decentralization. Local autonomy, Piketty thinks, has its place; but it must never be allowed to interfere with the power of the nation to impose income and wealth taxes. Otherwise, local regions might compete to attract investment by lowering tax rates, and we can't have that, can we? Discussing a Spanish law that lets regions set the income tax rates for half the total tax base, he says that the system "challenges the very idea of solidarity within the country and comes down to playing the regions against one another, which is particularly problematic when the issue is one of income tax, as this is supposed to enable the reduction of inequalities between the richest and the poorest, over and above regional or professional identities."

People should not be free to organize a business as they wish, even if they are starting it with their own money. The state should require them to share control of their company with workers, and they must install women and minority groups on their board of directors. "In addition to the fact that employee representatives should have 50% of the vote in all companies (including the smallest) it is conceivable that within the 50% of voting rights going to shareholders, the share held by an individual shareholder may not exceed a certain threshold in sufficiently large companies. . . . In order to . . . truly move against patriarchy, it is essential to put into place binding, verifiable, and sanctioned measures, both for positions of responsibilities in companies, administrations, and universities and in political assemblies. . . . The issue of gender discrimination must also be considered in relation to the fight against ethno-racial discrimination, particularly in terms of access to employment."

Something Piketty says himself enables us to see a problem with these policies. He points out that donors to major universities do not get to control policy and suggests that investors in business can be treated the same way. "[T]he fact remains that this generous donor is in a more precarious position than a shareholder. There is no guarantee that the board of directors will renew him [in his seat on the board] indefinitely, and, above all, he can in no way threaten to pull out and withdraw his donation. His gift has been definitively incorporated into the endowment of the university; however, this has not prevented him from giving it." If this is true, isn't it also true that those who want to establish worker-controlled firms are free to do so and to invite investors to give them gifts? Why do we need the state to force all businesses to conform to this pattern? To Piketty, though, individual freedom would interfere with democratic solidarity, and to invoke the "sacrosanct mantra of the market and private property" is repellent.

Ludwig von Mises long ago pointed out the harmful effects of confiscatory taxation in the name of "equality." As he says in Human Action: "A law that prohibits any individual from accumulating more than ten millions or from making more than one million a year restricts the activities of precisely those entrepreneurs who are most successful in filling the wants of consumers. If such a law had been enacted in the United States fifty years ago, many who are multimillionaires today would live in more modest circumstances. But all those new branches of industry which supply the masses with articles unheard of before would operate, if at all, on a much smaller scale, and their products would be beyond the reach of the common man. It is manifestly contrary to the interest of the consumers to prevent the most efficient entrepreneurs from expanding the sphere of their activities up to the limit to which the public approves of their conduct of business by buying their products."

As Mises also notes, workers' wages depend on their marginal productivity, and the best way to increase marginal productivity is to increase the amount of capital invested per worker. Confiscatory taxation, pursued in the name of what Mises calls a "spurious metaphysical doctrine," interferes with capital accumulation and thus hurts workers. "The greater part of that portion of the higher incomes which is taxed away would have been used for the accumulation of additional capital. If the treasury employs the proceeds for current expenditure, the result is a drop in the amount of capital accumulation. . . . Thus the accumulation of new capital is slowed down. The realization of technological improvement is impaired; the quota of capital invested per worker employed is reduced; a check is placed upon the rise in the marginal productivity of labor and upon the concomitant rise in real wage rates."

If you compare what Mises says with the remarks by Piketty I have quoted, you will see very clearly the difference between an economist and an antieconomist.

Christopher Habig: How Understanding Subjective Value Will Revolutionize the Medical Care Industry

Posted: 23 Nov 2021 07:30 AM PST

The field of medical care is so ripe for new entrepreneurial solutions. As is always the case, solution design begins with understanding subjective value, both for customers (patients) and providers (doctors) Christopher Habig of Freedom Healthworks (FreedomHealthworks.com) joins Economics For Business to explain how an Austrian, subjective-value focused approach is bringing market freedoms to medical care.

Key Takeaways and Actionable Insights

Step 1: Like many entrepreneurs, Chris Habig started a revolutionary business from a place of familiarity and existing knowledge.

The so-called effectual process in entrepreneurship begins with two straightforward questions: what do I know and who do I know? Chris Habig grew up in a family where both parents are physicians. This vantage point gave him the opportunity to observe the critical doctor-patient relationship first hand, as well as the way in which modern bureaucratized medicine imposes obstacles and complexities that strangle the value generation potential of that relationship.

Step 2: Assessing the subjective value gap.

From his Austrian analytical perspective, Chris was able to identify the subjective value gap. For customers (patients) it is the loss of the positive feelings that they associate with the doctor-patient relationship. Chris summarizes them as advocacy, access and affordability: my doctor is on my side and looking out for me; my doctor is always available to me; I will not be excluded for economic reasons. These feelings are negated by bureaucratic medicine.

There's a subjective value gap on the physician side, too. Research shows that doctors are stressed, and no longer find fulfilment in their work. Their mental health declines and there is an increasing rate of defection (leaving the industry) and even suicide. It's a sign of a dysfunctional system to exert such an effect on its human capacity.

Step 3: Identifying the barriers to remove.

Value generation often consists in the removal of barriers to the realization of the desired experience. Chris identified two major barriers: insurance and government. The current approach to medical insurance actually hampers the market for what customers truly desire, which is the positive feelings of the doctor-patient relationship. Now it's a patient-insurer relationship: will my visit / test / procedure be covered? Will there be a big bill in the mail?

And, of course, the participation of government to enforce the current system through legislation and regulation perpetuates the barriers.

Step 4: The entrepreneurial solution.

The solution is to free the system from its constraints through entrepreneurship. The physician is the entrepreneur on the supply side. Via a new business model called Direct Primary Care (DPC), the physician-entrepreneur creates a new value proposition for customers. Access is provided via a subscription model, and this financial innovation enables the thriving of a practice composed of a small number of patients to whom the physician can devote more time per visit, more attention, and more personal and individualized care. The physician is networked into a web of complementary secondary and specialist services that can be orchestrated for the individual patient's need. All the associated business services are clustered around the DPC practice, and the physician does not need to be bound by a hospital system bureaucracy.

The new financial model enables the customer to take charge of their medical expenses, paying cash for current needs and reserving insurance for catastrophic events, which is the way it should be used. Consumer prices are lowered throughout the system.

Lives are improved on both sides of the doctor-patient relationship.

Step 5: The support system for the entrepreneurial model.

We live in an age in which distributed entrepreneurship can be embedded in an enabling system of digital infrastructure. Part of the innovation that Freedom Healthworks brings to the renaissance of the doctor-patient relationship is the platform on which the DPC business model can run.

Chris has identified 158 steps for the set-up, operation, and maintenance of a DPC business model. These can all be hosted, enabled, and implemented on the physician's behalf. Finance, technology, operations, marketing, and vendor relationships can all be systematized and partially or fully automated. The doctor can focus on the relationship component of interacting with patients.

Step 6: Scaling.

Can entrepreneurs build out a fully-functioning cash-based direct care system to rival and ultimately replace the government-insurance company nexus? It's already happening. As each DPC practice proves itself, more entrepreneurial physicians will make the transition and momentum will build.

DPC is an important example of the future of entrepreneurial economics.

Additional Resources

"Enabling A Direct Primary Care Practice" (PDF): Mises.org/E4B_145_PDF1

"FreedomDoc Launch Process" (PDF): Mises.org/E4B_145_PDF2

Healthcare Americana podcast: Mises.org/E4B_145_Pod

Visit FreedomHealthworks.com and FreedomDoc.care

China's Financial Bubbles Remind Us of Scams like Britain's South Sea Bubble

Posted: 23 Nov 2021 07:00 AM PST

It never ends well: to clean up mountains of bad debts, the Chinese regime has employed debt-for-equity schemes that could leave countless ordinary investors in deep trouble.

Original Article: "China's Financial Bubbles Remind Us of Scams like Britain's South Sea Bubble"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

Will the Next "Skyscraper Curse" Be Found in the Digital World?

Posted: 23 Nov 2021 05:00 AM PST

Our largest skyscrapers exist no longer physically, but in a world of ones and zeroes. The most groundbreaking technology projects springing from malinvestment may be digital the next time around.

Original Article: "Will the Next "Skyscraper Curse" Be Found in the Digital World?"

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.

The Virginia Elections Showed Some Parents Are Seeing How Bad the Government Schools Really Are

Posted: 23 Nov 2021 04:00 AM PST

In the aftermath of the Virginia gubernatorial elections, armchair pundits are still offering their spin on the upset that Republican challenger Glenn Youngkin pulled off against former governor Terry McAuliffe. While there's a lot of talk about the results of this election being a referendum on the Biden administration's plummeting approval rate and mishandling of the economy, education is one local contributing factor behind Republicans' strong performance in the Old Dominion that cannot be overlooked.

After all, off-year elections at the state levels tend to be somewhat insulated from DC happenings. By default, local issues take precedence over DC topics du jour. According to exit polls, education figured prominently among issues that brought Virginians to the polls. Exit poll data from the Washington Post showed that education was among the top three issues that concerned Virginian voters.

While the instruction of key concepts of critical race theory was a major factor (and will continue to be so) in motivating Virginians to vote against the Left, other permutations of leftist indoctrination and social experiments germinating inside of public schools provoked a strong response from disaffected voters in Virginia.

After government-sponsored lockdown measures compelled many students to take their classes online, parents now had the chance to look over their children's shoulders and find out what they were being taught. Parents who casually dumped their children off at glorified taxpayer-funded daycare centers received a rude wake-up call once they grasped the level of indoctrination their children were being subjected to. Some parents were so impacted by what they learned that they ended up rushing to their local school board meetings and gave education functionaries a piece of their mind.

It also didn't help that throughout the campaign trail Terry McAuliffe did everything possible to position himself as the candidate of the education establishment.

McAuliffe outdid himself by declaring that parents had no right to tell schools what to teach. To cap it all off, McAuliffe held a campaign rally with Randi Weingarten, the president of the American Federation of Teachers, right before election time. Weingarten heads the largest teacher union in the nation and was one of the most enthusiastic boosters of covid-19 lockdowns.

To say that McAuliffe's campaign was oozing with elitism would be an understatement. Regardless of how one felt about Republicans, the moralizing of the promask, prolockdown crowd and the aloofness of the edu-cracy throughout the pandemic was an insufferable maelstrom of elitism that had to go down at the polls.

One of the key lessons from the Virginia elections is that paying attention to local issues is of the utmost importance for any meaningful change to occur in politics. People tuning in to their local affairs is superior to having one's eyes glued to federal politics and futilely pulling the lever for politicians who do scant little to roll back the state's encroachments on people's daily lives.

Altogether, the Virginia race is not about Youngkin but the grassroots discontent that got him elected. In fact, Youngkin has all of the trappings of a conventional Republican who'll regurgitate bland talking points about conservative values and enact some marginal tax cuts here and there. Nothing special when it comes to making transformational reforms that put the administrative state on a diet.

Nevertheless, there are silver linings that can be found. What's on display in Virginia is a generalized discontent toward institutions that have been traditionally treated as normal fixtures of American politics. People who were previously intoxicated by propaganda about government schools serving as institutions that educated and civilized the masses are now sobering up to the realities of government schooling. Now it's dawning upon many bewildered parents that government schools function as indoctrination centers and are increasingly turning into dangerous social experiments.

From a big picture perspective, there's reason to be cautiously optimistic about the prospects of education reform. Over the past two decades, homeschooling has been on the rise. According to a Yahoo! News report released at the end of August, 11 percent of US households are now homeschooling. Overall, that means 5 million children are no longer under the thumbs of indoctrination agents cosplaying as educators.

Contrast this to 1999, when the percentage of students being homeschooled stood at around 1.7 percent. In that year, there were 850,000 school-aged children being homeschooled according to numbers from the National Center for Education Statistics. 

Perhaps under Youngkin's watch government will not move much in terms of education freedom. After all, history has repeatedly shown, at least at the federal level, that the Republican Party is not a vehicle for the structural reforms Americans need in order to live free from the grasp of the managerial state. But one positive takeaway from this election cycle is the burgeoning local engagement across Virginia, and nationwide, for that matter. A redirection of energy from federal activism to state and local activism is a good first step toward building movements that will hack away at the state's myriad tentacles of power.

Undoubtedly, winning on the education front would yield massive results for liberty, as it would deprive petty despots of the opportunity to poison millions of malleable minds with pro-state propaganda. A significant reason why statism is so embedded in the psyche of so many Americans is the state's ability to throw countless youth on the indoctrination conveyor belt and endlessly churn out pro-state zealots.

If there's one political fight worth seeing through, it's the crusade against government schooling. Defeating edu-crats once and for all would be one of the most effective ways to put the administrative state on a diet. 

This posting includes an audio/video/photo media file: Download Now

Kyle Rittenhouse: The Media's Assault on the Rights of the Accused

Posted: 22 Nov 2021 12:00 PM PST

To the relief of many, the Kyle Rittenhouse trial is over and a Kenosha County, Wisconsin, jury found Rittenhouse not guilty on all counts. While they believed that Rittenhouse acted legally in self-defense, it is clear that the vast majority of progressive American mainstream journalists believed him to be a murderer and would accept no other explanation.

Now it is one thing to believe something but quite another to throw out false information in the hopes that media members can help rig a conviction, and that is what was seen in the coverage of this case, from pretrial, the trial itself, and to the current moment. Furthermore, the progressive mainstream media coverage of this case goes well beyond the simple falsehoods we heard on a regular basis and threatens the fundamental rights of the accused that have been a bedrock of US criminal law since before the founding of the republic.

Following the verdict, I turned on MSNBC, which has been a leader in the false claims that Rittenhouse was a so-called white supremacist who went to Kenosha to hunt and kill people. The network has not disappointed in its postverdict coverage, beginning with the accusations by a panel of attorneys, law professors, and an official with Black Lives Matter. We heard that this was another Emmett Till verdict, that the judge in the trial was a white supremacist who rigged an acquittal, and that the entire case was about promoting white supremacy.

Conversely, the prosecutors were heroic and the jurors simply failed to do their duties. MSNBC contributor Ja'han Jones declared: "The Kyle Rittenhouse trail was designed to protect white conservatives who kill:"

The case had the makings of an acquittal before the trial even began. The outcome seemed clear even before an almost exclusively white jury pool was selected, even before Judge Bruce Schroeder created an uproar by ruling that the slain protesters could be referred to as "rioters" and "looters" but not "victims," even before Schroeder refused to punish Rittenhouse for what prosecutors said amounted to a violation of his bond conditions. Rittenhouse is a white teen who abides by white rules, and white people empathetic to those rules seemed poised to insulate him from repercussions.

The day he pleaded not guilty to felony homicide, Rittenhouse flashed a white supremacist symbol and was "loudly serenaded" by a group of men at a bar who belted out the anthem of the Proud Boys, a far-right extremist group, according to prosecutors.

Most likely, Rittenhouse make the "OK" sign, which until recently meant, well, OK. However, in our racially charged body politic, people must look for everything to be interpreted racially, even if no racial intent was intended or demonstrated.

Nor was MSNBC the only offender in racializing the verdict, as President Joe Biden, after earlier having falsely declared Rittenhouse to be a "white supremacist," decided to pour even more gasoline on the fire in an official White House statement following the verdict saying that he was "angry and concerned." In a bizarre, Bidenesque move, he then said this:

I ran on a promise to bring Americans together, because I believe that what unites us is far greater than what divides us. I know that we're not going to heal our country's wounds overnight, but I remain steadfast in my commitment to do everything in my power to ensure that every American is treated equally, with fairness and dignity, under the law.

I urge everyone to express their views peacefully, consistent with the rule of law. Violence and destruction of property have no place in our democracy.

Wisconsin's Democratic lieutenant governor Mandela Barnes declares:

Over the last few weeks, many dreaded the outcome we just witnessed. The presumption of innocence until proven guilty is what we should expect from our judicial system, but that standard is not always applied equally. We have seen so many black and brown youth killed, only to be put on trial posthumously, while the innocence of Kyle Rittenhouse was virtually demanded by the judge.

These statements are mind-boggling departures from reality. While giving lip service to their "respect" for juries, Biden and Barns then officially call out jurors for giving what they clearly state is the "wrong" verdict. Afterwards, after making a divisive statement, Biden pronounces himself to be the healer of nations and then calls for the "rule of law," forgetting that this situation came about because Biden supporters burned, looted, and destroyed a number of homes and businesses in Kenosha, many of them owned by racial minorities. Writes former New York Times reporter Nellie Bowles:

Until quite recently, the mainstream liberal argument was that burning down businesses for racial justice was both good and healthy. Burnings allowed for the expression of righteous rage, and the businesses all had insurance to rebuild. 

When I was at the New York Times, I went to Kenosha to see about this, and it turned out to be not true. The part of Kenosha that people burned in the riots was the poor, multi-racial commercial district, full of small, underinsured cell phone shops and car lots. It was very sad to see and to hear from people who had suffered. Beyond the financial loss, small storefronts are quite meaningful to their owners and communities, which continuously baffles the Zoom-class.

Indeed, the two men Rittenhouse shot to death were burning and looting, actions the mainstream media equated with protesting injustice against African Americans. Only in the bizarre world of progressivism can destroying the businesses and homes of racial minorities be considered a righteous protest against harming those same racial minorities.

As former NY Times columnist Bari Weiss points out, the media continually pushed its own version of the truth, not letting reality get in the way:

It did not help that in many places last summer, cities and police forces indicated or explicitly said they wouldn't defend people's property from destruction or burglary during the unrest. And it didn't help our understanding of what transpired on August 25 that we were told repeatedly by national media outlets that there weren't riots, and there wasn't violence in Kenosha that night until Kyle Rittenhouse discharged his weapon. We could all see the blocks of burning buildings with our own eyes. 

To acknowledge the facts of what happened that night is not political. It is simply to acknowledge reality. It is to say that facts are still facts and that lies are lies. It is to insist that mob justice is not justice. It is to say that media consensus is not the equivalent of due process. (emphasis mine)

Unfortunately, the sins of progressive journalists and politicians did not end with false public statements about Rittenhouse but extended into the conduct of the trial itself. The media and Democratic politicians demanded a show trial in which guilt would be understood from the outset in the way the Derek Chauvin trial played out in Minneapolis. Democratic congresswoman Cori Bush of Missouri declared: "The judge. The jury. The defendant. It's white supremacy in action. This system isn't built to hold white supremacists accountable," she wrote. "It's why Black and brown folks are brutalized and put in cages while white supremacist murderers walk free. I'm hurt. I'm angry. I'm heartbroken.

The rhetoric is well beyond the pale and it tells us something about how progressive Democrats plan to govern in the future, and it also says something sinister about how they regard the rights of the accused in our courts. First, let us look at what the Daily Beast called "shocking moments" of Judge Bruce Shroeder, who presided over the trial.

Shroeder, who is, by the way, a Democrat, took fire for his ruling that forbade prosecutors from referring to the men shot by Rittenhouse as "victims," but did not rule out being able to call them "rioters" or "looters." His rulings on nomenclature should surprise no one who is familiar with the rules of evidence in criminal courts.

Rittenhouse did not deny having shot the three men (killing two of them) but contended that he was engaged in lawful self-defense and that the people he shot posed a danger to his life. In that situation, the use of "victim" would not only be prejudicial to his defense but also would be grounds for reversing a guilty verdict. Likewise, if the men he shot could be shown to have been engaged in rioting and destroying property and attacking other people, such information would bolster his claims. And, indeed, the men who were shot not only had criminal records (that information was withheld from jurors), but eyewitness testimony along with photos and videos documented they were engaged in violent behavior that fateful night long before they saw the defendant. They decidedly were not the "peaceful protesters" that the media and Democratic politicians have continued to claim they were even in the face of incontrovertible evidence.

Then there was the supposed "racist" statement against Asians. Here is what he said: "I hope the Asian food … isn't on one of those boats in Long Beach Harbor." Yes, this is what the Daily Beast claimed was "shocking."

The exchanges between Shroeder and the prosecutors—condemned by the media and Democratic politicians—involved prosecutors violating the rules of evidence and disobeying direct orders from the judge, orders that applied both to the prosecution and the defense. Furthermore, when Thomas Binger publicly condemned Rittenhouse for invoking his Miranda Rights, he committed an offense for which a prosecutor can be disbarred. Shroeder had every right—and duty—to dress down Binger publicly.

Prosecutorial sins were not limited to disobeying the judge's orders and attacking a defendant for exercising legal rights. They also committed a Brady violation when they turned over an inferior drone video compared to what they had in their own possession, and other evidence helpful to the defense turned up at questionable times as well.

At the press conference after the verdict, Mark Richards, one of the defense attorneys claimed that the prosecution put two witnesses on the stand knowing that two police detectives who had interviewed them wrote that the witnesses were lying. Speaking of his own career past as a prosecutor, he said:

I never went after somebody like they did. And when they put on the Khindri brothers, knowing they were lying, that is a problem. You're playing with an 18-year-old's life and they were willing to put those guys on. They put them on knowing they were lying, and that's garbage.

If what Richards said is accurate (and he had written evidence to back his claims), then the prosecution knowingly suborned perjury, which is a felony in Wisconsin. At the very least, if Richards made a true statement, then the prosecutors in this case should face disbarment. This will not happen, of course, which also tells us something about the commitment of progressives to the rule of law that they claim to support.

The Rittenhouse case has uncovered a major threat to modern American jurisprudence, but not the threat that progressives are claiming. Attorney Scott Greenfield in his blog Simple Justice wrote chilling words during the trial:

As a general proposition, it is a tenet of progressive thought that the end justifies the means, such that the only "good" outcome is a "good" outcome, regardless of what it took to get there. Consequently, a trial ruling, a perception of evidence or a verdict that fails to comport with the desired outcome is inherently bad and wrong, since it's impossible to be good or right if it doesn't achieve the desired goal. Lie, cheat or steal, the only thing that matters is that the right outcome is achieved. In this case, the only acceptable outcome would be a verdict that Kyle Rittenhouse is guilty of murder. And that does not look likely at the moment.

He continues:

When a bad outcome appears inevitable, rationalizations appear out of the ether to explain how things could possibly go so very wrong. After all, a fair legal system couldn't possibly acquit Rittenhouse because he's guilty. Not because of what happened, not because of the law, but because that's the verdict reached in the Court of Social Justice. No matter how many lawyers explain that the judge's rulings, from the in limine motion to preclude the prosecution from calling the deceaseds "victims" to Judge Schroeder's admonishing the prosecutor, Thomas Binger, for trying to use Rittenhouse's exercise of his Fifth Amendment right to remain silent as evidence of guilt, to seeking to use propensity evidence that had been precluded against him, were both correct and within the bounds of normal trial practice, these are seen as absolute outrages by the unwary. Each instance that "surprises" the unduly passionate by not coming out the way their motivated reasoning would suggest becomes another piece of irrefutable evidence of how broken, how "fixed," the legal system is.

To add insult to injury, it's not just the unduly passionate activists crying that this is a travesty of "justice," but it's being supported by some lawyers of the left and progressive prawfs. And those pundits who are trying to smooth over, at least a little bit, the more outlandishly ridiculous claims of impropriety are being denigrated as closet racists for not joining the chorus of this grave injustice being perpetrated by white supremacists.

Thus, we have the president of the United States and the lieutenant governor of Wisconsin calling out jurors for doing what they were charged to do: examine the evidence and reach the best verdict they could. Progressive rhetoric aside, this was no Emmitt Till and the mixed-race jury that acquitted Rittenhouse did not engage in race-based jury nullification. Unfortunately, progressive journalists and politicians will not be satisfied until high-profile criminal trials resemble Stalin's Moscow show trials. That may be our future sooner than we might think.

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