I know God will not give me anything I can't handle.
I just wish that He didn't trust me so much.
Mother Teresa
Frederick Hayek, Ron Paul, Economic Fascism,
and A Follow-Up to My Bill O'Reilly Gas Price Rant
In recent posts, I've discussed certain writings (and/or audio/video clips) from two George Mason University economists: Don Boudreaux (recall his critique of the NY Times editorial regarding the "disproved" GOP claim that raising the minimum wage has an adverse effect on low-skilled employment and a video on neo-Keynesian Robert Reich's arbitrary use of the CPI to discuss income disparity?) and Russ Roberts (I commented on the 2006 interview he had with the great Milton Friedman where they discussed Friedman's classic text on monetary history and Friedman said that he was less worried about a second Depression and more about an out-of-control federal spending spree resulting in inflation.). They are operating a blog called "Cafe Hayek", which I'll be adding to my blogroll over the weekend.
Frederick Hayek, as faithful readers know, was a Nobel Prize-winning economist whom represents the Austrian School of Economics, best known for his phenomenally successful and influential WWII-era book called "The Road to Serfdom".
At the risk of oversimplification, Hayek was responding to Western intellectuals (around the time of WWII and the fascist movements in central Europe) whom regarded fascism as a perverse response of capitalism to socialism. Hayek argued that the fascism and socialism shared common characteristics, like a belief in the efficiency of centralized planning and authority and subjugation of the individual, i.e., serfdom. Hayek believed that whatever the nature of the collective ideal (the proletariat, the fatherland, etc.) that the recognized authority claimed to represent, the path to subjugation wasn't necessarily transparent to the individual but a stealth movement to that effect, where inch by inch the individual is ceding his rights to that authority. Hayek maintained that only a robust reassertion and unyielding defense of the primacy of individual rights and responsibilities can avoid the inevitable march towards enslavement to that central authority, whatever its ideological foundation.
It is no accident that Ron Paul, for instance, has raised controversy recently by saying, "We've slipped away from a true Republic - Now we're slipping into a fascist system where it's a combination of government and big business and authoritarian rule and the suppression of the individual rights of each and every American citizen." [I cite examples of what I believe Ron Paul is referencing later in this commentary.]
Some people may dismiss this out of hand, misunderstanding what Ron Paul means here, confusing incidental statist abuses of human rights (say, under WWII-era Germany and Italy) with its economic philosophy. The horrific Holocaust is morally unjustifiable, but human rights abuses can occur under any context where individual rights are subsumed under some collective ideal that the state authority claims to represent. In effect, Locke's idea, that government derives its legitimacy from individuals from unalienable rights, is flipped on its head: individual rights are conditionally granted at the discretion of the state.
Thomas DiLorenzo, an Austrian School economist and senior faculty member of the excellent libertarian Mises Institute, wrote an impressive paper on economic fascism (available here). I won't repeat it here, but here is my edit of some salient insights:
A version of economic fascism was in fact adopted in the United States in the 1930s and survives to this day [under the names of] "planned capitalism" [or] "industrial policy". [American fascist] economist Lawrence Dennis [ in 1936 argued that ] the adoption of economic fascism would intensify "national spirit" and put it behind "the enterprises of public welfare and social control"; the big stumbling block "liberal norms of law or constitutional guarantees of private rights." [Whereas the violations of human rights under political fascism were subsequently condemned] the practice of economic fascism never was: to this day, Mussolini [is admired for making sure that] "the trains run on time," insinuating that his interventionist industrial policies were a success.
From an economic perspective, fascism meant (and means) an interventionist industrial policy, mercantilism, protectionism, and an ideology that makes the individual subservient to the state. "Ask not what the State can do for you, but what you can do for the State". [Elements of economic fascism include]: (1) the primacy of the government; (2) planned industrial "harmony"/interventions; (3) government [senior] /business [junior] partnerships--"the principle of private initiative" could only be useful "in the service of the national interest" as defined by government bureaucrats; (4) mercantilism and protectionism. Corporatism was a massive system of corporate welfare (where losses are socialized).
Many American politicians who have advocated more or less total government control over economic activity [do not directly] attack private property, free enterprise, self-government, and individual freedom [but have adopted a deceptive soft-sell approach]: they have enacted a great many tax, regulatory, and income-transfer policies that achieve the ends of economic fascism, but which are sugar-coated with deceptive rhetoric about their alleged desire only to "save" capitalism: government restrictions henceforth must be accepted "not to hamper individualism but to protect it". Americans are mostly unaware of the dire threat [progressive politicians like Obama] pose for the future of freedom. The road to serfdom is littered with road signs pointing toward "the information superhighway, health security, national service, managed trade," and "industrial policy."
Before going further, let me comment briefly on the fiction that the cause of the economic tsunami was the greedy banks that had been unleashed to engage in morally hazardous, risky lending gambling with federally-guaranteed deposits because of the repeal of Glass Steagall; the refrain is "privatized gains; socialized losses". The fact of the matter is that the companies that went down during the economic tsunami were not the super-integrated banks, including commercial banks and investment banks. As a libertarian conservative, I'm not favorably inclined towards Big Business of any kind. In fact, we argue that the correct policy is to ROLLBACK government guarantees, subsidies, etc. We think that government guarantees and subsidies vest the government in target business success. We are making a larger point about free trade and the law of comparative advantage. Mercantilist/protectionist policy basically means that the government is propping up companies with failing business models; this is readily seen not so much in (unwanted and unnecessary) government bailouts of Big Banks, as in Obama's failed government loan guarantees to crony alternative energy interests. Government intervention actually artificially inflates prices and creates deadweight losses for consumers (not to mention creates a drain on the Treasury).
What I keep coming back to in terms of Obama's politics is the 2001 WBEZ interview which I covered during the campaign which one of the few times he was candid about his politics. He's griping that there's only so far you can get from the courts beyond the same basic legal rights as everybody else. If you feel that resources are unfairly distributed, you have to work through the government to access and distribute relevant assets through Constitution-provided taxes or regulations (my edits):
But, the Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society, didn’t break free from the essential constraints that were placed by the founding fathers in the Constitution, at least as its been interpreted, that generally the Constitution is a charter of negative liberties: says what the states can’t do to you, says what the Federal government can’t do to you, but doesn’t say what the Federal government or State government must do on your behalf, and that hasn’t shifted. The actual coalition of powers through which you bring about redistributive change requires political and community organizing and activities on the ground.Obama is quite clear here: change does not mean win-win: it's zero-sum. But we see progressive Democrats (and, to a more limited extent, Republicans) basically encouraging increasing broad-based dependence on government support. This is by no means a comprehensive list:
- we have seen the ratio of government spending in the health care sector increase to half (or more)
- seniors are increasingly dependent on (underfunded) government entitlements (pension and health care)
- the GSE's and FHA have increased their share of the mortgage industry from a negligible fraction to industry dominance and a significant percentage of the guaranteed loans before the tsunami were to high-risk applicants with little to no money down
- the Treasury Department forced banks over their objections after the economic tsunami to accept government "investments"
- we have consistently seen Democrats push up income eligibility for government-subsidized insurance programs (SCHIP, Medicaid) well into the middle class
- the Federal Reserve is only weakly supervised and was rewarded after the economic tsunami with even more responsibilities and it has been actively involved in European crisis talks
- we have seen an increasing footprint of the federal government in areas traditionally administered at the local/state level, including subsidies for teachers, police and firemen, and regulation of healthcare
- we have seen a radical expansion of government-guaranteed loans (from college students and mortgages to nuclear power plants)
- there were opaque multi-thousand page, pushing-on-a-string, bait-and-switch health care and financial "reforms" spawning dozens if not hundreds of federal bureaucracies empowered to write laws, even trumping religious liberty (in the recent birth control mandate over Catholic institutions
- entirely new bureaucracies have been created (e.g., the TSA) all under the deceptive guise of "protecting American travelers" violating their modesty
- there have been bailouts of various businesses or industries, government protections of union interests and government takeovers of businesses or industries (e.g., student loans)
- there have been "America only" provisions in stimulus bills, ethanol, sugar and other subsidies, import quotas (e.g., steel)
- there has been an erosion of basic civil liberties by American citizens alleged to be linked to terrorists
- there have been attempts, e.g., by DHS, to single out potential political opponents (e.g., right-wing groups, returning vets, etc.) as potential "terrorists"
Even SCOTUS has occasionally betrayed negative liberties, e.g., its wrongly-decided Kelo decision, which radically expanded abusive uses of eminent domain.
Selling in the global market encourages firms to build larger factories and refineries that, in turn, enable outputs to be produced at lower costs per unit. So while in the short-run rising exports of oil products can cause fuel prices here to spike, the long-run effect might well be lower prices because of larger, more-efficient scales of operation. Also, more exports of fuel products means more imports of other goods and services. The result is lower prices in America for consumer goods such as clothing and furniture, as well as lower prices of inputs such as steel and industrial machinery used by American factories.Political Potpourri
As I predicted a couple of days ago, Rick Santorum's lead over Mitt Romney in the Gallup tracking poll has essentially collapsed to the bare minimum, and the most recent polls from Michigan and Arizona show Romney in the lead. Intrade has Romney up to almost 80% in Michigan and better than 50% in Ohio. Obama's approval ratings have eased off towards the mid-40's, and Romney is beginning to edge back closer to Obama in head-to-head battles in battleground states. It looks like Romney has had a good week, and Intrade has his odds of capturing the GOP nomination at about 80%.
Musical Interlude: My Favorite Groups
Paul McCartney & Wings, "Letting Go". Sometimes I don't understand the British fans. They hated this song, but they loved songs like "Mull of Kintyre" and "Let 'Em In". For the record, my Wings Top Five: (1) "Maybe I'm Amazed" (live)--every glorious note, and one of the greatest rock vocal performances of all time; (2) "Get Closer" (I consider the song the most Beatlesque, Paul's rock vocals are perfect, the harmonies are spot on, and the arrangement, especially the frenetic ending. is AWESOME); (3); "Another Day" [technically, a solo hit, but on 'The Wings' Greatest']; (4) "Live and Let Die"; (5) "My Love". "Letting Go" is among my next 5; in fact, I put the track from "Wings Over America" on my Walkman cassette tape for my daily jog.
