Fascist is as Fascist Does

Once again Lew Rockwell addresses the issue of fascism and freedom in “Hitler’s Economics,” the 9^th installment in Robert Wenzel’s 30 Day Reading List. The essay was prompted by the case of The Glenview State Bank of Chicago publishing a flattering article of Adolf Hitler’s economic policies in its monthly newsletter, and the Anti-Defamation League’s indignant response.

As Rockwell is careful to note, it isn’t praising fascist economic policies per se, which were not only popular in the US at the time, and are just as en vogue today, but putting them in the context of Hitler is the problem. The ADL wrote that “Hitler’s economic policies cannot be divorced from his great policies of virulent anti-Semitism, racism and genocide….” And this is Rockwell’s point: it’s impossible to separate economic policies from the evil carried out by the State through central planning, regardless of who is in charge and without respect to the territory in which it takes place.

And just so the reader is clear on what a fascist or Hitlerian economic policy looks like, Rockwell describes what Hitler implemented in Germany at the time:

He suspended the gold standard, embarked on huge public-works programs like autobahns, protected industry from foreign competition, expanded credit, instituted jobs programs, bullied the private sector on prices and production decisions, vastly expanded the military, enforced capital controls, instituted family planning, penalized smoking, brought about national healthcare and unemployment insurance, imposed education standards, and eventually ran huge deficits.

It all sounds remarkably similar to the policies in effect in contemporary American life, sans the direct family planning policies, although similar programs have been advocated from time to time.

The reason such policies are familiar to those here in the US (and to a large extent people overseas) is that they’re essentially Keynesian, in the broad sense that they’re founded on central planning by bureaucrats. Rockwell notes that Keynes himself was quite fond of the Nazi system, writing in the German edition of his General Theory that his theory “is much more easily adapted to the conditions of a totalitarian state….” And it’s no wonder, since the very heart of central planning requires the State to subvert the free will of the individual and attempt to control his behavior. “It means forcibly overriding the voluntary decisions of consumers and savers, violating their property rights and their freedom of association in order to realize the national government’s economic ambitions.”

Part of this planning hinges on autarky, an isolationist system that rejects international trade and restricts or prohibits exchange between people in other countries. This is accomplished through the dual policies of protectionism and conquest. Rockwell notes that under president George W. Bush a number of products were protected from foreign competition, including lumber and microchips. The same policies are underway now with president Obama. One of the first acts he did as president was to raise tariffs on Mexican tires imported to the US.

And neither party has really been against foreign wars, despite any rhetoric to the contrary. The fact that virtually all of them have been waged in resource-rich countries or otherwise strategic locations is no coincidence either. It’s all part of the fascist system.

Some Insights On Taxes

Murray Rothbard first published “The Consumption Tax: A Critique” in the “Review of Austrian Economics,” but it’s more than a critique of the consumption tax, it covers virtually all forms of taxation. Rather than summarize his piece, I simply want to highlight a few of the points he makes related to tax collection, because the entire article is well worth reading and I simply can’t do it justice in my own form.

He notes that it was Milton Friedman who helped institute the withholding tax during WWII, something which is apparently not too well known in some libertarian circles. The Libertarian party’s nominee, Gary Johnson, was unaware of this fact until recently, when he was interviewed by Robert Wenzel.

An important point to consider in the debate over which kind of tax is better or worse is the subjective valuations that individuals place on their payments and interactions with the Feds. For some people they would much prefer to pay as little as possible, but others may not mind giving up more of their money if it’s done through a more simplified process.

Perhaps the biggest point that I took from this article was the insight that income taxes and consumption taxes are essentially the same in terms of how they impact savings and consumption. In the case of an income tax it must reduce one’s net consumption assuming one maintains their consumption and savings ratios. For example, if Mr. Jones earns $100,000 a year and spends ninety percent of his income he’d save $10,000. But if he were taxed at ten percent he’d only be able to consume some $81,000, while saving $9,000. Clearly consumption has been impacted in this case.

As for a consumption tax, it would also impact saving, whatever consumption tax (Flat Tax, Fair Tax, etc.) advocates might say. Their argument is essentially that an income tax has an adverse impact on saving, but under a flat sales tax people would be incentivized to save more, and without it being impacted by tax policy. However, since saving is merely the act of delaying consumption, at one point or another savings will be impacted. And what we’re left with is that: “An income tax does not penalize saving per se any more than it penalizes consumption.”

But going back to the promotion of saving, Rothbard notes that that too is not without problems for so-called free market types who promote a consumption tax. It’s true that saving is a good thing in general, for it allows the formation of capital, which helps to increase output and therefore the standard of living. But what a good economist must recognize is that individuals make their own decisions about saving versus consumption as a matter of their time preference. Those with a higher time preference tend to value immediate goods over future goods, and will save less. Using the tax code to engineer their preferences subverts their will and imposes that of the central planner, hardly something compatible with the free market. As Rothbard puts it, “To say […] that only consumption should be taxed and not savings is to challenge the voluntary preferences and choices of individuals on the free market….”

Another issue that Rothbard raises in regards to excise taxes, is that such methods of revenue generation cannot be passed onto consumers as is often suggested. The reason this is so is due to the Austrian contribution to price theory. According to the subjective theory of value, the market determines the price of a good based on supply and demand together the preferences of the individuals involved. This means that firms set their prices as high as the market will allow the items to clear, and raising them even slightly to cover the tax will tend to drive consumers to substitute goods.

He notes that it would be possible over time to raise prices as new stock becomes available, but this not something which can be accomplished easily or overnight. So while it’s true that firms can try to pass taxes onto their clients, there is a natural limit to this and therefore businesses will absorb the majority of any excise tax.

Rothbard also takes to task those conservatives and supply-siders who advocate “revenue neutral” tax schemes or suggest that a certain tax rate or method will increase tax receipts. Neither of these should be advocated by anyone claiming to reduce the size and scope of government. Suggesting the government should not lose any revenue after a tax reform proves that nothing really gets reformed except the extent to which the taxpayers are robbed by the State. And to that point, no one can claim to want to reign in government while simultaneously promoting a tax that increases government funding. Because, as Rothbard observes: “the real problem and proper focus should be on the amount that any given individual is obliged to surrender to the State.”

Slavery Becomes Law

Salon ran an article yesterday entitled “’Tough luck’ becomes law” by Andrew Koppelman, in which he laments the Affordable Care Act’s prospects with the Supreme Court. The subtitle was: “Is the Supreme Court about to enshrine ruthless libertarianism in the Constitution?” And what absolutely shook Koppelman to his core was the concept raised during oral arguments that hospital staff might have a right not to be enslaved by their patients.

Of course he didn’t put it in those terms, but what other conclusion can one reach when someone argues that governments should compel hospital staff to provide care at no direct cost to patients?

During arguments in front of the Supreme Court, the Solicitor General, Donald Verrilli, suggested the government was justified in mandating individuals buy health insurance because it also required medical practitioners to provide care to anyone who came through the door. In response, Justice Scalia said: “Well, don’t obligate yourself to that.”

This was interpreted by Koppelman as: “there is no real obligation to care for sick people who cannot afford to pay for their own medical care….”

And in one respect this is true. Any legal obligation for one individual to care for someone else amounts to nothing less than slavery. It means that sick people can, with the force of the state, require doctors to work for free, or make others pay for the care. This is not only forbidden under the 13^th Amendment, but is also morally reprehensible.

This in no way precludes a moral obligation that some may have to assist the poor, and doesn’t mean that the poor would be neglected in a free society. Before the fascist state took over the medical and insurance industries a number of institutions were in place to provide care for the poor. These included mutual aid societies, private and charitable hospitals, and doctors who worked volunteered to help those unable to pay. But of course none (or at least very little) of that exists anymore, since the government has assumed the role of benevolent caregiver (and done a terrible job, at that).

In the absence of the state robbing Peter to pay Paul’s medical bills (after skimming a little off the top, of course) this private network would reemerge. So it’s hardly true that without some coercive body using guns and badges against people that poor folks would be without medical care. We see then that Koppelman’s “ruthless libertarianism” involves non-violent, peaceful, voluntary association, whereas his benevolent progressivism is centered on coercive, violent, might-makes-right collectivism.

But, I suppose he can now breathe a sigh of sociopathic relief, since his law was upheld (with help from Republican-appointed John Roberts) by the same organization that supported Japanese internment, the Dred Scott decision, the War on Drugs, strip searches during simple arrests, the Patriot Act, drug-sniffing dogs as probable cause, and a litany of other injustices.

Libertarianism and Secession

Libertarianism.org published a piece by Jonathan Blanks back in February, and for whatever reason, it made its way around Facebook yesterday with several groups debating its contents. In the article Blanks challenges the argument made by some libertarians that Southern secession was justified on libertarian grounds. Now I’ll agree that defending Southern secession can become tricky for a libertarian given a) most people’s relative misunderstanding of the events leading up to and during the war; and b) the motives of Southern politicians regarding the institution of slavery.

However, Blanks’ overall argument – that states may not secede – is not compelling overall. Virtually his entire argument is couched on the issue of slavery, which works when discussing the War Between the States, but falls apart when applied to other cases.

Imagine slavery wasn’t an issue at all, and the people of Vermont decided to secede and become their own Socialist republic. Where is Blanks to go now regarding secession?

The second issue I have is that he invokes Article I, section 8 of the constitution in reference to the Feds using the military to put down insurrections. The problem with this argument is that secession and insurrection are two separate issues. In the first case one subset of a larger group wants to leave and become their own entity; in the second case one subset wants to gain control of the entire body.

This is why calling the War Between the States a “civil war” is a misnomer. The south never attempted to capture the US Capitol and take over the federal government. They merely said “we quit.” And, since the states created the federal union, the states can leave the federal union. A more accurate description of the war is “the war against southern independence,” or “the war of Northern aggression,” as Thomas DiLorenzo refers to them in his books The Real Lincoln and Lincoln Unmasked.

Finally, a note on slavery: had the south been permitted to secede, the institution of slavery would have immediately been under enormous pressure, since slaves could flee to the north and seek asylum. This would have driven the cost of slavery well above its productive limits, and with the mechanization of agriculture becoming more common, slavery would have ended peacefully, instead of 750,000 people being killed.

Rise of the Machines

“Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever.” What was Henry Hazlitt referring to in Economics in One Lesson? He was talking about the idea that technological progress would put everyone out of work if the government didn’t intervene on the workers’ behalf.

In “Is Greater Productivity a Danger?” David Gordon destroys the argument of Professor Tim Jackson who, writing in The New York Times, suggested that “increasing productivity threatens full employment.” On day 7 of the 30 day reading list Professor Gordon writes that the free market is all too often blamed for ills that it is not in fact responsible for – pollution and depressions, among others – but “we really have gone beyond the pale, though, when the market is blamed for something good.”

Indeed, greater production levels couldn’t be a better outcome, since producing things that satisfy human wants is the single purpose of the market! As I mentioned above, Henry Hazlitt covered this issue of mechanization killing jobs in chapter 7 of his primer Economics in One Lesson.

He writes how, followed to its logical end, this argument would mean that: “Not only should we have to regard all further technical progress as a calamity; we should have to regard all past technical progress with equal horror.” But, he is also careful to point out that: “Theories as false as this are never held with logical consistency….” If these theories were carried out logically, he explains, using reductio ad absurdum, the argument could be made in favor of destroying all trucks and just hiring people to carry freight on their backs, since it means more people could find work.

But the reason Jackson is so repulsed by the idea of increases in production is that he has a skewed understanding of what a job is and what the economy is here to provide. He sees jobs as ends, and believes that firms ought to hire people simply so they’ll have money to consume things. But the economy – and those who act in it – isn’t here to provide employment; they’re here to provide things for other people. In that way jobs are not ends, they are means to producing goods and services which relieve economic scarcity for others.

Nevertheless, Jackson has presented a solution to the non-problem he’s conjured up. He wants the government (big surprise) to use the tax code in order to engineer society to his liking. He believes the proper levels of tax penalties and tax credits on just the right industries will achieve his vision of labor moving into the “caring professions” as he refers to medicine, social work, and teaching.

Professor Gordon notes that to an extent Jackson is right, in the sense that greater productivity allows for other uses of one’s time. But he asks rhetorically why this might be a problem, pointing out that “Human beings have unlimited wants, and there are always new uses for human labor.”

Where might this labor go, if automation could provide virtually everything we need or want? First, it’s important to understand that not only would goods be plentiful, but so long as the production of money isn’t subject to the whims of a central banker, prices would be stable, if not gradually falling over time. This would allow the standard of living to gradually increase over time as well.

And one possibility is that a lot more people could afford to buy services once only available to more affluent consumers. It’s possible that tailored clothing, detailed cars, and professionally decorated homes become more common. Jobs might open up for personal chefs, gardeners, maids, and tutors in all fields. A world of music, art, and other entertainment that once had to be put on hold while creative minds worked producing other things could be shared with the world.

This is all possible, but only if people like Tim Jackson toss out their myopic notion that a fixed amount of wealth exists and humans need some coercive body to regulate their behavior.