Ron Morley's Freedom Blog : freedom

The Police State that is America

Ronald D. Morley — Thu, 22 Oct 2009 01:38:00 GMT

The many recent calls for further regulation of financial markets and institutions in the United States are but one manifestation of the left's infatuation with the idea that humans and their society are perfectible if only enough rules and regulations are put in place to control their actions. They also mark one more step on the road to totalitarianism in the U.S. We have been told many times in recent months that it is necessary to place further restrictions, on what is already a market over-burdened with Federal regulations, in order to “ensure that this [the current financial crisis] never happens again.” President Obama has not only called for more regulation of the U.S. financial markets, but, also, seems to agree that some sort of international oversight of those markets is necessary. Given that the Federal government has apparently won the propaganda war over who is responsible for the recent “meltdown” of financial structures around the world –- it was unregulated bankers and financiers who brought the calamity upon us – it is virtually a certainty that more onerous restrictions will be placed upon the evildoers in order to prevent them from causing such damage again: all to the cheers of a poorly educated and informed populace.

The apparent success of the Obama regime's drive to further control the nation's banking and financial infrastructure is another step on the road to making the United States a police state. As the Federal government moves to place caps on the remuneration of those who work in the banking and finance fields all Americans lose yet more of their freedom – the majority simply haven't yet recognized that fact. Given President Obama's recent speeches in which he declares that the banks which were bailed out by the Federal government are not loaning enough money to businesses and consumers it will probably not be long before policies will be put in place which will define how much money banks and other financial institutions must loan to various classes of customers; likely, whether or not they would ordinarily qualify for those loans. Despite the President's many disclaimers that he doesn't want the Federal government involved in the day-to-day management of such areas of the economy as the auto industry and Wall Street his actions say otherwise. Given his recent calls for banks to return to the good old days of loaning money willy-nilly it is obvious that he has not learned anything from the lessons of the current economic troubles – indeed, he wants to force banks back into the very practices which helped get us into this fix in the first place. Each time the Federal government puts in place more regulations, every time a Federal or state prosecutor decides to bring criminal charges against bankers and financiers for actions that were not crimes when they were made, every time Federal and state prosecutors are allowed to conflate civil law infractions with criminal actions (as is often the case with so-called “conspiracies” whose members are brought to trial) the United States takes another step on the road to becoming a police state.

One of the signs that one is living in a police state is an increased unwillingness on the part of most citizens to say or do anything which might be construed as opposing the State. The State seeks to attain this goal in several ways. It starts by introducing young people to the vision of the State as a benevolent entity –- one which is concerned only with providing citizens with the best possible life; at the low, low cost of sacrificing a few civil liberties which don't matter all that much anyway. For those who have already passed through the State's education system the mass media (which are always required to obtain licenses from the State in order to operate) are enlisted in the propaganda effort. This is particularly true when socialist programs and policies are being discussed There is an increase in the number of puff pieces published or aired which seek to portray the leadership of the State as wise, enlightened individuals who desire nothing more than to make the citizenry happy, well-fed, and willing to join the leadership in bettering the nation internally and strengthening it against all external and internal enemies. During the period of Nazi rule in Germany this mode of operation was known as “working toward the Fuhrer.” Citizens are encouraged to inform the State's police agencies of any “unusual” activities on the part of their neighbors. Everyone, young and old, is encouraged to be alert for anything which might threaten “national security.” The police are increasingly used to monitor the political actions and speech of the citizens: various types of “thought crime” are defined and viewed as, in many cases, more serious than plain, old-fashioned crimes such as assault and larceny. In an effort to make certain that everyone is made aware of the many threats facing the State and thus the Nation, and the people arrests are made and trials held. Many times the information that leads to the arrests is provided by informants –- often in the pay of the State –- to the State's increasingly politicized and militarized police agencies. This serves to reassure the mass of citizens that the State is ever on guard to keep them safe, while also introducing an element of doubt about what constitutes a crime, as many of the alleged plots never get any further than discussing or “planning” some alleged outrage against the State. (Check out the books The Tyranny of Good Intentions and Go Directly to Jail: The Criminalization of Almost Everything , both available through Amazon for more details than I can go into here). The fact that, in many cases, no overt actions need to be taken in order to commit a crime causes many citizens to cease even talking about perceived shortcomings of the government and its leadership. This results in the State being able to declare that the vast majority of its citizens are happy and content with the policies of the government –- which is very convenient whenever someone does actually complain.

The United States is rapidly approaching this state of affairs. Much of the mass media is dedicated to feeding the populace intellectual pablum. Look around at the magazines and newspapers which line the check-out lanes at supermarkets. It is unusual for any of these publications to print anything of a political nature and when they do the articles are almost invariably rehashed “talking points” in favor of whatever new program the current regime is touting as a way to cure some perceived societal ill. The airwaves, with the exception of so-called “conservative talk radio”, are likewise almost devoid of serious discussions of political issues – the shouting matches of such programs as the “O'Reilly Factor” cannot be considered to be reasoned discourse. In most cases even those media outlets which purport to oppose the proposed action by the State are themselves pushing for some increase in the power of the Federal government: it's only that the power will be exercised in a different manner or in an alternative area of life.

The current debate over health care “reform” is but one example of this phenomenon. The Democratic proposal is to place some Federal bureaucracy in control of all aspects of health care. They would mandate that everyone purchase health insurance –- whether it makes sense in the individual case or not. The insurance policies will have to meet certain government-defined criteria in order to be considered legal. The current Federally-controlled health care system –- Medicare -– will be required to scale back the services it will pay for (to the detriment of those participating in the plan) in order to partially pay for the new program. What is left of the free market in medical services will be killed and buried beneath tons of new Federal regulations and guidelines.

The Republicans, rather than pushing for reducing the role of the Federal government in health care, also want to increase its power in this area. Rather than the Democrats' “public option” (State-subsidized health insurance) the Republicans wish to put in place something called “co-ops”. Though no one really knows how they would operate the safe bet is that they will be another way of increasing the Federal government's involvement in health care. One can work one's way down the list of Republicans' objections to the Democrats' proposal and find similar things. All the Republicans' substitutions still result in the growth of the power, size, and intrusiveness of the Federal behemoth: they do not act to reduce the influence of the Federal government in this field.

In like manner, one can go through the list of issues confronting this country and see much the same thing. Democrats want to use the power of the Federal government to legalize “gay marriage”, while Republicans seek to use the same power to forbid them. Democrats want to use Federal power to not only allow women the right to an abortion -– they wish to force medical service providers to perform the procedures no matter the feelings and beliefs of the workers. Republicans want to use the power of the central government to ban abortions altogether. The list goes on and one is hard-pressed to find an issue on which one side or the other wants to reduce Federal power in the area under discussion, let alone act to eliminate that power entirely. Through all of this the Constitution is more and more viewed as an antiquated obstacle to enabling the growth of Federal power. No longer do the vast majority of our U.S. Representatives, Senators, and members of the Executive branch take their oaths to “preserve, protect, and defend the Constitution” seriously.

As time goes on the power of Leviathan waxes and fewer citizens move to oppose the growth. Even now there are few areas in life that are not subject to some form of Federal regulation. As the State's intrusiveness has grown so has its police powers: necessary in order to ensure compliance with its wishes. The United States is effectively a police state; it's just that in most cases we call our police “bureaucrats” or administrative law judges in order to disguise their true function and make their intrusions more palatable to the masses. Until now they have remained largely non-violent in the exercise of their vast powers. We cannot count on that to continue and only the foolish wish to see that power increased. What is left of free political discourse in this nation is rapidly disappearing. If the Democrats get their way and the FCC once again imposes the so-called “Fairness Doctrine” the presence of voices opposing the growth of totalitarianism on the airwaves in this country will be mostly silenced. In the meantime those who dispute the need for, or the legality of, the continued growth of the monstrosity that our Federal government has become are labeled as miscreants who represent a small minority of the populace and who are motivated by racist hatred of the new President's policy initiatives. It is anyone's guess how much longer these voices of dissent will be tolerated by the Obama administration or, for that matter, any administration which replaces it. The State's power continues to grow and most Americans ignore the threat it poses so long as they can keep up with who gets kicked off the island next.

Why the Delay?

Ronald D. Morley — Mon, 16 Feb 2009 18:22:00 GMT

President Obama, after spending the better part of the last month insisting that his so-called economic stimulus package be passed immediately (maintaining that failure to do so would spell utter ruin for the country), is going to wait until tomorrow to sign the bill, which was passed last Friday. The fact that the President has delayed signing the bill puts the lie to the supposed emergency conditions that required the immediate passage of the bill. Remember, this is a bill that the Statists consider to be so important that time could not be spent debating any of its multitude of provisions or even whether or not it was necessary. The President repeatedly went on radio and television and spoke before live audiences berating Republicans, and others, for daring to ask what is in it, who is going to reap the benefits of the hundreds of billions of dollars that are being spent, and trying to make modifications that might actually help the economy, such as including more tax cuts in it and cutting back on the actual spending that the President proposed. We were told many times during the last three weeks or so that passage of this bill was imperative; that every minute that was taken before passage meant that more American jobs were lost, more homes were foreclosed, and more damage was being done to the very fabric of the American economy itself. Now that the bill has been passed and the spending of the hundreds of billions of dollars is assured, the sense of urgency has, apparently, vanished.

One must ask, why is this? Why is delay acceptable now, but not during the time leading up to the passage of this incredibly wasteful, and damaging, piece of legislation? Why are not the President's supporters camped outside the Oval Office chanting, “Sign that bill, save our jobs, spend that money” at the top of their voices? The simple fact is that, as with the TARP bailout bill that was rushed through under similar conditions of feigned urgency last October, those who backed the bill understand full well that a delay of even several months would not make a significant difference to the overall effect on the American economy in the long run. The American economy is too large to quickly change direction, either up or down. It has taken months, if not years, for the effects of the collapse of the housing bubble, which actually began in late 2006/early 2007 to reach the point they have. It will take equally as long, if not longer, for the many malinvestments that were made, in large part because of mis-guided policies of the Federal government, to be corrected so that the assets involved can be put to good use and the economy can resume growing. The only reason that the Keynesian economists and statist politicians painted such a dire picture was to panic the American people, many of whom are woefully ignorant regarding economics, into demanding that “something be done” to forestall the looming disaster which supposedly threatened to engulf mom, apple pie, and all that is good. Politicians know from long practice that the best way to get what they want, in this case more power over the economy for the Federal government, is to evoke a sense of urgency around whatever their current issue is. The result is that, between the actions made possible by the TARP bill, loans of billions of dollars to the Detroit automakers, and, now, the economic stimulus package, the power of the State to intervene in the United States economy has grown tremendously. Large parts of the financial and manufacturing segments of the economy are now effectively nationalized, though most Americans don't realize it because that term is never used.

Instead, we are told that “bridge loans” have been made to the automakers so that they can go on to “financial viability”. "Equity stakes" are taken in large and important financial institutions. New regulations are called for so that “this will never happen again.” Trillions of dollars are pumped into the banking system by the Federal Reserve in an attempt to “get the credit markets moving again.” Executives of businesses which have taken Federal money are now told how much they may be paid instead of having their wages set by voluntary negotiations and market forces. The strings that are attached to the billions of dollars about to be spent as part of the economic stimulus package are presented as the means of “making sure the taxpayers' money is well spent.” In other countries these actions are called “forced nationalization” (as was the case when Venezuela took over oil fields and other assets owned by foreign oil companies). In other countries the proliferation of new regulations is called authoritarianism. In other countries if the government sets maximum wages it is seen as socialism or communism. In other countries when the central government decides how money must be spent and who the winners and losers are in the marketplace it is called “central planning.” Something must be different about the United States when the same actions are called by other names and the motives of those who back the new powers of the State are automatically assumed to be pure and benign. It's probably something in the air that ensures that the United States' government would never, ever, do anything but good.

As always when dealing with politicians it is more important to pay attention to what they do, than to what they say. Actions do, indeed, speak louder than words and President Obama's delay in signing his much ballyhooed and supposedly vital “economic stimulus” bill reveals that he knew all along that his story was a tissue of lies and distortions. The American people have, again, allowed themselves to be duped into giving up more of their freedom in the mistaken belief that the State will keep them “safe”; this time from “economic turmoil.” There is precious little real freedom left in this nation, as most citizens will discover when they wake up one day to find that the State has decided how much they are allowed to earn, how much of some good they may purchase at the local market, how limited their choices of domestically manufactured motor vehicles (and the options on those which are available) are, and what doctors they may see and what treatments they may be offered, among other things. Americans have forgotten, if indeed most of them ever stopped to realize, that a State which can “give” them everything also has the power to take those things away. Liberty may not guarantee that everyone can have everything they might desire, but it does guarantee that what they do get they will be allowed to keep.

War crimes and economic policies

Ronald D. Morley — Thu, 12 Feb 2009 22:42:00 GMT

The following is essentially the text of an email that I recently sent to a friend who'd asked me if I thought that senior members of the former Bush regime should be prosecuted for war crimes because of the use of torture as an instrument of national policy. He also asked what I thought about the economic policies of the Bush regime and its expansion of the power of the Federal government. I've edited the original email slightly to make it suitable for publication here, but the changes have been minimal.

Yes, I do think that former President G.W. Bush, Vice-President Cheney, Attorneys General Alberto Gonzales, John Ashcroft, and Michael Mukasey should be tried before the International Criminal Court in the Hague for war crimes and other crimes against humanity. Only this will serve as a warning to those who occupy those positions in the future that the leaders of the United States, no matter the circumstances, are not laws unto themselves, but must be held accountable for their actions. As for the Bush regime's management of the economy, I would think that a reasonable case could be made for malfeasance in office, though I'm not sure it would extend to criminal prosecution. After all, it could be argued that these things fall under the heading of making general policy and that a chilling effect would occur if government employees were made to feel that their actions could be second guessed years down the road and then be prosecuted because of it. On second thought, that might not be all bad. Seriously, though, everything that you mention [the auto company bailout, the Wall Street bailouts, using Federal Reserve policy to encourage the growth of the speculative housing bubble, etc.] is, to my mind, unconstitutional to start with as there is nothing in Article I, Section 8 that gives the Federal government the power to muck about in the market place except to regulate commerce, which, if you look in your dictionary, is defined as the buying and selling of things and the Founders intended regulation to be used in the sense of "to make regular" as is pointed out by both Madison and Hamilton in The Federalist Papers.

The main problem we have at the moment is that the supposed solutions to our economic problems are not only antithetical to our way of life, but they are nonsensical from an economic standpoint. What got us into this trouble in the first place was the over-extension (some of it State-mandated) of credit to those who could not afford to pay down the debt they were taking on. Leaving aside discussion as to "whose fault" that is as irrelevant, the Fed's policy of attempting to "unfreeze the credit markets" is simply trying to continue the policy that got us here. It is the economic equivalent of pouring gasoline on a house fire in an attempt to put it out. How does this make sense? One of the biggest lies that's being told by virtually every so-called economic guru that is given air time on the news these days is the idea that people should not be trying to save any money, but should, instead, continue their practice of spending every cent that comes their way. The only way that a society generates wealth in the long term is to have capital available to invest in new factors of production, whether those be new employees, machine tools, physical plant, or research and development doesn't really matter. The only way that capital is generated is when people do not spend every dollar they have, but, instead, put some aside in savings accounts, CDs, and so on. Those deposits then allow banks to lend that money to those who wish to borrow it to purchase new factors of production, which leads to more production of physical goods, which increases the overall wealth of the society in question. Leaving aside the issue of whether or not fractional reserve banking is a good idea (I don't think it is as banks which are allowed to practice it are inherently bankrupt and are only playing the odds that the majority of their depositors will not want to withdraw their money at the same time) an economic downturn is exactly the time when people should be encouraged to save as that's the way out of the downturn.

However, John Maynard Keynes convinced the politicians of the world that his "cure" of lots of government spending to "prime the economic pump" was the way out of the economic troubles of the 1930s. Of course, this appealed to the politicians because it allowed them to be seen to be "doing something" to "help" the people, while simultaneously increasing their power over the economy: they couldn't make all that new money available without putting some rules in place about how it could be used, now could they? To top it off, deficit spending is wonderful for politicians as future generations get stuck with the bills and future politicians get stuck with making the unpopular choices that should have been made in order to avoid the deficits in the first place. Is there any reason to wonder why America's first Fascist Dictator Franklin Delano Roosevelt loved these economic ideas? Combine the Keynesian economics with the Progressives' ideas of allowing Congress to delegate its legislative authority to "expert decision makers" in numerous Federal regulatory agencies (another unconstitutional idea that was only allowed to really take off after the Supreme Court rolled over for Roosevelt following his attempted court-packing scheme) and you have the basis for the behemoth Federal government that is the bane of freedom which we now live with.

We are but witnessing the logical end of the path which we began to tread in the early 1900s when Theodore Roosevelt began his campaign against the so-called "malefactors of great wealth" and used that as an excuse to put in place the first pieces of a strong regulatory apparatus, which his cousin, Franklin, then expanded enormously in the 1930s. Once the nose of the camel of unconstitutional Federal regulation was allowed into the tent of the free market the march to eventual nationalization of the economy and totalitarian rule was under way. I highly recommend that you read Frederick Hayek's The Road to Serfdom for a more formalized and academic treatment of the reasons that we have reached the current state of affairs. As it is, the Federal government has now effectively nationalized large portions of the financial markets by taking equity positions in large banks as part of the Paulson "bailout program". That process is being extended to the automotive industry via the so-called "bridge loans" being made to GM and Chrysler. Those companies will be unable to demonstrate "financial viability" any time in the near future and the previous loans will be used to justify making more under the guise of "protecting the taxpayer from further losses", instead of allowing the bankruptcy process to take its course so that other companies, which could more efficiently make use of the assets GM and Chrysler now own, are allowed to purchase them. Rather, the majority of Americans are being required to subsidize the life-styles of UAW workers who played a major role in the destruction of the companies they work for by effectively looting them for their own benefit. It's ironic that the socialist who now sits in the Oval Office is going to preside over a situation in which waitresses who work for minimum wage will be taxed so that the money can be given to UAW workers so the union workers don't experience any "economic turmoil" of their own.

And speaking of the minimum wage, one must ask if it makes any sense in a declining economy to require potential employers to continue to have to pay minimum wages to employees who are economically marginal? If job creation is the goal towards which all of the Federal spending and bailout programs are aimed why are private employers not given the freedom to set wages according to the demands of the marketplace? There are a lot of people who would work for $5/hr. right now, and likely a number of jobs that could be economically viable if private enterprise were allowed to follow the laws of economics rather than the dictates of politicians in Washington who have never run a business and whose only goal is to continue themselves in power no matter the cost to society at large. All minimum wage laws have done is to ensure that the economically marginal are unable to find gainful employment, which is why the rate of unemployment among black and Hispanic youth goes up every time the minimum wage is raised (it lags by some time but the correlation is there). Thus, we have the absurd situation, so common with programs foisted upon us by so-called "liberals" (who, in case you haven't noticed, are not liberal with anything except the expansion of the power of the State to interfere with your life, but I digress), in which programs designed to help an economically troubled group simply makes the situation worse for those supposedly being helped. I highly recommend Thomas Sowell's Basic Economics and Economic Facts and Fallacies for further reading in this area.

So, to get back to your original question about whether or not those who profited from the collapse of the housing bubble after putting in place Federal government policies that led to the trouble, I doubt that one could prove a direct link between action and profit. However, I would be in favor of establishing an economic "Truth and Reconciliation Commission" that would be required to investigate and publicize the actions of those responsible in both the government and private sectors, along with undertaking the education of the American people about economic principles that our State-controlled "education system" fails so signally to do. However, there is no chance that such a thing will be done. Instead, the American people will continue to be told that the current economic mess is entirely the result of a “failure of the free market”, while ignoring the major role that the Federal government played in the fiasco that became the housing bubble. Those in power have no interest in the public learning the truth behind the current economic problems and every reason to continue to lie to and mislead the public regarding those issues. The only hope we really have of getting the truth out is via the Internet and the libertarian blogs that thinking people continue to read and discuss.

Thomas Jefferson, the nature of the State, and President Obama

Ronald D. Morley — Thu, 12 Feb 2009 18:18:00 GMT

I got an email today from an old friend asking whether the signature line of an email which I'd sent him was really something that which Thomas Jefferson had written. What follows is more-or-less my response to him (slightly edited to leave out personal information).

Actually, so far as I know, Jefferson did write all of those things. I've got a collection of his complete correspondence and other writings and every time I've questioned the authenticity of one of those quips I've looked it up and, by golly, there it is. Jefferson constantly wrote about the dangers of the power of the State and the inherent evil of that structure. One of the things that he was at pains to point out was that it is the State that is evil, regardless of the intentions of the individuals who make up the power-wielding apparatus thereof. He contended, and history has certainly borne him out, that, because the only power the State has is based on coercion it is inevitable that such power will be used by someone to extend the power of the State further and it is the small encroachments which lead, inexorably, to great reductions in civil liberties such as we are seeing in our own time. Each little encroachment, if not opposed to the utmost, is used as a precedent to justify the next small extension of the power of the State: it matters not the motivation of those who espouse the initial extension of power. In the end the State reaches a point at which the continuation of its existence is seen as more important than anything else and it is at that point that one begins to see the identification of the State with the Nation: which are actually separate entities, the one made up of government functionaries, the other of the mass of the people themselves. That is why Presidents such as FDR, G.W. Bush, Bill Clinton, Barak Obama, etc. go to such great lengths to try to be seen as "men of the people", which encourages the mis-identification of the State with the Nation.

We are about to get a huge dose of that now that Barak Obama has become the President. Indeed, it's already under way. Using the guise of "helping the people" President Obama is acting vigorously to extend the power and influence of the State. Given the extent of the so-called "economic stimulus" package, with its plethora of new programs and spending, the power of the Federal government is about to take another great leap forward. All of the money which is to be spent directly will come with significant strings which will define who may use the money and how they must act in order to get it. The tax breaks amount to the same thing, the people are being bribed into acting in ways which the State finds acceptable by promising them that they will be allowed to keep a little more of the money which is rightfully theirs to begin with. The State reached the point years ago at which, for all practical purposes, it began acting as though all of the money which people earn actually belongs to it and the people are allowed to keep some of it out of the goodness of the State's heart. Just listen to the political rhetoric when our leaders talk about the "need" to raise taxes for this, that, or the other thing. There is never any doubt in their minds (or their speeches) that the money belongs to them in the first place, and that it's simply a matter of determining how much of it people will be allowed to keep for their own purposes.

Given the philosophy of the economists who are now in charge of developing "programs" and "stimulus packages" designed to end the economic crisis which we are in the midst of we will see yet more trillions of dollars of Federal debt racked up. All that debt amounts to is a tax on the future earnings of all Americans and, at the rate the debt is being increased, it is one which cannot be paid off short of virtually confiscating all earnings and property so that the State may have direct control of all economic activity. That's been tried before - it was called Communism - and it utterly failed to meet the needs of either the people or, ironically enough, in the end, the State itself; as was seen with the collapse of the Soviet Union in the early 1990s. Americans have been blinded to the reality that the TARP program and the so-called "bridge loans" to the auto companies have effectively nationalized large chunks of the American economy. That fact has been driven home, though few have seen it for what it is because of the skillful use of State propaganda, when President Obama declared that a certain class of citizens - "bankers" - will no longer be allowed to earn more than $500K per year if their banks have taken any money from the State in the form of TARP funds. Most Americans are willing to see those horrible, nasty, evil, greedy bankers punished for their supposed lead role in creating the current economic, but they fail to realize the precedent that has been set: the State has now asserted that it has the right to cap the earnings of anyone who takes advantage of some Federal program. Today, it's the TARP program, but who's to say what it will be tomorrow: perhaps it will be those who use the State's higher education system and make above a certain arbitrarily set number, say $250K per year to use President Obama's definition of excessive earnings. By allowing the State to set the earnings of one class, Americans have opened themselves up to allowing it to set the earnings of all. For decades it's been accepted by the idiots of this nation that the State has the right to set the minimum wage that employers can pay, effectively casting large numbers of teenagers and other marginally employable persons (mainly black teens and young males) into the loving arms of the State's welfare system - effectively creating an entire class of people who are wholly dependent on the State for their existence. As of last week we're seeing the logical extension of the State's supposed "right" to interfere in the free market; which will do nothing, but introduce more uncertainty and aberrations into that market. And, of course, by ensuring that the best management talent will go to banks which are able to pay the going market rate for their talent, the State is setting up those banks which have taken TARP funds for yet more failure in the future, which will be used to "justify" yet more State control over that sector of the economy: funny how that works out, huh?

Why the State Loves Keynesian Economics, continued

Ronald D. Morley — Thu, 11 Dec 2008 15:38:00 GMT

As a result of my last entry here some people have commented that my statement, “...no matter how it is sugar-coated, the policies of John Maynard Keynes are essentially ways of increasing the power of the central government at the expense of individual freedom”, was too strong. Some readers felt that I had not made a sufficient case for that statement. I will attempt to correct that issue here.

The current discussion of whether or not to bailout the Detroit automakers by providing billions of dollars in loans is as good a starting place as any. The basic idea of Keynesian economics, that deficit spending by the Federal government will stimulate the economy during an economic downturn, applies to the proposed bailout. The end result of the proposed policy is to save jobs in the hope that doing so will cause Americans to, once again, resume their profligate spending habits and pull the economy out of its doldrums via the mechanism of consumer spending. There is no substantive difference between the Federal government giving the automakers billions of dollars, via the mechanism of deficit spending, or its spending those billions on some other form of “stimulus package” such as President-elect Obama's spending on infrastructure projects. The money is still obtained by borrowing, which denies the private sector access to those funds, and the Federal government still controls how the money is to be spent.

How does this act to limit individual choice and freedom? For the answer one has to look at what the proposed office of “Car Czar” will be empowered to do. The Federal officer who will be put in charge of the bailout of the automakers will have tremendous powers to determine what actions the manufacturers may take. He will decide whether or not the Big Three put together reorganization plans that will “make them viable”. There is every reason to believe that those decisions will extend to what types of vehicles the companies will be allowed to produce. After all, forcing the Big Three to make small, fuel-efficient cars is a project near and dear to the hearts of politicians such as Nancy Pelosi and Harry Reid. That will certainly mean that GM and Chrysler, at least, will be required to put a lot of emphasis on building the small, fuel-efficient cars that Americans have supposedly been demanding, in spite of all the evidence to the contrary, for the last thirty years. Gone, or at least severely limited, will be the supply of large SUVs and pickup trucks that have been so beloved by Americans for the last decade at least. In their place will be vehicles such as the Chevy “Volt” and the various small hybrids that have been developed over the last several years. The judgment of one person will be substituted for that of the millions who make up the market for new autos. In the process individuals will be denied the ability to purchase the type of vehicle that they may want and be forced to take, in its place, a substitute that, by and large, the marketplace has deemed inadequate to the needs or desires of many Americans.

The stimulus package that is being proposed by President-elect Obama will act in a similar way to limit the choices of individuals. As I pointed out in my last entry, deficit spending by the State acts to limit the amount of money available to private enterprise. Thus, the vast majority of the jobs that will be “created” by the proposed State spending will be construction jobs as it's difficult for salespeople, computer programmers, or those engaged in manufacturing to build the bridges, roads, airports, and other infrastructure projects that are so dear to the heart of the President-elect. By limiting the amount and type of jobs that the market would ordinarily be able to provide the State will, again, be acting in a way which arbitrarily limits the freedom of choice of Americans. Once again, Keynesian economic policies act to limit freedom.

There is simply no way around it. The fact is that the Federal government will not provide money to the states or once-private enterprises without establishing rules for how that money may be spent. The limitations that the Feds will put on how the funds may be used will, in the end, act to limit the freedom of individual Americans, even if only in seemingly inconsequential ways. It is time for Americans to realize that there is no such thing as a free lunch, and that while the State may say it is “giving” money or services to help citizens during these economically-troubled times, that money, or those services, invariably come with rules about who may qualify for them and what actions they may or may not take to remain eligible. The more Americans acquiesce in allowing the State to nationalize large pieces of the United States' economy, the more they will find their freedom of action limited by the arbitrary actions of Washington bureaucrats and politicians. And that, in the end, is why the State loves Keynesian economics: adopting those policies, by limiting the freedom of action of the marketplace, automatically enlarges the powers of the Federal government and diminishes the freedoms of the people.

Why the State Loves Keynseian Economics

Ronald D. Morley — Sun, 30 Nov 2008 15:27:00 GMT

In this time of economic turmoil it seems as though the majority of economists have become disciples of John Maynard Keynes. Turn on virtually any news broadcast covering the financial crisis which the State's economic mismanagement has thrust upon us and, most of the time, the “economic experts” the media turns to for explanations of what is going on, and for suggestions of what needs to be done to turn things around, turn out to do little but spout the same mistaken Keynesian economic ideas that Franklin Delano Roosevelt relied upon to justify his “New Deal.” According to most of the economists that the general public will have opportunity to listen too, men such as Robert Reich, Robert Rubin, Lawrence Summers, Henry Paulson, Chris Farrell, and others, there are two things which will pull America out of the financial disaster that we are supposedly heading for: an increase in consumer spending, and a large Federal government financial stimulus package. The fact that both history and economics tells us these steps are counter-productive, indeed will act to extend the length and depth of the economic troubles, does not appear to matter to these people.

In spite of the evidence, compiled by Murray Rothbard and others, that Keynes' preferred policy, called “pump priming” acts to prolong economic downturns and make them worse than they need to be, these policies continue to be number one on the State's list of tools to be used when faced with an economic downturn. There are a several reasons for this state of affairs. Passing so-called “economic stimulus” packages appeals to short-sighted legislators because they are seen to be “doing something” about the worsening economy. This action also allows the power-hungry Congresscritters, and members of the executive branch of the government, to extend the power of the State by attaching various rules and regulations to the money they thus make available: rules that must be obeyed by anyone wishing to avail themselves of this Federal largess.

However, the truth of the matter is that State intervention in the economy is always counter-productive, and rarely moreso than during an economic downturn. The reasons are fairly simple, though many people fail to understand them. The effects of the Federal government's interventions begin with one simple thing: any money spent by the Federal government, which adds to the government's deficit, is money that is no longer available to the private sector. The Federal government must cover its deficits by borrowing money from some source and, of necessity, the loans to the State compete against demand for the same funds from the private sector. However, most people do not recognize the truth of this situation, and its affect on their lives, and so they simply accept the loudly and oft-repeated claims that only the Federal government is capable of “making a large enough impact on the economy” to be useful. It's as if the economy is some large machine that will automatically respond positively to the government's attempts at percussive maintainence.

It is amazing that otherwise intelligent people do not seem to understand why the government's “economic stimulus” packages do not work as advertised. They seem to think that, because it is the Federal government which is borrowing money so as to be able to increase its deficit spending, the law of supply and demand is somehow bypassed. They do not, or choose not, to understand that every dollar borrowed by the State is a dollar that is no longer available to entrepreneurs in the private sector. Also not comprehended is that the increased demand for dollars in the loan market drives up the price of those dollars, I.e., interest rates increase, which increases the economic burden that must be borne by private sector borrowers. The higher interest rates also ensure that some potential borrowers, business people who might have created private sector jobs, are unable to afford to take out loans, reducing the amount of economic growth.

Some people will say that when the Federal Reserve acts to increase the money supply, as it has done recently to the tune of several trillions of dollars, that it offsets the increased demand for dollars by the Federal government and the overall effect on the private sector is neutral. This is simply not the case as the Federal Reserve's actions simply increase the rate of inflation within the economy. By flooding the economy with dollars the Fed simply makes each of those dollars is worth less than its predecessor. The increased inflation offsets any possible affect the increased supply of dollars may have had on overall demand. There is also the increased danger of the government's artificial expansion of the money supply triggering a hyper-inflationary spiral such as is now occurring in Zimbabwe. The simply truth is that government action cannot repeal the basic laws of economics.

The Federal government, of course, is all in favor of government-based economic stimulation. After all, from its point of view, it's all good. It is able to expand and extend the reach of its power. It lessens the economic power of the private sector, further enhancing the State's power. And, perhaps most important, the majority of the jobs which are created by the economic stimulus are directly connected to State spending and, therefore, the citizens holding those jobs are made yet more dependent on the State for their livelihoods. From the State's point of view this is all good and, if the economic crisis is lengthened, its power is only increased. In short, no matter how it is sugar-coated, the policies of John Maynard Keynes are essentially ways of increasing the power of the central government at the expense of individual freedom.