The Free Market Reader

 

INTRODUCTION: TAX PAYERS AND TAX EATERS

In countries with openly tyrannical governments, we expect lies. From government newspapers, government officials, and every other aspect of the state propaganda apparatus, we assume deception.

What we do not expect is that the U.S. government does not operate much differently, even if the means are subtler.

Ludwig von Mises always distinguished between the two methods of acquiring wealth: the voluntary way of the free market and the coercive means of the state.

With an interventionist state like ours, dedicated to extracting our money for itself and favored interest groups, whose officials revel in dominating others, no one will admit openly what he is about. The talk will be of the public interest, the common good, the national security. But the real issues will always be cash and control.

Even in the early 19th century, John C. Calhoun described the United States as divided between the “tax payers and tax eaters.” And today, we can use that same analysis. Ludwig von Mises called the battle between these two artificially created groups a “caste conflict,” in contradistinction to Karl Marx’s class conflict.

There can be no natural class conflict in society, since the free market harmonizes all economic interests. But in an interventionist system, there must be a struggle between the caste that lives off the government and the rest of us.

To keep us from struggling too much, the government—from our earliest days—trains us to be good little citizens: to salute and say “Yes, sir!” when ordered to pay redistributionist taxes, instructed how to run our businesses, told how to lead our personal lives, or drafted for foreign wars.

And part of the training is the painstakingly inculcated acceptance of the government as “we.”

“Are we spending too much on the space shuttle?” someone asked me recently. But “we” are not spending anything. The U.S. government is.

The government is separate from us, and almost always opposed to our interests. We do not have a government of the people, by the people, and for the people. We have a government to the people. And one important tool in keeping it going is the lie.

For example, almost every economic statement from the Reagan administration has been a lie. We—and I do mean we—got the most protectionist eight years since Herbert Hoover, and they called it free trade. We got five tax increases, including the single largest in human history, and they called it lower taxes. We got the biggest deficits ever, and they called it fiscal conservatism. We got a doubled federal budget, and they called it cutting back. We got a vast increase in the power and scope of federal control and snooping, and they called it freedom.

In analyzing any government action, we should always ask: who’s getting the money and the power?

During the Carter administration, conservatives told us how terrible the Occupational Safety and Health Administration (OSHA) was. It oppressed businesspeople, imposed crazy regulations, and violated civil liberties. And it was all true. But why is there silence on Reagan’s OSHA? Because it is really a big-business agency, set up by the Nixon administration.

OSHA exists not to protect workers’ health and safety, but to defend established corporations from competition. It’s not an anti-business agency, it’s an anti-small-business agency.

Exxon, with its thousands of lawyers, has no trouble dealing with OSHA. But the small company can be put out of business by OSHA’s fines and harassment. And it is—not by coincidence—the small businesses that OSHA concentrates on.

Recently, OSHA imposed its largest fine ever for alleged safety violations on a small meat-packing house. The agency had acted at the behest of the largest meat-packing firm in the area. This is why unscrupulous big businesses love OSHA. It’s anti-competitive.

We used to hear about the awful Environmental Protection Agency (EPA) during the Carter administration. It oppressed businesspeople, imposed crazy regulations, etc. But again, this is a big-business agency established under the Nixon administration to hobble competition and subsidize favored local politicians and special interests—especially construction firms. It does not exist to improve the environment.

Like OSHA, EPA regulations are much less of a relative burden on large firms than small ones. And most of the EPA budget is spent on gigantic building contracts for supposed pollution-control facilities. But since friends of the administration are getting the contracts now, all conservative criticism has disappeared.

The Consumer Product Safety Commission (CPSC) was another product of the Nixon administration specifically set up to hurt small business and to help big business, this time under cover of consumer safety.

During the Carter years, we heard about how appalling this agency was. But there’s silence now. Yet CPSC is still intervening, and still setting guidelines at the behest of established businesses designed to foil competition.

The Federal Trade Commission—emblematic of the older Progressive and New Deal agencies—is no different. Denounced during the Carter years as a crazed regulator—which it was—it is now praised as a bastion of free enterprise. Yet special interest groups founded the agency specifically to restrict competition and therefore free enterprise. The FTC now brags, for example, about eight years of increased enforcement of the anti-trust laws, statutes designed to allow politically connected businessmen to suppress their non-politically connected rivals.

One of the glories of America, and of the American free market, has always been our entrepreneurs. But especially since the days of the big railroads, there have always been some established businesses scheming to use government to reward themselves and punish their competitors. These traitors to free enterprise have been a major force in the growth of government, which is the horror story of our century.

To be able to fight for the ideals of the Founding Fathers, to be able to work for free markets and individual freedom, we have to be able to see through the government-generated smoke.

If we do not understand, and help others understand, what the government and its associated special interests are trying to do to us, there’s no way we can fight them.

One rule of thumb is to assume that the government is lying until proven truthful, and to look carefully to see who’s benefiting from any government action. It’s not enough to make economic arguments against government control, as important as that is.

To mobilize the tax-eaten to make necessary changes—as the Jeffersonians and Jacksonians knew—we have to tell people the truth. And that means showing them the injustice, as well as the inefficiency, of government intervention.

Only correct economics, combined with a clear-eyed caste-analysis of who’s doing what to whom, can help us make the changes we need to make. And that has been one of the roles of the Ludwig von Mises Institute.

The first publication, indeed the first activity, of the new Institute, was the Free Market. More than six years later, this publication has become an influential advocate of the uncompromising laissez-faire, anti-tax eater position. It is widely reprinted and cited, and increasingly useful to members of the general public, the media, the academy, and the policy community.

But newsletters are necessarily ephemeral. And so much of lasting significance has been published in the Free Market that I thought a more permanent collection was justified. It also makes a good, if not comprehensive, primer on free-market theory and policy from an Austrian perspective.

On monetary and fiscal policy, trade, regulation, socialism, privatization, and a host of other areas, these articles offer a perspective—and a tone—that once permeated the American Right, but which almost disappeared.

The fact that it is now flourishing, even if as a minority voice, is due in part to the Free Market and the Mises Institute.

This has been due to many people, but I would especially like to thank Perry Alford, to whom this volume is gratefully dedicated. His commitment to the vision of the Founding Fathers, to individual liberty and the free market, and his fighting spirit, have been lasting inspirations to all of us associated with the Institute.

Special thanks are also due to the indispensable Jeffrey A. Tucker. Norma A. Marchman did essential work in preparing the manuscript for typesetting and the production process, and Lianne M. Araki and Judy Thommesen did their usual excellent work as well.

Llewellyn H. Rockwell, Jr.

The Ludwig von Mises Institute

October 1988