Power & Market

The Republicans for National Renewal (RNR) held a promotional event in Phoenix, Arizona for the holiday season last year after an extensive lineup was sponsored on social media. At the time, they had little to no bragging rights as they fought an uphill battle against election integrity.

During the late hours of night in August 2022, it was clear that two themes were stated with confidence: Conservatives were out, and populists were in. The election results proved that the political landscape has been malleable, however there had been a lack of momentum from conservatives.

Like Murray Rothbard, others were estimating what the future ideological divide could be. Sam Francis was infamous for naming names, yet his most academic profile was the philosophical foundation that aligned with Rothbard. He asked:

“Should we be Lockians, Hobbesians, or Burkeans: natural rightsers, or traditionalists, or utilitarians? On political frameworks, should we be monarchists, check-and-balance federalists, or radical decentralists? Hamiltonians or Jeffersonians?”

These were the questions rarely asked outside of Mises conferences, but one man has been making them relevant again. Peter Thiel provides a backstory that only Rothbard seemed interested in years prior. When public gatherings like RNR were organized, a refreshing dialogue had a visible impact on the audience and sounded similar to Francis’s pitch. He said:

The strategy of the Right should be to enhance the polarization of Middle Americans from the incumbent regime, not to build coalitions with the regime's defenders and beneficiaries" (p. 230).

This was the place where the August election started its trajectory. It may have looked like a smaller competitor to the concurring Turning Point USA conference just down the street. In terms of finances, this would certainly be accurate. Another notable presence were the youth groups disaffected by the Republican organizations. Years ago, there were a handful of college opportunities that provided proper networking opportunities. Today, the groups are more distinct beyond the vague patriotism heard in conservative media. If donors like Thiel remain regulars in this populist faction, the financial gap may not be an obstacle moving forward.

As the title suggests, the event was a referendum on the GOP’s direction and not a carbon copy of the party platform. Many of the speakers consisted of Republicans, although not in the conventional sense. Blake Masters, backed by Thiel, delivered a speech on his prominent one income policy reverting to a human centered economy. Two more Arizona regulars, Kari Lake, and Wendy Rodgers shared dissident views on branching away from the party in favor of the Trumpian model over its neoconservative counterpart.

All the Rothbardian staples were present. They argued that the renewal within the GOP started with Pat Buchanan’s presidential campaign in 1992 and succeeded with Donald Trump. A list of the greatest hits were shared from the declining standard of living to unapologetic nationalism. According to Newsweek, this was part of a broader trend among Generation Z seeing where the wind is blowing and seizing the opportunity.

The culture wars were waging once more at the forefront of the event. Economic concerns, championed by the conservative establishment, took a back seat as social topics surfaced above everything else. The usual suspects were under the gun including Big Tech, unregulated capitalism, and feckless Republicans. The alliance binding all these Trumpian senators and influencers contributed to the “working-class realignment.” Based on the guest list, a coalition of grassroots conservatives were underway and anticipating the midterms with revitalized enthusiasm.

It was also a safe haven for the often-neglected paleo libertarians of the Mises Institute. Books from Hans-Hermann Hoppe and others were scattered throughout the greeting tables. Tho Bishop appeared as the main representative, opening one of the first serious speeches of the night. The tone resembles what Murray Rothbard referred to as “Right Wing Populism” and claimed to be the only strategic way to win elections in the long run. After a lengthy celebration in August, many have speculated that this trend isn’t exclusive to the state of Arizona.

For all their flaws, Generation Z is reaching an impasse, and many are hedging their bets on college organizations as the way forward for the GOP. But, if they’re wrong, Rothbard’s prominent words may be palatable among the new generation of populists.

With the release of new employment data from the Bureau of Labor Statistics today, most commentators have focused on the big gains seen in the total number of jobs as reflected in the establishment survey. According to that survey, total nonfarm jobs reached 152 million which—30 months later—finally puts total jobs back at their pre-covid peak during January and February of 2020. This was hailed as an enormously strong jobs report by many observers. 

But the grand employment successes indicated by the establishment survey are not reflected in the household survey which, rather than measuring total nonfarm jobs, measures "total employment" or employed people. In that case, employed persons are about a half a million jobs below the February 2020 peak, but the more worrying trend is in the fact that total employment has been flat for the past four months. total employment was 158 million in March 2022 according to the survey. In July, it was also at 158 million. 

That's quite a difference between the two employment surveys. The establishment survey shows that since March total jobs have grown by 1.68 million while total employment has fallen by 168,000. That's a difference of 1.8 million. 

This suggests that the total number of jobs is growing, but the total number of employed people is not. In other words, people are taking more second jobs, but more people aren't employed. 

Employment weakness also shows up in the labor force participation rate (for the 25-54 age group, excluding most retirees) which remains below the 2020 peak, and also below where it was for the entirety of the period from the late 1980s to the 2008 financial crisis. 

The overall narrative for the most recent employment data, however, was that jobs are "smashing" expectations and that the labor market is red hot. Yet, it's apparently not hot enough to bring the working-age labor force back to where it was before the GFC. Nor is it hot enough to bring total employment back up to 2020 levels. 

Theoretically, this sort of thing could always be explained by the idea that household earnings are so strong that many workers simply don't need to work anymore. That is surely true in some cases, but we also know that the savings rate is falling while debt is mounting. 

For example, after surging to historically high levels in 2020—thanks largely to stimulus checks and people putting off recreation and vacations—the personal savings rate has collapsed since December of last year. As of June, the personal saving rate is at 5.1 percent, which is the lowest since 2009. 

Moreover, household debts are mounting as well. According to the Federal Reserve consumer debt and revolving credit have grown rapidly since March of 2021, and are now at a new high and in July was up more than 17 percent year-over-year. Other data suggests consumers are still doing plenty of spending, but many are apparently doing it using consumer credit and at the expense of savings. 

This is not shocking since wages are not keeping up with the CPI inflation rate. 

What does all this mean for the economy? It suggests neither collapse nor robustness. The fact that employment data tends to be a lagging indicator, however, means the employment data probably doesn't mean much in terms of telling us where the economy is headed. Many economists and policymakers are busy debating semantics and whether or not the call the current situation a recession. But falling real wages, high inflation, rising debt, and two quarters of negative GDP growth suggest falling standards of living, which is mostly what matters. 

With Republicans and Democrats in Congress having openly expressed their united opposition to the Biden administration reentering the nuclear agreement with Iran (the JCPOA), it should come as no surprise that negotiations have gone nowhere.

The reason?

Beneath all the bluster about nefarious Iranian activities in the Middle East and the back and forth over lifting the sanctions Trump’s team imposed on Tehran after unilaterally ripping up the JCPOA in the first place, Joe Biden is a wimp afraid of facing political backlash for undoing one of Trump’s worst foreign policy decisions.

Afterall, it was Biden’s own current team of Malley, Blinken, and Sullivan who worked out the nuclear deal with Iran while working for Obama.

So even though Biden has admitted Trump pulling out of the deal was a "gigantic mistake," he won’t agree to lift sanctions neocon Trump officials like Elliot Abrams admitted were only put in place to try and prevent Biden from reentering the deal in the first place.

This includes the labeling of the Iranian Revolutionary Guard Corps as a terrorist organization, which though Biden had been using it as an excuse not to get back into the deal Tehran has recently dropped it as a demand in negotiations – this while the Wall Street Journal openly reports the Israeli military and intelligence services are assassinating Iranians left and right, including inside Iran itself.

The truth, unfortunately, is that Biden lacks the courage of his convictions and is no longer serious about getting back into the deal. As a consequence, war with Iran looks increasingly likely – and over nuclear weapons our own CIA director, William Burns, says publicly the Iranians aren’t pursuing making.

Despite the fact that every U.S. intervention in the Middle East over the past twenty years, from Afghanistan, to Iraq, to Syria, to Yemen, has strengthened Iran’s position in the region, the groundwork for the next disastrous war has already been laid – building on the foundation of the Abraham Accords to bring India on board with Israel, Egypt, the UAE, and Saudi Arabia to gird for direct conflict with Iran. Speaking in Israel, Biden has already gone so far as to threaten the use of force to prevent the Iranians from getting the bomb they aren’t pursuing, but which, if they were wise, Tehran would start building as a deterrent immediately.

Apart from the pressure from our “allies” in Riyadh and Jerusalem, the former a regime so despotic Freedom House ranks it lower than China, while the latter simply needs an enemy to keep the billions in annual U.S. aid flowing, the Abraham Accords already have their own caucus in Congress, and the military industrial complex salivates at the prospect of a Middle East NATO to buy even more of their products.

Poor Iran – not so bad as to prevent Ronald Reagan selling them weapons through Israel during the 1980s, as Gareth Porter has convincingly documented, after the first Cold War ended Tehran found itself picked out as one of the new threats that would continue to justify the empire.

So as increasingly delusional screeds by walking disasters like John Bolton populate the opinion pages of the major papers and Republican and Democrats unite to bully a weak President already inclined to serve the interests of our ostensible client states, who benefits from our Iran policy is as obvious as who doesn’t: the American people.

(Endorsed by Godfrey Bloom, Alasdair Macleod, Simon Hunt, and Claudio Grass)

In a few days the British Conservative Party will select a new prime minister from within its ranks. The new PM will have a short-lived opportunity to select new ministers. But more importantly, due to the inevitable adverse consequences of a decade and a half of unprecedented money printing, little real action to complete the promise of Brexit, and war in Ukraine, the new PM can select ministers pledged to sound money, a rational and pro-growth tax policy, free markets, limited government, and a non-interventionist foreign policy.

Sound Money

In perhaps an apocryphal story, it is held that Ludwig von Mises was once asked what one reform he would select if allowed only one. He quickly answered...return to sound money. By sound money, Mises meant a money not controlled by government but rather by the market. Without a doubt the market would choose a commodity-based money, most likely gold. Sound money would force government to live within its means. Under a sound money regime, it becomes clear that every pound or shilling spent by government comes directly from the people. Government spending reduces private spending pound-for-pound. The so-called "spending multiplier" by which one pound of government spending increases total spending by multiples of that amount is a complete fallacy.

New taxes will always be unpopular and rightly so. Increase in government borrowing can only happen by pre-empting private borrowing, via higher interest rates, which is recessionary by its very nature. It is natural and good that government must overcome the public's reluctance for new taxes and more government debt to increase spending. Government must justify their increased spending plans to the people. By the same token, government spending cuts will mean that the public will have more to spend themselves.

A Rational Tax Policy

Like the need for sound money, the need for a sound taxation policy is one of the most important, yet least understood, aspects of government. Even the current debate between the final two Prime Ministerial contenders, who of all people should be better briefed, reveals a profound confusion that exemplifies Frederic Bastiat’s distinction between what is seen and what is not seen.

Every time one of them declares an intention to cut, say, corporation tax and more recently, even income tax, the predictable counterblast is:

But that will cost the Exchequer ‘£x billion’ per annum and will mortgage our children’s future, creating ‘£y billion’ of additional borrowing that will take ‘z years’ to repay. The nation can’t live on credit-card economics! I will first address the problem of inflation, and only then cut taxes – that’s the responsible approach!

These emotive responses perfectly illustrate Bastiat’s “what is seen” – but it completely misses the vast potential increase in tax revenues that might flow from a lower rate. What is not seen is the effect of international tax competitiveness on the number of businesses that will register their residence in the UK because it has a comparatively low rate of corporation tax – witness Ireland, which has a corporate tax rate of only 12.5%, compared with the USA rate of 21%.

Consequently, what is not seen is the gain to the exchequer of welcoming thriving, profitable companies into the UK, rather than the converse - losing UK businesses to jurisdictions with lower tax rates.

Also “not seen” is the economic benefit that will flow from the presence in this country of thousands of employees and their families. Because it is not seen, it is also unquantifiable – but what is certain is that we shall see supply-side net economic growth. The “tone” will have been established – and the direction of travel is bound to be positive. It will result in a bigger pie – not a bigger slice of a diminishing pie.

What is seen is always limited – such as revenue from new tariffs on imports – while ignoring the harmful market distortions and negative price impacts that impinge directly and indirectly on the cost of living. There are important lessons here.

Free Markets

The examples of the failure of government run programs is there for anyone who is not an ideologue to see. Just this past week, the Financial Times reported that the government may halt all increases in new housing in the London area due to the lack of adequate capacity in the power grid. In other words, Britain's publicly owned and operated power system is not producing enough electricity. A top to bottom privatization of not only power generation but fuel sources is required.

Scrap regulations on all sources of energy including nuclear and fossil fuels. Nuclear power is one of the safest and lowest cost sources of power available. Its higher costs are completely the result of unnecessary regulation that, frankly, seems intended to end nuclear power completely. Britain has been a leader in nuclear power technology for over half a century. All its important warships and submarines run on nuclear power, and hardly anyone thinks a thing about it.

Britain has been a fossil fuel giant since the eighteenth century. Coal made the industrial revolution possible. North Sea oil has never met its full potential. There is no reason that Britain needs import fuel, unless it can be purchased more cheaply elsewhere, such as the Middle East or even, dare we say the word, Russia.

Limited Government

Limited government means two things--limited government involvement in the economy and limited spending. The two go hand-in-hand. An additional benefit is that limited spending can be funded out of lower taxes. The British legal system, based upon the common law, is all that is required for the smooth regulation of economic matters. For example, fraud and contract law are well defined in the British legal system for the smooth regulation of commercial life. Tort law regulates harms inflicted, making product liability laws, for example, unnecessary. Just as a better mousetrap drives fewer effective ones from the market, better and cheaper products drive less effective and more expensive ones from the market, making product regulation completely unnecessary.

A better template than the unitary state is the Swiss principle of subsidiarity. Switzerland is a multi-ethnic land, making a one-size-fits-all government impractical. Therefore, government is pushed down to the lowest governmental level possible wherever practical, and it turns out that much of day-to-day practical government can be handled at local levels where the people really do have a voice. Britain should try this approach

The National Health Service is a disgrace on almost any objective basis of functional and cost-effective analysis, and it's getting worse rather than better. End taxpayer support and put a fee-for-service price on its operation, forcing it to compete with private healthcare providers.

There is no room for EU regulations, quotas, etc. in a sovereign country ruled by common law with limited government. Only Brexit supporters should be considered for ministerial jobs.

A Non-interventionist Foreign Policy

The war in Ukraine has illustrated how nations can be dragged into war when their own national interest has not been threatened. NATO expanded eastward after the fall of the Berlin wall three decades ago, until it ran into real opposition in the form of Russia. There was no need for this expansion and there is no need for Britain to be involved in Ukraine in any way.

The war there has taken on a life of its own and only a strong leader with a dedicated cabinet of peace minded ministers will be able to dislodge Britain from this conflict and prevent Britain from being dragged into similar conflicts, such as the new dispute between Serbia and Kosovo. Instead of taking sides in purely local conflicts, Britain should do all it can to create a new Concert of Europe. This will require real statesmanship. Britain can and should lead the way.

A truly sovereign Britain can defend itself when its real interests are threatened. Armed neutrality requires a strong national defense and a non-interventionist foreign policy. The emphasis is on "defense" and "non-intervention.” A good maxim to follow is "Mind your own business and set a good example."