Power & Market

Was Bastiat an Economic Theorist?

Most economists, while recognizing the great 19th-century French liberal Frédéric Bastiat as an outstanding economic journalist and a master polemicist for free trade and other liberal economic policies, have summarily dismissed him as an economic theorist.  These include economists from Mises and Hayek to Schumpeter and Marx.  Lately some economists have begun taking a second look at Bastiat’s work in economic theory. 

Right now there is a stimulating online conversation going on about Bastiat's contributions to economic theory in his treatise Economic Harmonies.  The conversation marks the completion of a draft of Liberty Fund's new translation of Economic Harmonies and is led by Dr. David Hart, the Academic Editor of Liberty Fund's Bastiat translation project and the leading authority on Bastiat and his work.  It is part of the series “Liberty Matters: A Forum for the Discussion of Matters pertaining to Liberty.”   Besides David and me, the participants include two prominent academic experts on Bastiat, Professors Don Boudreaux of George Mason University, and Guido Hülsmann of the University of Angers. 

The contributions to the discussion are lively, concise, accessible to Bastiat fans of all ages and backgrounds, and well worth reading. 

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What Do We Do About Social Media?

05/20/2019Atilla Sulker

Individuals from all corners of the political spectrum have been stirred up by the recent banning of various figures including Alex Jones and Louis Farrakhan. Some have praised these bans for providing good constraints on what they deem "fake news" or “hate speech.” Others have attacked these bans for being influenced by nefarious motives that are contra free speech. The debate regarding the extent to which social media sites may regulate speech has been going on for years now. Perhaps it is time for a reassessment.

The Fallacy of "Social Media Homogenization"

One of the biggest fallacies people fail to avoid in these debates is that all social media sites are homogenous goods. The successful entrepreneur understands the importance of differentiation in marketing their product. For it is differentiation which allows the entrepreneur to narrow down his market and attract consumers. Just as in any other market, the social media titans, Facebook and Twitter, have developed very differently from each other, and each have their own distinctive features. Facebook has developed best for allowing like minded people to connect with each other, while Twitter has become a bully pulpit for various figures in the political and pop culture world.

It would thus be wrong to compare all social media sites, as if they were the same. The various consumer ends each social media site serves to satisfy determines its overall development. Many different factors will influence these ends. Among one of these factors is the extent to which speech is regulated.

If a given social media site aims to assist individuals and firms in networking with each other, they will likely not have any role in the market of sharing controversial opinions. Conversely, the social media platform which aims at giving a voice to those on the fringes of society will likely have no interest in entering the market of business networking. If we step back and look at the bigger picture, it is a fallacy to paint all social media sites with a broad brush stroke. Each one of them serves a unique purpose, and this purpose has a huge impact on how the site will develop in the longer run.

So perhaps the solution does not lie in calling for state interventions — boldly proclaiming that social media sites are ruthless monopolies trampling on free speech. Perhaps a site like Facebook is not meant for the sharing of controversial opinions, or genuinely serious discussions. Perhaps it serves the market of people who want to connect with each other through shared interests and friendly banter. Perhaps the initiation of controversial discussion is irrelevant and disruptive to Facebook's purpose. Perhaps the sentiments of Farrakhan and Jones don’t fit in the environment which Facebook is trying to create.

The market has offered solutions to this already. Where the “networking social media site” is lacking, the “controversial opinion sharing site” will compensate. Gab is a good example of this. The site claims to be a bastion of free speech and individual liberty, and has become a platform for many controversial figures who identify with the so called “far right.” The differentiation of various sites can of course be based on different premises. There could perhaps be the “leftist social media site” on the one hand, and the “right wing social media site” on the other.

By advocating for repercussions from social media platforms which practice censorship, we are merely treating the symptom of a much more fundamental problem, (i.e., government intervention). Rather, we should be advocating for the splintering of all governmental partnerships with firms such as Facebook, among others. It is these economic interventions which fundamentally stymie voluntary freedom of association, and replace it with a militant, state enforced censorship.

Those who are truly against censorship will let the market gradually filter it out. One has to support the property rights, and consequently, free speech of his political enemies in order to uphold that of his. Thus we must advocate for a system in which the state doesn’t take sides, nor try to fix the consequences of interventionism through further intervention.

Just as in the physical realm, individuals associate with those whom with they have shared interests, they do so in the realm of the internet. Market mechanisms have allowed for the exercising of this freedom of association, and state intervention only blurs the lines. Let the “safe space junkies” and the “rugged individualists” go their separate ways.

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What Mises Said about Rothbard

In the last decade or so, a handful of Austrian economists have been aggressively promoting a strange story of the postwar development of the Misesian tradition.  In their telling, Friedrich Hayek and Israel Kirzner were busily developing Mises’s approach to economic theory and method when Murray Rothbard showed up and shunted the methodological train onto the wrong track.  For this reason, Rothbard and his followers—who these storytellers collectively and derisively refer to as “the Rothbardians”—are to be read out of the Austrian movement.  In an article published last year, I explained why this story concocted by the “Rothbard deniers” is flat wrong and provided textual evidence that Mises and Hayek themselves, as well as Henry Hazlitt, would have disagreed with it.    

Just recently another piece of evidence turned up confirming Mises’s approval of Rothbard’s interpretation of his a priori economic methodology.  This is in the form of a letter written by Mises to fellow Mont Pelerin Society member and French positivist philosopher Louis Rougier.  Dr. Patrick Newman discovered the letter in the Mises archives at Grove City College and kindly shared a copy with me. 

In the letter, dated December 6, 1962, Mises is responding to criticisms of one of his books by Rougier.  Given the date of the letter and its focus on epistemology and methodology, the book in question is probably Mises’s last one, The Ultimate Foundation of Economic Science: An Essay on Method, published in 1962. In summing up his position, Mises writes:

The proof of the cake is in the eating.  I can only refer to the systematic exposition of the whole doctrine of praxeology in my book Human Action and nowadays in the brilliant book of a younger man, Murray N. Rothbard, Man, Economy and State. . . .

So Mises clearly considered Rothbard’s treatise as an updating and advancement of his own system of economic theory.  But this is not all.  After a paragraph recommending to Rougier his earlier book on the methodology of economics, Epistemological Problems of Economics, first published in German in 1933, Mises closes the letter with an entreaty to Rougier: 

But, please, first of all read the book of Rothbard.  It is very interesting also from the epistemological point of view. 

Given the evidence, including the words of Mises himself, I think that there remains little doubt that the mainline Misesian tradition in economic theory and method runs through Murray Rothbard. 

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Why Do Rich Capitalists Suggest Destruction of Capitalism?

04/24/2019Jeff Deist

Jeff Deist recently joined our friend Jay Taylor's podcast. 

Many billionaires — Ray Dalio, Warren Buffett, and Bill Gates among them — like to call for higher taxes on people such as themselves. But this raises a compelling question: would they have become rich in the first place under the kind of tax system they now advocate? Would they have accumulated a critical mass of investment capital if taxes had consumed more of their profits along the way? Would they have been able to maintain sufficient capital expenditures in their respective businesses to stay dynamic? Or would revenue, capital, and personal wealth lost to the IRS have relegated these super achievers to the status of merely successful? Jeff provides insights into those questions.

Audio is available here.

Also available on YouTube.

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Will Democrats Rally Behind a Herman Cain Fed Nomination?

04/04/2019Tho Bishop

According to multiple reports, Donald Trump is preparing to nominate Herman Cain to fill one of the two vacant positions on the Federal Reserve’s Board of Governors.

Cain, the former CEO of Godfathers Pizza and a meme-friendly  2012 presidential candidate, shares several similarities to Stephen Moore, who was also nominated last month. To their credit, neither man comes from the arena of economic groupthink that persists among many central bankers. Both also owe their nomination to the strong personal relationship they both have with Trump, which is why the administration isn’t worried about their past superficial criticism of the low interest rate policy the president has made clear he desires.

While Moore has been criticized strongly within beltway circles since his nomination, it will be interesting to see how Trump critics handle Mr. Cain. After all, he has the one quality Elizabeth Warren and other Democrats have chosen to focus on when it comes to a Federal Reserve nominee: he isn’t a white guy.

For several years now, Warren and other Democrats have been pounding the table for greater diversity at the Fed. As a letter from 2016 states:

Given the critical linkage between monetary policy and the experiences of hardworking Americans, the importance of ensuring that such positions are filled by persons that reflect and represent the interests of our diverse country, cannot be understated. When the voices of women, African-Americans, Latinos, and representatives of consumers and labor are excluded from key discussions, their interests are too often neglected.

If the view point of Warren and her colleagues truly is that simply skin color and experience are important to the Federal Reserve considering the interests of Americans broadly, it would make sense for them to celebrate this nomination. Here we would have the first African American Fed governor in several decades, who rose up from a working class background to become an American success story.

Should Cain be nominated, anything short of grand applause from Democrats will only highlight how shallow the emphasis on superficial “diversity” truly is.

The additional irony here is that Trump’s desire to stack the deck with his own allies actually serves the policy goals of progressive groups. For example, Fed Up, a left-populist organization policy that has been part of the larger push to emphasize “Fed diversity,” has been pounding the table against interest rate increases for years. In theory, a Governor Herman Cain that is loyal to Trump’s vision should check the two largest boxes the organization has been promoting.

Of course, there is a real tragedy connected to this superficial push for “diversity,” as it is precisely the interventionist monetary policy advocated by politicians like Warren and groups like Fed Up that do real damage to minority communities. While Fed Chair Jerome Powell  took time to visit the historically black college of Mississippi Valley State this February, his speech failed to highlight how the Fed’s post-2008 monetary policy has disproportionally hurt black communities due to the fact African Americans are less likely to be invested in a juiced up stock market. Or how the Fed-fueled housing bubble was particularly damaging to black communities.

So while Herman Cain does check a diversity box for the Federal Reserve, he is unlikely to bring the far more important ideological diversity to America’s central bank that is desperately needed. On the bright side though, at least he isn’t Marvin Goodfriend. 

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Wages: The Anti-Capitalist and Pro-Capitalist View

04/01/2019George Reisman

[formatted from this twitter thread- ed.]

I present two conflicting theories of how the standard of living of the average wage earner rises: the prevailing, anti-capitalist theory, and my own, pro-capitalist theory.

Keep in mind that every law ultimately rests on the threat to kill violators. That is the threat made against all who forcibly resist lesser punishment, such as paying a fine or going to prison.

Thus, the prevailing theory of how wages rise is essentially that the government tells businessmen and capitalists, raise wages or we’ll kill you.

The prevailing theory of how the work week shortens is that the government tells businessmen and capitalists, shorten the work week or we’ll kill you.

The prevailing theory of how child labor is eliminated is that the government tells businessmen and capitalists, stop employing children or we’ll kill you.

The prevailing theory of how working conditions improve is that the government tells businessmen and capitalists, improve working conditions or we’ll kill you.

Now here’s my theory:

Businessmen and capitalists are continuously striving to introduce new and improved products and more efficient methods of production. They are impelled to do this by virtue of the profit motive.

To the extent that the businessmen and capitalists succeed, the supply of products is increased relative to the supply of labor, which causes the prices of products to fall relative to wage rates. This means a rise in the buying power of wages, i. e., a rise in “real wages.”

As real wages rise, more and more workers are put in a position in which they can afford to work in jobs that pay less but offer shorter hours. In fact, they become able to afford to take reductions in pay in greater proportion than the reduction in hours. Wage cuts in greater proportion than the reduction in hours make it positively profitable for employers to offer shorter hours. E.g., instead of two 12-hour shifts, it becomes more profitable to have three 8-hour shifts at lower hourly wages.

As the real wages of workers rise, not only do their hours shorten, but also the need for a financial contribution from their children diminishes. Thus, as capitalism progresses, the age at which children go to work rises. Since 1780, it’s gone from 4 to over 24 in many cases.

Furthermore, as the real wages of workers rise, they are more and more put in a position in which they can afford to take jobs that pay less but offer better working conditions, and, by the same token, refuse to take jobs that offer poor conditions.

Because of the height of real wages in capitalist countries, wage earners are routinely able to refuse to take jobs with poor conditions, except at such a premium in wage rates that it is usually much cheaper for employers to pay the cost of improving the conditions.

In sum, without government intervention, capitalism operates to raise wages, shorten hours, end child labor, and improve working conditions.

I turn now to a brief account of the effects of imposing the prevailing, anti-capitalist, gun-slinger, we’ll-kill-you theory of how the standard of living of the average wage earner rises.

Imposing wage rates above the free-market level causes unemployment. Insofar as those forced into unemployment in one field then add to the supply of labor in other fields, wage rates in those fields drop. An arbitrary inequality in wages is created. And skills are wasted.

Forcibly raising wage rates at the bottom of the skill-ladder, as do minimum-wage laws, forces the displaced workers into unemployment. These workers were already earning a wage below the now prescribed minimum and being employed elsewhere would require a yet-lower, illegal wage.

Forcibly reducing hours reduces production and causes higher prices. Even if the average worker’s hourly wage is increased to the point of leaving his weekly wage unchanged, the rise in prices reduces his real wages. Poor people are gunned into being poorer than they need to be.

Denying parents the ability to obtain a financial contribution from their children makes desperately poor families poorer still.

Forcibly improving working conditions diverts take-home pay into paying for the improvements and thus can literally take food off the table of poor workers’ families.

In sum, the so-called do-gooders are not at all do-gooders. They are EVIL-doers. They have an imperious mentality as far removed from reality as Marie-Antoinette’s and go about like drunken fools urging the government to brandish its weapons, not knowing who or what might be hit.

To learn about every aspect of the case for capitalism, read my ​Capitalism: A Treatise on Economics.

Formatted from Twitter: @GGReisman
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Watch AERC Live

03/22/2019Mises Institute

Keynote AERC lectures and selected panels can be watched live at mises.org/live

Our online schedule includes (Central Time Zone):

Friday

9:15-10:15 A.M. | The F.A. Hayek Memorial Lecture (Sponsored by Greg and Joy Morin)

Randall Holcombe (Florida State University) | Political Capitalism: How  Economic and Political Power Is Made and Maintained

10:30 A.M. – Noon | Panel on Remembering the Interwar Right

David Gordon (Mises Institute), Brion Mcclanahan (Abbeville Institute), Paul Gottfried (Elizabethtown College)

1:30 – 2:30 P.M | The Henry Hazlitt Memorial Lecture (Sponsored by Hunter Lewis)

Robert Luddy (Captiveaire) Henry Hazlitt’s Long-Term Economic | Thinking: Foundation of Entrepreneurial Excellence 

2:45 – 4:15 P.M. | Panel: 100th Anniversary of Nation, State, and Economy

Thomas Dilorenzo (Loyola University Maryland), Joseph Salerno (Mises Institute, Auburn University, and Pace University), Nikolay Gertchev (Ichec Brussels Management School), Jörg Guido Hülsmann (University of Angers)

4:30 – 5:30 P.M. | The Ludwig Von Mises Memorial Lecture (Sponsored by Yousif Almoayyed) 

Michael Rectenwald (New York University, Retired)  Libertarianism(s) Versus Postmodernism and ‘Social Justice’ Ideology

Saturday

9:00 – 10:00 A.M. | the Lou Church Memorial Lecture (Sponsored by the Lou Church  Foundation)

Daniel Ajamian (San Diego, California) The Cost of Enlightenment

1:00 – 2:30 P.M. | Paper Panel: Socialism

Rafael Acevedo  (Texas Tech University), Yuri Maltsev (Carthage College),  Edward Fuller (Palo Alto, California

2:45 – 3:45 P.M. | the Murray N. Rothbard Memorial Lecture (Sponsored by Don Printz)

David Dürr (University of Zurich) The Inescapability of Law:  and of Mises, Rothbard, and Hoppe

4:00 – 5:30 P.M. | Panel: The Significance of Hans-Hermann Hoppe (Sponsored by Steve and  Cassandra Torello)

David Gordon (Mises Institute),  Mark Thornton (Mises Institute and Auburn University),  N. Stephan Kinsella (Kinsella Law Group, Property and Freedom Society), Thomas Dilorenzo  (Loyola University Maryland),  Jörg Guido Hülsmann (University of Angers),  Joseph Salerno (Mises  Institute, Auburn University, Pace University)

Response: Hans-Hermann Hoppe (Property and Freedom Society,  Mises Institute)

Photos available here.

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Why It's Important to "Preach to the Converted"

02/08/2019Ryan McMaken

An an editor of publications with a distinct ideological bent, I sometimes hear that it's important to strive to avoid "preaching to the choir" or "preaching to the converted."

It's difficult to generalize what is meant when this phrase is used. Some users of the phrase think it's a waste of time for any group to discuss important topics among the members. Why discuss laissez-faire economics (or any topic) with other people who already agree?

Some have even argued that the very existence of publications devoted to a specific limited ideological point of view are dangerous because they encourage more in-group discussion at the expense of outside engagement.

More generally, though, the use of the phrase "preaching to the converted" is used to devalue the practice of encouraging frequent discussion of ideas and scholarship within in a certain group. The phrase instead suggests it is better to focus most — if not all — communications outward for the purposes of converting outsiders.

There's a lot of gray area here, and moderates on the issue likely hold a wide variety of opinions as to just how much discussion ought to be with outsiders. Some may think its fine to develop ideas internally, and to engage in only occasional outward "missionary" efforts. Depending on the nature of the organization, some may even think it's fine to focus nearly all energies on in-group teaching and scholarship so that in-group members can then go to other organizations which specialize in outward communications, but do little in terms of internal debate and idea development.

In practice, most ideological groups do both internal idea development and education, and outward communication.

Both activities are important, and many people understand this.

Some observers, nevertheless have a tendency to excessively emphasize the importance of not "preaching to the converted" and this is often due to three incorrect assumptions:

  1. It is believed that people in the converted already have a sufficient understanding of the topic at hand.
  2. It is assumed that the converted will never leave the group in question.
  3. It is believed that the converted won't interact with people outside their group in other contexts.

To illustrate these points, it may be helpful to speak of them in the context for which the term was originally invented: religious evangelization.

This isn't to suggest that laissez-faire views of political economy are anything like a religion. They're not. These views do not constitute a "way of life" or any sort of all-encompassing theory of the cosmos or the human person.

Nevertheless, a religious group can serve as an instructive analogy for a closer look at spreading a certain ideological viewpoint.

The "Choir" Is Often Full of Poorly Educated and Casual Believers

Let's begin by looking at "the converted" or the congregation in any religious group.

Anyone who has experience within any sizable group of Christians — for example — knows that there is a wide variety of knowledge levels and engagement levels within the group.

Some of them are well-read, enthusiastic, orthodox, and attend every single group event. Others are less sure of the group's core beliefs. Some only attend services occasionally. Some self-identify as Christians, but have barely read any of the group's most important documents.

And yet, all of these people call themselves "Christians." Clearly, it would be a mistake to then conclude that no one in this group requires additional discussion, instruction, or reading. In fact, most would benefit from being shown new ways of looking at things, or new readings with which they had not been familiar before. The clergy and teaching staff would also benefit from being asked difficult questions and being asked to elaborate on ideas already discussed. Useful information doesn't just flow one way. Without this, the "converted" cannot be expected to communicate their ideas to others, or even to themselves. Moreover, because old people die and new people are born, new people may be coming into the group as other people are dying off.

Some of the Converted May Be Headed Out the Door

This brings us to the second problem of assuming too much about the converted. It is often assumed that those who are converted will stay that way. This, of course, is a bad assumption in both ideological movement and in religious groups. People fall away from religious groups frequently. The same is true of any number of ideological groups, whether they be based on laissez-faire economics,  on Marxism, or on veganism.

Thus, one of the most important functions of "preaching to the converted" is to address the questions of those who perceive inconsistencies in the ideas, or to better explain hard-to-understand aspects of a certain group of ideas. One of the most important things to avoid is the idea that every question already has pat answers that are self-evidently true to everyone. This is rarely the case, of course, so even among the converted, additional discussion and investigation is usually warranted.

The Converted Are Part of Other Groups

And finally, it is important to remember that "the converted" — unless they're part of a despotic cult — interact with numerous other groups of people in daily life, whether through family, professional work, or community groups. If these people are to be expected to spread certain ideas effectively, they must have a competent grasp of them. And there must be some place or publication or organization that can help them obtain this grasp of things.

In other words, if the converted are to share their ideas with others, their primary concern should be understanding these ideas well in the first place.

Leonard Read regularly made this point, noting:

it is only in self-improvement that one can have any influence whatsoever on the improvement of others. This point may never come clear unless we know why so few of us feel any need for self-improvement while so many of us possess an overpowering itch to improve others. Why do we spend so much more time looking down than up?

This was perhaps Read's version of "doctor, heal thyself." It's a good thing to want to go out and improve the world. But it's important to also have the means of improving one's self first. Being a member of "the choir" or "the converted" is often a helpful first step.

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Want to Help American Indians? Grant Them Federal Land, Sovereignty, and Nationhood

01/22/2019The Editors

Left-progressives are incensed over the plight of Nathan Phillips, the American Indian from the Omaha tribe involved in an altercation with Catholic high school boys over the weekend. In general, the American left views itself as the champion of indigenous people, insisting that bowdlerized American history fails to fully account for genocide and theft of land. But as usual the progressive answer—welfare, dependency, government programs, and government agencies— doesn't actually help Indians. Our own Jeff Deist offered up a more ambitious progressive plan via Twitter:

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When Democratic Compromise Fails: Kosher Slaughter Outlawed in Belgium

01/04/2019Ryan McMaken

On January 1 this year, a new law in the Flemish region of Belgium went into effect, effectively banning kosher slaughter of animals "after regional parliaments introduced prohibitions for animals that have not been pre-stunned."1

According to The Jewish Chronicle:

Shechita is banned in Flanders as of January 1, while similar restrictions will be in place in the French-speaking Walloon region from September 2019.

Local rabbis said it was in direct contradiction to Jewish law, which requires that an animal be uninjured and in optimal health before slaughter.

One added that the Belgian measures were putting Jewish lives “at risk.”

The motivation behind the new laws comes in part from concerns over animal welfare. Thus, Belgian lawmakers had to choose between religious freedom for Jews and animal welfare. They chose the animals.

Clearly, there is a fundamental conflict of values here between those motivated by animal welfare, and those motivated by religious freedom.

We see similar conflicts between advocates for religious freedom and those who oppose male circumcision, and between the two sides in the abortion debate. We see it in debates over bans on Muslim head coverings. In democratic political systems — including those with strong constitutional protections for minorities — the majority opinion eventually wins out. Constitutions can be changed, and what the majority considers to be "right" will eventually become the position of all institutions.

Moreover, in cases like kosher slaughter, the activities being targeted are no mere preferences. They touch on fundamental values, and they present a clear conflict with other value systems. In cases such as these, where there is no apparent room for compromise. And if there is no "middle ground," whose values ought to prevail?

Democracy Doesn't Always Work

Throughout most of the West, of course, we're all taught from an early age that "democracy" will allow everything to work itself out. The parties in conflict will enter into "dialogue," will arrive at a "compromise" and then everyone will be happy and at peace in the end.

But, that's not how it works in real life. While there are some areas for compromise that can be found around the edges of issues such as moral values and ethnic identity, the fact is that in the end, kosher meats are either legal or they're not. Circumcision is either legal or it's not. Abortion is either legal or it's not. Muslim head coverings are either legal or they're not.

After all, if one group of people believes that a 3-month-old fetus is a parasite that has trespassed against the mother, those people are going to find little room for compromise with a group of people who think the same fetus is a person deserving legal protection.

Indeed, we see the shortcomings of democracy at work every time this latter issue comes up. One side calls the other killers who are complicit in the killing of babies. The other side calls their opponents rubes and barbarians, probably motivated by little more than crazed misogyny. Similar dynamics, of course, are present in cases involving animal rights, circumcision, and headscarves. One side thinks that their side is the only acceptable option for virtuous people. "Virtue," of course, can be defined any number of ways. Some are so blinded by their cultural biases, in fact, that they even conclude that no "civilized" person could possibly believe that, say, circumcision is anything other than a barbaric practice.Those who continue to believe in such things must therefore be forced "into the 21st century" by the coercive power of the state. Their religious beliefs, as Hillary Clinton demanded in 2015, "have to be changed."

These problems also exist under authoritarian, non-democratic regimes. But anti-democrats usually admit that the state is using force to support one side over the other. Democrats, on the other hand, often prefer to indulge in comforting fictions. What many supporters of democracy refuse to admit is that there is no peaceful debate that will solve this conflict. The conflict is philosophical and moral in nature. And, so long as both sides are forced to live under a single legal system, any "compromise" will take the shape of one side imposing its position on the other by force. In the end, the losing side will be taxed to support the regime that disregards its views and forces compliance with laws made by the winning side.

Those on the winning side, of course, don't see any problem here. What the minority thinks of as "oppression" is really — according to the winners — just "modernization," "progress," "decency," "common sense," or simply "the will of the majority." The fact that the enforcement of that will of the majority is founded on state violence is of little concern.

The Solution: Secession and Decentralization

Ludwig von Mises, who was himself a democrat, offered a solution to the problem of democratic majorities: self-determination through secession and decentralization.

For Mises, populations must not be forced perpetually into states where they will never be able to exercise self-determination due to the presence of a more powerful majority. On a practical level then, populations in regions, cities, and villages within existing states must be free to form their own states, join other states with friendlier majorities, or at least exercise greater self-government via decentralization.

Moreover, in order to accommodate the realities of constantly-changing populations, demographics, and cultures, borders and boundaries must change over time in order to minimize the number of people as members of minority populations with little to no say in national governments controlled by hostile majorities.

In Mises's vision, there is no perfect solution. There will always be some minority groups that are at odds with the ruling majority. But, by making states smaller, more numerous, and more diverse, communities and individuals stand a better chance of finding a state in which their values match up with the majority. Large unitary states, however, offer exactly the opposite: less choice, less diversity, and fewer changes to exercise self-determination.

The Option of Decentralized Confederations

Nor do all political jurisdictions need to be totally independent states. Mises himself advocated for the use of confederation as a solution to problems of cultural and linguistic minorities. Confederations might be formed for purposes of national defense and diplomacy, Mises noted. But in any country with a diverse population, in order to maintain internal peace, self-government of domestic affairs must be kept localized and so as to minimize the ability of a majority group to dominate a minority group.

Mises didn't invent this idea, of course. This sort of confederation was justified on similar grounds by the founders of the Swiss Confederation and the United States. Moreover, while not planned out ahead of time, the government of Austria-Hungary was by necessity decentralized to minimize internal conflict. In cases such as these, matters of language, religion, education, and even economic policy must be handled by the local majority, independent of any nationwide majorities. Or else democracy becomes little more than a tool for the winning coalition to bludgeon the losing coalition.

For decades, this worked at various times in the United States. On the matter of abortion, for instance, Americans agreed prior to Roe v Wade to allow abortion laws to be determined at a local level and be kept out of the hands of the national government. Public schools — and what was taught in them — were governed almost exclusively by local school boards and state governments. Even immigration policies and linguistic issues were decided by local majorities, and not by national ones. So long as these matters remained local matters they were irrelevant to national politics. Under these conditions, a victory for one party or another at the national level has little impact on the daily practice of one's religion, moral values, or schooling.

As localized democracy turns into mass democracy, however, majorities exercise increasing power over minority groups. Each election becomes a nationwide referendum on how the majority shall use its power to crush those who pose a threat to the prevailing value system. Even worse, when there is one nationwide "law of the land" there is no escape from its effects, save to relocate hundreds of miles away to a foreign land where the emigrant must learn a new language and a new way of life far from friends and family.

Needless to say, as this sort of democratic centralization increases, the stakes become higher and higher. The potential for violence becomes greater, and the disenfranchisement of minority groups becomes ever more palpable.

Mises understood well what the end game to this process is. It's political and social unrest — followed by political repression to "restore" order. War may even follow. For Mises, the need to guarantee localized self-determination was no mere intellectual exercise for political scientists. It was a matter essential to the preservation of peace and freedom. We would do well to take the matter as seriously as he did.

  • 1. The law also bans "halal" slaughter, which is basically the Muslim version of kosher slaughter, and is extremely similar. Not surprisingly, the law's passage was motivated in part by anti-Muslim sentiment in Belgium, although antimale welfare was the most-often used justification for the legislation.
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