Why Presidents Want You Scared

Why Presidents Want You Scared

10/31/2018James Bovard

The media is railing about Trump for fearmongering ahead of the midterm elections.  Like this never happened before?  Like this is not the job description of modern politicians? Like Obama, George W. Bush, and Clinton did not fearmonger whenever they could profit by spooking Americans?  Trump is continuing a tradition that was firmly established by Woodrow Wilson.  Fearmongering is simply another proof of the rascality of the political class – and another reason why their power should be minimized. Here’s a 2011 piece I wrote on the topic, excerpted in part from Attention Deficit Democracy.

Fear-Mongering and Servitude

In his 1776 essay, “Thoughts on Government,” John Adams observed, “Fear is the foundation of most governments; but it is so sordid and brutal a passion, and renders men in whose breasts it predominates so stupid and miserable, that Americans will not be likely to approve of any political institution which is founded on it.” The Founding Fathers hoped the American people would possess the virtues and strength to perpetuate liberty. Unfortunately, politicians over the past century have used trick after trick to send Americans scurrying to politicians to protect them.

President Woodrow Wilson pulled America into World War I based on bogus idealism and real fear-mongering. Evocations of fighting for universal freedom were quickly followed by bans on sauerkraut, beer, and teaching German in government schools. H. L. Mencken observed in 1918: “The whole aim of practical politics is to keep the populace alarmed and hence, clamorous to be led to safety—by menacing it with an endless series of hobgoblins, all of them imaginary.” In Mencken’s time he was often considered cynical. Subsequent developments have proven Mencken to be a prophet.

The Democratic Party relied heavily on the fear card in the 1920 presidential race. On the eve of the November vote that year Democratic presidential candidate James Cox declared: “Every traitor in America will vote tomorrow for Warren G. Harding!” Cox’s warning sought to stir memories of the “red raids” conducted in 1919 and 1920 by Attorney General A. Mitchell Palmer, during which thousands of anarchists, communists, and suspect foreigners were summarily jailed and in many cases deported. The American people rejected Cox and embraced Warren Harding’s promise of a “return to normalcy.”

President Franklin Roosevelt put “freedom from fear” atop the American political agenda in his 1941 State of the Union address. But FDR’s political legacy—especially Social Security—has institutionalized fear-mongering in presidential and congressional races. Democrats perennially portray Republicans as planning to yank life support from struggling seniors.

For almost 50 years American politicians have used television ads to spur dread, most famously in the 1964 “Daisy” ad for Lyndon Johnson’s campaign. The ad showed a young girl, in the words of Jim Rutenberg in the New York Times, “picking the petals off a daisy before the screen was overwhelmed by a nuclear explosion and then a mushroom cloud and Mr. Johnson declared, ‘These are the stakes.’” The ad did not specifically claim that Barry Goldwater, the Republican nominee, would annihilate the human race, but the subtle hint wafted through. Though this ad only aired once, it instantly became a legend.

Whipping up fear was the flipside of President Bill Clinton’s “feeling your pain” political style. Clinton fanned people’s fear of guns, militias, and life without medical insurance. At the same time, the Clinton administration stretched the power of government on all fronts—from concocting new prerogatives to confiscate private property to championing FBI agents’ right to shoot innocent Americans to bankrolling the militarization of local police forces. Clinton was the Nanny State champion incarnate, teaching Americans to look to government for relief from every peril of daily life—from unpasteurized cider to leaky basements. As long as the President seemed to care about average Americans, his abuses were largely forgotten. (The 1996 Republican presidential candidate, Sen. Bob Dole, also promised to provide voters with “freedom from fear” via untying “the hands of the police.”)

Fear and Bush

The 2004 race was the most fear-mongering presidential campaign in modern American history. In his acceptance speech at the Republican National Convention, George W. Bush referred to terror or terrorism 16 times. Bush reelection campaign television ads showed firemen carrying a flag-draped corpse from the rubble at Ground Zero in New York and a pack of wolves coming to attack home viewers as an announcer warned that “weakness attracts those who are waiting to do America harm.” (One commentator suggested that the ad’s message was that voters would be eaten by wolves if John Kerry won.) Just before Election Day a senior GOP strategist told the New York Daily News that “anything that makes people nervous about their personal safety helps Bush.” People who saw terrorism as the biggest issue in the 2004 election voted for Bush by a 6 to 1 margin. Moises Naim, editor of Foreign Policy, observed that the Bush campaign was “using the fear factor almost exclusively. This is a highly researched decision with all the tools of public opinion management. It’s nothing but a reflection that it works.”

Bogus terror alerts might have made the difference in the 2004 election. Robb Willer of the Sociology and Small Groups Laboratory at Cornell University examined the relationship between 26 government-issued terror warnings reported in the Washington Post and Bush’s approval ratings. “Each terror warning from the previous week corresponded to a 2.75 point increase in the percentage of Americans expressing approval for President Bush,” Willer concluded. Bush beat Kerry by 2.4 percentage points in the popular vote. Former Homeland Security chief Tom Ridge later admitted that many of the 2004 alerts were unjustified. The Cornell study also found a “halo effect”: Americans’ approval of Bush’s handling of the economy also rose immediately after the announcement of new terror warnings, Willer reported. Apparently the more terrorists were allegedly poised to attack America, the better job Bush was doing.

Voters in 2004 could choose whether they would be killed by terrorists if they voted for Kerry or whether they would be left destitute and tossed out in the street if they voted for Bush. Boston University professor Tobe Berkovitz commented to the Washington Post: “It’s not surprising that both campaigns are looking for the leverage point: scaring the hell out of the American public about what would happen if the other guy wins.” But the more an election is about fear, the more the winner will presume to be entitled to all the power he claims to need to combat the threat.


In his 2005 State of the Union address Bush declared: “We will pass along to our children all the freedoms we enjoy. And chief among them is freedom from fear.” The Founding Fathers would have derided the notion of politicians giving citizens “freedom from fear.” And they would have denounced the notion that this new-fangled freedom is superior to the freedoms the U.S. government had pledged to respect for more than 200 years.

After promising freedom from fear, a politician can always invoke polls showing widespread fears to justify seizing new power. The natural result of making freedom from fear the highest freedom is that any policy that reduces fear can be portrayed as pro-freedom. Bush claimed that to keep Americans safe he had to suspend habeas corpus and detain any suspected terrorist in perpetuity based solely on his unproven assertions. Bush authorized the CIA to use waterboarding and other methods of torture on detainees. He ordered the National Security Agency to launch a massive illegal wiretapping program that eavesdropped on thousands of Americans’ phone calls and emails without warrants. Yet Bush remained a great champion of freedom—at least in the eyes of his supporters.

The political mass production of insecurity is a dominant trait of our age. The easiest way for rulers to destroy the leashes the Constitution imposed on them is to make voters think they must choose: “We can obey the Constitution or we can prevent you from all being killed. What is it going to be?”

Rising fear can also undermine the freedom of speech that is a bulwark against government abuse. To the extent people desperately cling to faith in the leader to save them from all perils, they develop an intolerance to anyone who points out government follies or falsehoods. The Bush 2004 reelection campaign did all it could to fan such intolerance. Stumping around the nation for Bush, former New York City police commissioner Bernie Kerik told audiences in the final months of the campaign: “Political criticism is our enemy’s best friend.” As criticism is suppressed government becomes more incorrigible. Eventually the mistakes that could have been corrected cheaply early on become catastrophic national failures.

Fear and Obama

President Obama has picked up the fear-mongering relay baton with his attempts to frighten Americans about health care, global warming, economic collapse, and government shutdowns. Obama has also invoked the fear card to sanctify bombing bad guys anywhere and everywhere.

Government fear-mongering creates a downward politico-psychological spiral. The more fearful people become, the more gullible they will be. British philosopher John Stuart Mill warned in 1842: “Persons of timid character are the more predisposed to believe any statement, the more it is calculated to alarm them.” It is almost irrelevant whether 10 or 20 or 30 percent of the citizenry can see through government’s fraudulent warnings. In a democracy, as long as enough people can be frightened, all people can be ruled.

In the same way that some battered wives cling to their abusive husbands, the more debacles the government causes, the more some voters cling to rulers. The craving for a protector drops an iron curtain around the mind, preventing a person from accepting evidence that would shred his political security blanket. In the days after the 9/11 attacks polls showed a doubling in the number of people who trusted government to “do the right thing.” The media fanned this blind faith—as if trust in government was the high road to public safety. The Bush administration exploited the trust to unleash itself at home and abroad, and the nation is still paying the costs of its post-9/11 infatuation with government.

Bogus fears can produce real servitude. The Founding Fathers expected the American people to bravely stand up for their rights if their rulers trampled the law. Citizens cannot cower on cue without forfeiting any possibility of keeping government on a leash. If America is to have a rebirth of liberty, it must begin with a rebirth of courage.

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Jeff Deist on the Accad and Koka Healthcare Podcast

5 hours agoThe Editors

The Accad and Koka Report, hosted by two MDs, focuses on free-market approaches to medicine and health.

Drs. Michel Accad and Anish Koka recently hosted Mises Institute president Jeff Deist for a no-holds barred look at how Congress, the medical establishment, and lobbyists work together to make healthcare anything but free. Watch the interview here.

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Sheriff Tries to Clean Up Government

11/15/2018Mark Thornton

In an attempt to "clean up" government the sheriff of tiny Marshall Country, Alabama (pop. 97,000) ordered 22,000 rolls of toilet paper and 450 cases or trash bags. No word if this was an accident or if it was an attempt to bankrupt the county.

Extra Toilet Paper at the Sheriff Sept. in Marshall Co.

 

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78 Million Americans Now Live in States with Legal Recreational Marijuana

11/15/2018Ryan McMaken

Advocates for marijuana legalization won another victory this year as voters in Michigan voted to approve legalization of recreational marijuana in last week's election.

This comes only a month after Canada finalized its legalization of recreational marijuana, making it only the second country where the national government has legalized nationwide recreational use.

Nevertheless, with the addition of Michigan to the eight other states that have legalized recreational marijuana (not counting the District of Columbia), 78 million Americans now live in jurisdictions where it's been legalized.

cannabis_pie.PNG

Were these states to form their own country, it would be the nineteenth largest country in the world — larger than the United Kingdom and France.

This new reality has already made itself felt in federal policy.

In 2017, Congress voted to deny the Justice Department funds to enforce federal laws against medicinal marijuana.

And when now-outgoing US Attorney General Sessions announced plans to crack down on marijuana use that had already been legalized at the state level, he received bipartisan opposition in Congress. Not even republicans in Congress from pro-legalization states want anything to do with a ratcheting up of the Drug War.

Also pending in Washington is the "Strengthening the Tenth Amendment Through Entrusting States (STATES) Act" which, is essentially a "states' rights" bill supported by both parties in the name of reining in the drug war. Its purpose is to recognize what the Tenth Amendment already makes clear: that the federal government has no authority to dictate to states as to what people can eat or smoke.

One shouldn't expect many politicians to apply this philosophy across the board, although recognizing the importance of decentralization in the Drug War is a good first step.

Trump has suggested he will support the bill.

Illinois and New Hampshire may be next on the list for legalization, perhaps in 2020.

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The New Bob Murphy Podcast Interview with Jeff Deist

11/15/2018The Editors

Bob Murphy has a terrific new podcast called, unsurprisingly, The Bob Murphy Show. His focus? "Free markets, free minds, and grateful souls." Bob tells us he plans to focus more on individuals and their personal stories than libertarianism or economics per se. He's already hosted Tom Woods and Carlos Lara, and has big ideas for noteworthy future guests.   

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Here Bob and our own Jeff Deist discuss Jeff's time in DC, and what it's really like behind the scenes in the feckless US House (hint- people are uglier, dumber, and less cunning than House of Cards). They also consider Jeff's work in the world of private equity M&A, and how low interest rates cause huge distortions in how--and whether-- deals are done.

Be sure to subscribe to Bob's new show!

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An Easy Alternative to the Brexit Agreement

11/15/2018Gary North

Prime Minister May says that she has reached an agreement with the European Union.

The agreement is 585 pages long. Every time politicians vote to implement a 600-page document that was written by high-level bureaucrats, the liberties of the citizens of that nation decline. The devil is in the details, and there are a lot of details for the devil to get into.

She got it through her cabinet. Now she has to get it through Parliament, which is going to be a challenge. The pro-Brexit people hate conciliation, and the Remainers don't want to agree to anything remotely like Brexit.

She was never a big fan of Brexit. She is going along with the whole thing grudgingly. She has stalled an agreement for almost 2 years.

If Parliament won't vote for her agreement, then Britain will depart from the EU on March 29. It's automatic.

I have a solution. Parliament does not have to accept any agreement. No agreement is necessary.

Here is my Brexit solution. Parliament votes for this law.

Her Majesty's government adopts a policy of zero tariffs and zero import quotas, beginning tomorrow.

That's it? That's it!

There would be no negotiations with foreign countries. There would be nothing to negotiate.

If exporters located in EU countries want to sell something to the Brits, good for them. If there are Brits who like the products and accept them, good for them.

Tariffs are simply sales taxes on imported goods. Anytime a government cuts taxes, that is positive.

Revenues to the government would fall. This is also good.

Import quotas don't generate any revenues. There shouldn't be any import quotas.

Would trade go up between buyers in Great Britain and sellers in the European Union? You bet it would. Everybody likes to be able to sell at a discount, and, overnight, exporters to Great Britain would find that their goods now sell at a discount. No sales taxes are tacked onto the goods.

Would this be good for British buyers? Of course. Who wants to pay sales taxes?

Would financial companies leave Great Britain? No. Why should they? All of a sudden, the whole world would want to sell goods to residents of Great Britain. The doors would be open wide. If it's good for trade, it's good for finance.

If Great Britain did this, its economy would not sink. Other countries in the European Union would figure out that the benefits of staying inside the EU don't compensate for the liabilities associated with the surrender of national sovereignty. Anyway, a substantial minority of voters in those countries would figure this out. All it would take would be a policy of zero tariffs. In other words, all it would take would be a reduction of taxes. "We're outta here!"

No nation needs to sign a 500-page agreement in order to leave the EU profitably. It simply leaves the EU, abolishes tariffs and quotas, and starts trading.

Come one, come all! Let's make a deal!

This article originally appeared here at GaryNorth.com.

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A Trump-Pelosi Budget Deal is a Recipe for the Worst Kind of Tax Increase

The most disturbing outcome of the recent mid-term election isn’t that Alexandria Ocasio-Cortez will be a Member of Congress. I actually look forward to that because of the humor value.

Instead, with the Democrats now controlling the House of Representatives, I’m more worried about Donald Trump getting tricked into a “budget summit” that inevitably would produce a deal with higher taxes and more spending. Just in case you think I’m being paranoid, here are some excerpts from a recent Politico report.

The dust has barely settled on the midterm elections, yet tax talk is already in the air thanks to President Donald Trump signaling openness to higher taxes, at least for some. …Trump said he’d be open to making an “adjustment” to recent corporate and upper-income tax cuts… Those off-the-cuff comments are sure to spark concerns among Republican leaders… Trump also suggested he could find common ground with Democrats on health care and infrastructure.

To be fair, Trump was only talking about higher taxes as an offset to a new middle-class tax package, but Democrats realize that getting Trump to acquiesce to a net tax hike would be of great political value.

And I fear they will be successful in any fiscal negotiations. Just look at how Trump got rolled on spending earlier this year (and that orgy of new spending took place when Democrats were in the minority).

I fear a deal in part because I object to higher taxes. But also because it’s quite likely that we’ll get the worst kind of tax hikes – i.e., class-warfare increases in tax rates on work, saving, investment, and entrepreneurship.

The political dynamic of budget deals is rather straightforward. So long as the debate is whether to raise taxes or not, the anti-tax crowd has the advantage since most Americans don’t want to give more of their money to politicians.

But if both parties agree with the notion that taxes should increase, then most Americans will — for reasons of self defense — want higher taxes on the rich (with “rich” defined as “making more money than me”). And those are the tax increases that do the most damage.

Interestingly, even economists from the International Monetary Fund agree with me about the negative consequences of higher tax rates. Here’s the abstract of a recent study.

This paper examines the macroeconomic effects of tax changes during fiscal consolidations. We build a new narrative dataset of tax changes during fiscal consolidation years, containing detailed information on the expected revenue impact, motivation, and announcement and implementation dates of nearly 2,500 tax measures across 10 OECD countries. We analyze the macroeconomic impact of tax changes, distinguishing between tax rate and tax base changes, and further separating between changes in personal income, corporate income, and value added tax. Our results suggest that base broadening during fiscal consolidations leads to smaller output and employment declines compared to rate hikes, even when distinguishing between tax types.

Here’s a bit of the theory from the report.

Tax-based fiscal consolidations are generally associated with large output declines, but their composition can matter. In particular, policy advice often assumes that measures to broaden the tax base by reducing exemptions and deductions are less harmful to economic activity during austerity. …base broadening often tends to make taxation across sectors, firms, or activities more homogeneous, contrary to rate increases. This helps re-allocate resources to those projects with the highest pre-tax return, thereby improving economic efficiency.

By the way, “base broadening” is the term for when politicians collect more revenue by repealing or limiting deductions, exemptions, exclusions, credits, and other tax preferences (“tax reform” is the term for when politicians repeal or limit preferences and use the money to finance lower tax rates).

Anyhow, here are some of the findings from the IMF study on the overall impact of tax increases.

Mitchell1.jpg

The chart on the right shows that higher taxes lead to less economic output, which certainly is consistent with academic research.

And the chart on the left shows the revenue impact declining over time, presumably because of the Laffer Curve (further confirming that tax hikes are bad even if they generate some revenue).

But the main purpose of the study is to review the impact of different types of tax increases. Here’s what the authors found.

Our key finding is that tax base changes during consolidations appear to have a smaller impact on output and employment than tax rate changes of a similar size. We find a statistically significant one-year cumulative tax rate multiplier of about 1.2, rising to about 1.6 after two years. By contrast, the cumulative tax base multiplier is only 0.3 after one year, and 0.4 after two years, and these estimates are not statistically significant.

And here’s the chart comparing the very harmful impact of higher rates (on the left) with the relatively benign effect of base changes (on the right).

mitchell2.jpg

For what it’s worth, the economic people in the Trump administration almost certainly understand that there shouldn’t be any tax increases. Moreover, they almost certainly agree with the findings from the IMF report that class-warfare-style tax increases do the most damage.

Sadly, politicians generally ignore advice from economists. So I fear that Trump’s spending splurge has set the stage for tax hikes. And I fear that he will acquiesce to very damaging tax hikes.

All of which will lead to predictably bad results.

P.S. A columnist for the New York Times accidentally admitted that the only budget summit that actually led to a balanced budget was the 1997 that lowered taxes.

Originally published at International Liberty
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President Trump’s Iran Policy – Is It ‘Normal’?

11/13/2018Ron Paul

It’s not often that US Government officials are honest when they talk about our foreign policy. The unprovoked 2003 attack on Iraq was called a “liberation.” The 2011 US-led destruction of Libya was a “humanitarian intervention.” And so on.

So, in a way, Secretary of State Mike Pompeo was refreshingly honest last week when, speaking about newly-imposed US sanctions, he told the BBC that the Iranian leadership “has to make a decision that they want their people to eat." It was an honest admission that new US sanctions are designed to starve Iranians unless the Iranian leadership accepts US demands.

His statement also reveals the lengths to which the neocons are willing to go to get their “regime change” in Iran. Just like then-Secretary of State Madeleine Albright said it was “worth it” that half a million Iraqi children died because of our sanctions on that country, Pompeo is letting us know that a few million dead Iranians is also “worth it” if the government in Tehran can be overthrown.

The US Secretary of State has demanded that Iran “act like a normal country” or the US would continue its pressure until Iran’s economy crumbles. How twisted is US foreign policy that Washington considers it “normal” to impose sanctions specifically designed to make life miserable – or worse – for civilians!

Is it normal to threaten millions of people with starvation if their leaders refuse to bow down to US demands? Is the neoconservative obsession with regime change “normal” behavior? Is training and arming al-Qaeda in Syria to overthrow Assad “normal” behavior? If so, then perhaps Washington’s neocons have a point. As Iran is not imposing sanctions, is not invading its neighbors, is not threatening to starve millions of Americans unless Washington is “regime-changed,” perhaps Iran is not acting “normal.”

So what is normal?

The continued Saudi genocide in Yemen does not bother Washington a bit. In fact, Saudi aggression in Yemen is viewed as just another opportunity to strike out at Iran. By making phony claims that Yemen’s Houthis are “Iran-backed,” the US government justifies literally handing the Saudis the bombs to drop on Yemeni school busses while claiming it is fighting Iranian-backed terrorism! Is that “normal”?

Millions of Yemenis face starvation after three years of Saudi attacks have destroyed the economy and a Saudi blockade prohibits aid from reaching the suffering victims, but Secretary Pompeo recently blamed Yemeni starvation on, you guessed it: Iran!

And in a shocking display of cynicism, the US government is reportedly considering listing Yemen’s Houthis as a “terrorist” organization for the “crime” of fighting back against Saudi (and US) aggression. Labeling the Yemeni resistance a “terrorist” organization would effectively “legalize” the ongoing Saudi destruction of Yemen, as it could be justified as just another battle in the “war on terror.” It would also falsely identify the real culprits in the Yemen tragedy as Iran, which is repeatedly and falsely called the “number one sponsor of terrorism” by Pompeo and the rest of the Trump Administration neocons.

So yes, Secretary of State Mike Pompeo told one wicked truth last week. But before he demands that countries like Iran start acting “normal” or face starvation, perhaps he should look in the mirror. Are Pompeo and the neocons “normal”? I don’t think so.

 

 

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Woodrow Wilson Made Democracy Unsafe for the World

11/12/2018James Bovard

This week is the 100th anniversary of President Woodrow Wilson’s speech to Congress seeking a declaration of war against Germany. Many people celebrate this centenary of America’s emergence as a world power. But, when the Trump administration is bombing or rattling sabers at half a dozen nations while many Democrats clamor to fight Russia, it is worth reviewing World War One’s high hopes and dire results.

Wilson was narrowly re-elected in 1916 based on a campaign slogan, "He kept us out of war." But Wilson had massively violated neutrality by providing armaments and money to the Allied powers that had been fighting Germany since 1914. In his war speech to Congress, Wilson hailed the U.S. government as "one of the champions of the rights of mankind" and proclaimed that "the world must be made safe for democracy."

American soldiers fought bravely and helped turn the tide on the Western Front in late 1918. But the cost was far higher than Americans anticipated. More than a hundred thousand American soldiers died in the third bloodiest war in U.S. history. Another half million Americans perished from the Spanish flu epidemic spurred and spread by the war.

In his speech to Congress, Wilson declared, "We have no quarrel with the German people" and feel "sympathy and friendship" towards them. But his administration speedily commenced demonizing the "Huns." One Army recruiting poster portrayed German troops as an ape ravaging a half-naked damsel beneath an appeal to "Destroy this mad brute."

Read the full article at USA Today.
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Gustave de Molinari's Short-Lived Flirtation with the Socialists

Some of the French economists centered around the Journal des Economistes were elected officials. For example, Louis Wolowski was elected to the Assemblée Constitutionelle in 1848;1 so was juge de Paix Frédéric Bastiat. Decades earlier, Jean-Baptiste Say and Benjamin Constant were famously defending Classical Economics in the Tribunat where they opposed Napoleon Bonaparte. Bonaparte returned the favor and expelled both of them in 1804 and 1802 respectively.2

Unlike the aforementioned economists, Gustave De Molinari never was a politician himself. However, this does not mean that he never ran for office. He had briefly attempt to join the ranks of the liberal party in 1859.

Left or Right?

In his 1864 book review of De Molinari's Cours d'économie politique, Lord Acton points out the turbid relationship between the Liegeois-born economist and the Liberal Party: "[In] 1848, he returned to his own country, and finished his course of political economy at the Musée d'Industrie of Brussels, where, we believe, he has not been altogether well treated by the Liberal ministry. This gives a personal significance to his protest against the nomenclature of the two parties, which falsely implies that the one comprises all that is religious, and the other all that loves liberty, in Belgium".3

Indeed, De Molinari wasn't the keenest on political demarcations; in earlier writings, he had presented the fluidity between the nomenclature of liberal, religious, and even socialist party structures. Historian Roderick T. Long pointed out that De Molinari favored a collaboration with the French socialist party.4 According to him, both economists and socialists favored the same principles. In his Lettre aux socialistes (1848), the anonymous author (later identified as De Molinari) stressed that both economists and socialists favored a society in which justice was prevalent for every individual member. However, both groups used a different methodology. Economists thought of liberty and freedom as the necessary means to reach said goal, as history has shown them time and time again. Socialists, on the other hand, used statist recipes with taxes.

Blanc VS Coquelin

One place Molinari clashed with the socialists, however, and thus distinguished himself as a true supporter of laissez-faire, was in his opinions on banking.

While living in Paris, De Molinari must have read his friend Charles Coquelin's research on banks. Coquelin defended a free-market approach on banking; he preached the concept that the government should have no involvement in the role of banking. Rather, banks should be left alone. After empirical research on business cycles, Coquelin concluded that banking crises were the result of privileged monopolies and governmental regulation.5

Journalist and socialist Charles Potvin, however, opposed this vision: “Mr. De Molinari views align with the following principle. Legal persons should have the opportunity to gather themselves without governmental intervention. The role of the government should be limited to registration instead of active participation, isn’t it Mr. De Molinari? (Mr. De Molinari nods in agreement). If we follow Mr. De Molinari’s vision, wouldn’t priests and bankers run Belgium?6

Potvin’s opinion on banking changed over time — whilst always remaining in the realm of radical socialism. In his biography, historian Christophe De Spiegeleer argues that Potvin shows appreciation for the works of PJ Proudhon in his essays (Du Gouvernement de soi-même, La Banque Sociale).7 Proudhon proposes "la Banque du Peuple"; a company in which the people (ipse facto: the poorest individuals within a society) could borrow a lump sum of money without paying an extra fee. The poorest individuals were shareholders as well.8 Potvin praised these "mutualistic companies" in his magnum opus Du Gouvernement de Soi-Même (1877).

However, in his exchange with De Molinari, Charles Potvin outs himself as a disciple of socialist Louis Blanc. According to Blanc, the involvement of a government in the realm of banking was of the utmost importance. According to Potvin, spontaneous order and liberty would lead to anarchy in Belgium! For this particular reason, Louis Blanc claimed it necessary to seek government intervention and lift up the competition, in favor of a single, nationalized bank.9

"Pourquoi j’ai retiré ma candidature"

In a pamphlet (Pourquoi j'ai retiré ma candidature), written a couple of days after the fulminations of Potvin against Molinari, De Molinari announced the renunciation of his candidacy. In 1855, however, he had already predicted his fate within the party. In an article "Dialogue entre un électeur et un candidat," he criticized uninformed vocal minorities that forsake their own responsibilities. In the fictional dialogue, the voter expects politicians to take care of everything; protectionism, warfare, parish relief funds, subsidizing religion, ... To which the politician responds whether the voter would favor higher taxes. How would we fund these services? To which the voter responds: “How should I know? That’s up to you and that is why we elected you!”10

  • 1. RAMBAUD, Jules, l’oeuvre économique de L. Wolowski, Paris, L. Larose & Forcel, 1882, 9-29.
  • 2. MINART, Gérard, Entrepreneur et esprit d’entreprise. L’avant-gardisme de Jean-Baptiste SAY, Paris, l’Harmattan, 2013, 158-159.
  • 3. ACTON, John Emerich Edward Dalberg, “Review of Gustave de Molinari’s Course of Political Economy (1855)”, The Home and Foreign Review, 4, 1864, 313.
  • 4. LONG, Roderick T., “Rothbard’s “Left and Right”: Forty Years Later”, Mises Institute, 2006.
  • 5. MALBRANQUE, Benoît, “Réformer les banques: les propositions originales de C. Coquelin”, Laissons Faire, 1, 2013, 20-24; DE NOUVION, Georges, Charles Coquelin. Sa vie et ses travaux, Paris, Institut Coppet, 2017 [1908], 24-25.
  • 6. "M[onsieur] De Molinari proclame ce principe: les personnes civiles ont le droit de se constituer sans l'intervention de l'Etat. [...] La personne civile vient au monde, et l'Etat enregistre [...], n'est ce pas M[onsieur de] Molinari? (De Molinari fait un signe d'approbation). La Belgique ne serait-il pas exposée à une double invasion de moines et des banquiers?"“Après l’autel le coffre-fort”, Le Bien Public, 6 juni 1859.
  • 7. DE SPIEGELEER, Een blauwe progressist. Charles Potvin (1818-1902) en het liberaal-sociale denken van zijn generatie, Gand/Brussels, Liberaal Archief, 2011.
  • 8. PROUDHON, Pierre-Joseph, “Banque du peuple: déclaration”, Le Peuple, 1849, 1-13.
  • 9. CHARRUAUD, Benoît, Louis Blanc, la république au service du Socialisme, Unpublished PhD, Université Strasbourg III. Robert Schuman, 2008, 50.
  • 10. Cela vous regarde. Nous ne vous nommons pas pour autre chose" DE MOLINARI, Gustave, “Dialogue entre un électeur et un candidat”, l’Economiste belge, 1855, 1.
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The Midterm Election Showed Why We Need More States

11/09/2018Tho Bishop

The midterm elections continue to play themselves out in various races throughout the country. The fight going on in Florida and Arizona over newly discovered ballots brings to mind the line attributed to Joseph Stalin, “It's not the people who vote that count, it's the people who count the votes."

While it may be too soon to come up with official vote totals for a few senate races, there is one election night conclusion we can be certain about: America needs more states.

While the idea may seem may seem radical, smaller political units are the best way of addressing some of the growing cultural divides that the media loves to talk about. Some of these divisions are illustrated quite starkly when we look at a county by county break down of various statewide elections.

For example, New York does a great job showing the difference between the political preferences of urban and rural voters. Though the state is one of the strongest havens for the Democratic party, Governor Andrew Cuomo only won 15 of the state’s 63 counties in his successful re-election bid. Without significant change, rural parts of New York will always have very little say in the direction of the state government due to how small their population is relative to the boroughs of New York City.

The political dominance of NYC is of course also true in primaries. Letitia James, who was elected this week as New York’s Attorney General, won the Democratic primary in spite of coming in third place in every New York county north of Westchester and Rockland.

AG Primary NY.png
(Source: New York Times)

Of course it’s not always true that cities dominant state politics. The Georgia governor’s race, for example, saw Republican Brian Kemp defeat Democrat Stacey Abrams in spite of the latter’s strong support in the metro Atlanta area (though Abrams is pushing a legal challenge to the result.) The cultural divide in that race goes beyond rural vs. urban voters, but also demographic representation. The majority of counties Abrams won were those with majority black populations. Similarly, the non-urban blue counties in the Texas governor’s race were all areas with Hispanic-majority populations.

While it’s fair to question whether one party is actually better equipped to serve the interests of one demographic or another, the desire for communities to have greater political self-determination is understandable.

Ludwig von Mises wrote at length about the struggles of being an ethnic or cultural minority living under an interventionist government. We see these concerns played out in current topics such as the push for community policing as a means to try and address police brutality in minority communities.

There are other practical advantages to smaller political units, beyond political self-determination. Research by Mark Thornton, George S. Ford, and Marc Ulrich has found a correlation between constituency size and government spending. As Ryan McMaken summarized in an article on what the US can learn from Swiss federalism:

As Thornton et al. conclude:

[T]he evidence is very suggestive that constituency size provides an explanation for much of the trend, or upward drift in government spending, because of the fixed-sized nature of most legislatures. Potentially, constituency size could be adjusted to control the growth of government.

Other factors mentioned by Thornton, et al. and others include:

  • Large constituencies increase the cost of running campaigns, and thus require greater reliance on large wealth interests for media buys and access to mass media. The cost of running a statewide campaign in California, for example, is considerably larger than the cost of running a statewide campaign in Vermont. Constituencies spread across several media markets are especially costly.
  • Elected officials, unable to engage a sizable portion of their constituencies rely on large interest groups claiming to be representative of constituents.
  • Voters disengage because they realize their vote is worth less in larger constituent groups.
  • Voters disengage because they are not able to meet the candidate personally.
  • Voters disengage because elections in larger constituencies are less likely to focus on issues that are of personal, local interest to many of the voters.
  • The ability to schedule a personal meeting with an elected official is far more difficult in a large constituency than a small one.
  • Elected officials recognize that a single voter is of minimal importance in a large constituency, so candidates prefer to rely on mass media rather than personal interaction with voters.
  • Larger constituent groups are more religiously, ethnically, culturally, ideologically, and economically diverse. This means elected officials from that constituent group are less likely to share social class, ethnic group, and other characteristics with a sizable number of their constituents.
  • Larger constituencies often mean the candidate is more physically remote, even when the candidate is at "home" and not at a distant parliament or congress. This further reduces access.

In these ways changes to the size of states wouldn’t only grant voters a greater say in what goes on in their state capitols, but could potentially lead to a change in how the Federal government operates. Smaller states would diminish the significant advantages incumbent senators enjoy due to the costs of running state-wide campaigns in expensive media markets like those found in California or Florida, and could even diminish some of the power national parties have on the higher chamber.

Of course none of these structural changes will help solve the issues America faces without an ideological change in favor of free markets and individual liberty. Still, at a time when Americans are questioning all sorts of political norms, it is worthwhile to question the physical size of political units in the US.

So as we prepare for several news cycles fixated on various electoral lawsuits, the best solution is the simplest one: let them both win.

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