Power & Market
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.
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.
[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
Keynote AERC lectures and selected panels can be watched live at mises.org/live
Our online schedule includes (Central Time Zone):
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
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)
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:
- It is believed that people in the converted already have a sufficient understanding of the topic at hand.
- It is assumed that the converted will never leave the group in question.
- 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.
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.
Listen to Ryan McMaken's commentary on the Radio Rothbard podcast.
In order to whip up opposition to Brexit, pro-EU activists have long relied on generating fear by suggesting that without EU membership, British trade will suffer, and export totals will collapse.
This, however, has always been an unconvincing argument because EU membership tends to restrict participation in global trade more than it enhances it.
Even the EU admits that "growth in global demand is coming from outside Europe, noting that 90% of global economic growth in the next 10–15 years is expected to be generated outside Europe, a third of it in China alone."
Moreover, the importance of the EU as an export market for the EU has been declining in recent decades. 15 years ago, the EU accounted for over 50 percent of all UK exports. By 2015, the number had fallen to 44 percent, reflecting the shift toward markets outside of the EU.
Even the EU's core members like Germany know the real future of global trade lies outside the EU. As Alasdair MacLeod noted last year,
[W]ith respect to trade, Fortress Europe’s trade policies are increasingly disadvantageous to her. Germany now exports more to China than to any individual European country... [Germany] sees on her Eastern flank ... a pan-Asian phoenix arising in the form of the Shanghai Cooperation Organisation (SCO), led by Russia and China. And it is growing.
...India and Pakistan also became full SCO members, taking the rapidly-industrialising membership to nearly half the world’s population. The Silk Road is sending goods to Europe, and will transport Mercedes, BMWs, and VWs the other way. Asian demand for German engineering and capital equipment is likely to become the largest market by far for the foreseeable future.
Really, by staying in the EU — which is obsessed with tightly regulating and controlling trade with countries outside the bloc — the UK is limiting its own ability to be flexible with the rest of the world.
These facts, however, are not readily apparent to the general public in the UK or elsewhere, and the idea that the UK will be somehow "isolated" without the EU continues to turn heads.
But how to help illustrate that Brexit really means more openness in trade?
There is an easy way to help with this, of course, and it would be the right thing to do with or without Brexit: The US should immediately adopt a position of unilateral free trade with the United Kingdom.
The US, of course, should adopt unilateral free trade with everyone right now, but failing that, the UK is certainly an acceptable place to start.
I suggest the UK as a starting point because open trade with Britain is an easy sell, politically.
After all, opening up unfettered free trade with the UK would be an easy choice strategically. It would make the US an indispensable partner all the more, and solidify the UK as an important part of the North American economy.
Moreover, any claims that unilateral free trade with the UK is "enriching our enemies" would be laughable. The UK and the US have been at peace for more than 200 years. Unilateral free trade doesn't lead to "exploitation" of the US in any case, but even if it did, this would not be an issue of military importance.
From an economic standpoint, of course, unilateral free trade is always to the benefit of the country which adopts it. It would mean lower production costs and less expensive consumer goods for countless Americans and American entrepreneurs. Even if the UK maintained tariffs on American goods, the end result would only mean more inexpensive goods for Americans, and more investment in the US by British companies who reap the rewards of selling more goods to Americans.
Claims that the US would be flooded with "cheap goods made by slave labor" — as some anti-China protectionists like to claim — would be obviously non-sensical. British labor laws are similar to those in North America, and the cost of British labor is similar as well.
Moreover, when it comes to trading with the British, it is harder for protectionists and xenophobes to capitalize on nationalist impulses to push their agendas. Are we really to believe that we ought to fear exploitation by English-speaking high-income foreigners who, by the way, have an extensive history of investment in American industries?
Trump's Mishandling of the Brexit Situation
Unfortunately, for all his big talk about building strategic advantages for the US government, Trump has badly mismanaged the Brexit situation and will probably botch the opportunity to draw the UK further into a greater partnership with the US.
Instead of using Brexit as a means to build a better relationship with the UK, at the expense of the EU's quasi-socialist bureaucrats, Trump has instead attempted to isolate the UK further in order to force UK acquiescence to Trump's economically-illiterate campaign against free trade.
This hurts American consumers and producers while also potentially helping politicians in both China and the EU. As Thomas Wright at Politico notes:
A post-Brexit Britain needs close relations with other major countries, and if the United States is difficult to deal with, [the UK] will find itself increasingly tempted into a closer economic partnership with China, one that will surely have political consequences. Trump’s antagonistic approach also plays into the hands the leftist leader of the opposition, Jeremy Corbyn, a persistent critic of a close U.S.-UK alliance who would likely leap at the chance to weaken the special relationship.
My personal position is that it is not important or in our best interests to engage in foreign policy posturing with China or any other country. Political neutrality and open commerce is always the best position. However, I do know that Trump and his allies think that playing games with China and the EU are important policy goals. But even by their standards, the administration's anti-UK protectionism is counter-productive.
No doubt Trump's supporters will stick to their little narrative in which Trump is playing 4-D chess and has some grand plan that will both stick it to the EU and massively increase American exports to the UK at the same time.
This is a pipe dream, of course, but some people seem to actually believe it.
Were the Trump administration wiser, it would pursue unilateral free trade not just with the UK, but with the entire Anglosphere of Canada, Australia, and New Zealand. Both the economic and strategic benefits would be substantial.
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.
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.