Power & Market
The GOP-controlled House of Representatives is set to further federalize gun laws and gun regulations.
They're doing it, though, under the guise of what sounds like a harmless bill designed to guarantee property rights:
The House is poised to pass a bill that allows concealed carry permit holders from one state to legally carry their guns in any other state — legislation the National Rifle Association has called “their highest legislative priority” in 2017.
But the problem here is that what the House is doing is not reciprocity. Reciprocity, properly defined, is a matter of agreement among the states. It does not involve the federal government. The new bill seeks to further insert the federal government into gun laws by forcing reciprocity on all the states. We explored this important distinction here at mises.org in August:
This issue can be addressed from both a legal and Constitutional standpoint, and from a general philosophical decentralist view:
Suzanne Sherman at the Tenth Amendment Center has already weighed in against the idea on Constitutional grounds, based on two main arguments:
1. Reciprocity laws are compacts made among the states, and are not imposed by the federal government.
2. The Bill of Rights Doesn't apply to the states.
On the first matter, Sherman notes that the proposed legislation would impose reciprocity on the states. This, Sherman notes, is a departure from what we usually mean by reciprocity, which denotes compacts that two or more states have voluntarily entered into.
Many advocates of forced National Reciprocity point to the “Full Faith and Credit Clause” found in Article IV, Section 1 of the Constitution. Such application is likewise problematic because it deviates from the original intent of the clause, lifted directly from the Articles of Confederation without any change to its meaning. This clause, as ratified, simply ensured citizens in one state could own land or property in another with the full rights of a citizen of that state. It in no way implied that one state had to recognize the institutions or licensing of another state. Driver’s licenses are acceptable for passing through various states, but it is, like CCW licensing, by mutual assent of the states. In other words, there is no federal statute mandating that one state must honor another state’s driver’s licenses.
In other words, the sort of "reciprocity" imagined by the backers of nationwide forced reciprocity is a new kind of reciprocity that substitutes federal policy for decentralized state-level policy.
The enormous downside to this is that it federalizes what has long been recognized as largely the domain of state and local governments. Further federalizing gun policy may look like a fine idea right now, but as Sherman notes, it only takes a couple of new anti-gun appointments to the Supreme Court for the whole idea to blow up in the faces of pro-gun advocates. It's far more prudent, Sherman contends, to work against any increase in federal involvement in gun policy.
Sherman is correct.
The second point is about the Bill of Rights. As Lew Rockwell points out,
[T]he purpose of the Bill of Rights was to state very clearly and plainly what the Federal Government may not do. That's why they were attached to the Constitution. The states, under the influence of skeptics of the Constitution's limits on the central power, insisted that the restrictions on the government be spelled out. The Bill of Rights did not provide a mandate for what the Federal Government may do. You can argue all you want about the 14th amendment and due process. But a reading that says it magically transforms the whole Bill of Rights to mean the exact opposite of its original intent is pure fantasy.
Of course, even if the Constitution explicitly gave the federal government the power to regulate guns, it would still be a bad idea to do so at the federal level. As is the case with all types of policy, the federal government is primarily the domain of millionaire politicians who are nearly impossible to influence — or even get a meeting with — unless one is extremely wealthy or has the backing of a large nationwide special interest group. It is unwise to grant those people even more power.
Moreover, if the federal government is going to make new federal laws in this matter, that means it must also enforce them. Will this be done through a new national bureaucracy? Or perhaps through the federal courts? Either way, the federal government will be more involved in crafting, regulating, and overseeing state policy. Republicans claim to be against this sort of thing.
Also key to understandign the importance of decentralization is the fact that decentralization offers a multitude of choices between different regimes in the face of government restrictions and persecution. If only one huge government has been granted the power to protect rights, to where will one go when the government fails to do its prescribed task? On the other hand, when a wide variety of smaller governments are charged with protecting rights, the failure by one regime is not nearly as catastrophic since the offending regime can be far more easily avoided through emigration and boycott than can a large centralized regime.
Thus, it might sound nice to put the federal government in charge of protecting gun rights, but the potential downside is immense given that federal policy can change easily, and then be imposed nationwide.
The writer known as Bionic Mosquito has helpfully brought to our attention some of the good stuff offered by Murray Rothbard in his articles for Libertarian Forum. Specifically, Mosquito points to Rothbard's 1969 article promoting the mayoral candidacy of Norman Mailer. Rothbard writes:
The Mailer platform stems from one brilliantly penetrating overriding plank: the absolute decentralization of the swollen New York City bureaucracy into dozens of constituent neighborhood villages.
Mosquito notes that Rothbard would be unloved among some modern libertarians who strongly oppose secession by bits and pieces — especially by individual secession. You see, these libertarians claim that secession is illegitimate if a group of people decide to do it by referendum. Presumably, if a single person opposes the proposed secession by referendum, then it becomes a crime against humanity. Oh sure, these libertarians claim they like secession in the form of "individual secession." This option, of course, exists totally outside reality, as Mosquito notes:
So…since libertarians cannot support secession by referendum, we are left with convincing seven billion people of the value of political, individual anarchy. They will all just opt out at the same moment – no pushback from the state or even their neighbors. All of them, simultaneously, having this “aha” moment.
Sounds like a great strategy.
This, of course, is why Rothbard supported all sorts of localized secession movements. Mosquito continues with his look at Rothbard's article on Mailer:
Rothbard is not waiting for the big bang – seven billion people simultaneously seeing the light:
Each neighborhood will then be running its own affairs, on all matters, taxation, education, police, welfare, etc.
As opposed to the idea that there is something un-libertarian about people living next to each other and sharing some desires in common for the neighborhood. In any case, the smaller and more local the political unit, the more control each constituent has and the more that those in government will be known individually – in person, face-to-face.
Rothbard recognizes that neighborhoods will separate into common groupings; he is not shy about discussing black and white. He recognizes that the idea of “diversity” is an idea formed to bring conflict; instead, he offers:
…in the Mailer plan, black and white could at long last live peacefully side-by-side, with each group and each self-constituted neighborhood running its own affairs.
Whites and blacks would be independent equals “rather than as rulers of one over the other….”
One of Mailer’s key proposals is that New York City secede from New York State and form a separate 51st State….
That the seceding New York City would likely be far more socialist than the rest of the state didn’t bother Rothbard one bit, it seems – decentralization was the key, the non-aggression principle put into practice. Also, keep in mind: Mailer ran as a democrat. Imagine that: a democrat for secession and political segregation.
Rothbard goes on to support his effort at New York secession by noting that the city has more then enough wealth to support itself as an independent entity. In the past I've claimed that large cities ought to become their own states, and noted the states have more than enough population and wealth to do so.
Moreover, Rothbard in the article makes the excellent point that if the federal government weren't siphoning off so much of New York City's wealth, the taxpayers there would have immense resources to address all the city's needs:
Another superb part of Mailer's libertarian vision is his reply about where the New York City government would raise funds; he points out that citizens of New York City pay approximately $22 billion in income taxes to the federal government, and that New Yorkers only receive back about $6 billion from federal coffers. Hence, if New Yorkers kept that $22 billion in their own hands . . . That way lies secession indeed!'
Those are 1969 numbers, but as I've noted in a similar context — in my "Decentralize the Welfare State" article — states like New York ought to be allowed to decentralize tax collections. That is, if we can't eliminate taxation, at least the wealth produced by New Yorkers — or whatever state you like — ought to at least stay in New York where the people who paid the tax bills actually live.
All of these changes are baby steps toward real decentralization that provides small amounts of greater choice to taxpayers, and more control over their lives by localizing political power.
As always, we're hear about how we should really be supporting secession for "7 billion people." That's fine. But as Mosquito notes:
My responses to a couple of the anti-secessionist libertarians can be found here and here. The very short version: we will never get from something like 200 political jurisdictions to 2,000 or 2 billion or 7 billion until we get to 201 first. Support secession, then the next one and then the next one. Do this a few dozen times and we might be getting somewhere.
Deutsche Bank Strategist Jim Reid suspects that global demographics and other realities may be soon putting the current fiat-money regime to the test. According to Business Insider:
Reid's basic contention is this: The dominance of the fiat currency system since Richard Nixon decoupled gold from the dollar in 1971 "is inherently unstable and prone to high inflation," and an offsetting disinflationary shock that kept it afloat since 1980 is now slowly reversing.
If that's the case, Reid says the fiat currency system — a term which describes any currency whose value is backed by the government that issued it, rather than by a commodity like gold or silver — could be "seriously tested" over the next decade.
But why now?
According to Reid, since the 1970s, many world economies have benefited significantly from a number of deflationary forces. Chief in Reid's mind is "an explosion in the global working-age population" which has led to declines in wages and an ability to produce immense amounts of goods and services at low prices.
(Other deflationary forces, which aren't mentioned in the BI piece, include the technological gains that Alan Greenspan was always so fond on mentioning when he spoke publicly. It's true that labor has increased, but so has the usefulness of capital in making less-expensive goods.)
Reid terms the large growth in the global labor force as a "demographic super cycle" and that any reversal in the cycle "could spell problems for the fiat currency system."
Well, thanks to these deflationary forces, central banks "can respond with familiar tools: More leverage, loose policy, and extensive money-printing."
Thanks to so many factors that are pushing prices downward, central banks can massively expand the money supply and still maintain some semblance of price stability.
Buried in this explanation, of course, is what Austrians have long pointed out about prices: In a modern economy, the natural thing for prices to do is go down. Contrary to the deflation-phobia exhibited by so many economists today, falling prices are a signal of improvements in capital, and possibly of greater access to capital by workers. Neither of these things are a danger to an economy.
Thus, as Reid notes, without so much central-bank money printing, global prices would likely have been declining for the past two or three decades, just as they did during much of the late 19th century in the US when living standards were increasing substantially.
So, while central bank money printers think everything's fine because their price indices show "low" inflation, it is likely that the real cost of money printing has been a beneficial lack of deflation.
In other words, consumers could have benefited from repeated drops in the cost of living in recent decades. But instead, they get mild inflation which robs them of the cheaper goods that would have existed in the absence of central bank meddling. Fortunately for central banks, though, few voters and consumers view things that way, and instead have bought the idea that prices are naturally flat, and thus, an inflation rate of, say, two percent is no big deal.
In reality, voters and consumers should be comparing an inflation rate of 2 percent, not to 0% but to, say, negative 2%. In this scenario, central bank inflation should be viewed not as 2 percent, but as 4 percent. Every year. Compounding.
Reid is now worried that these deflationary factors may be coming to an end, and once it does, central banks won't be able to use their usual tricks. And if that happens, the age of fiat money will be in trouble.
Is it illegal to physically attack another person in Kentucky? If so, it's unclear why there is any need or cause whatsoever for the involvement of federal authorities in Rand Paul's recent altercation with a neighbor at this Kentucky home. Indeed, even if Paul had been murdered, there'd still be no reason to involve federal authorities.
Murder is illegal in every one of the fifty states. It's even illegal in Puerto Rico. But, for the last several decades, there's been a disturbing trend in American criminal justice matters. Everything is being federalized.
This was not always the case, however.
This law provides for a death penalty for killing a member of Congress, a presidential or vice presidential candidate, or a Supreme Court justice, as well as imprisonment up to life for attempting to kill such a person...
The background of this law is interesting. When President John F. Kennedy was assassinated in Dallas in 1963, it was not a federal crime to kill a U.S. president. Had alleged assassin Lee Harvey Oswald been tried, the trial would have taken place in a Texas state court. In 1965, Congress passed a law, 18 U.S.C. 1751, making it a federal crime to kill, kidnap, or assault the President or the Vice President.
In 1968, presidential candidate and U.S. Senator Robert F. Kennedy was assassinated in Los Angeles. That was not a federal crime at the time, and Sirhan Sirhan was convicted in California state court for the murder and sentenced to death. (That sentence was commuted to life in prison in 1972, when that state abolished the death penalty, and Sirhan remains in a California state prison.) In 1971, Congress enacted 18 U.S.C. 351, which extended the protection of the Federal criminal law to members of Congress, paralleling that extended to the President and the Vice President.
This fits well into the usual habit of transferring the business of criminal justice to federal authorities with the effect of further extending federal powers and increasing prosecutorial resources that can be brought to bear against the accused. This federalization helps to further diminish the role of the states in the administration of public policy, to extend the reach — and expense — of federal courts, and to impose the costs of a double-layered legal system on the taxpayers.
Prior to federalizing these laws, had there been ambiguity as to whether it was illegal to murder, kidnap, or commit battery against people? Where the streets running with the blood of murdered federal politicians?
Of course not. These laws do send a valuable message, however. They remind us that there are one set of laws for a special protected class of federal officials, agents, and employees. And there's a second set of laws for the people who merely pay for it all.
In a new report for the TaxPayers' Alliance in the UK, Ben Ramanauskas makes an important point: deficit spending and government debt are moral issues, and not just matters for arcane economic theory. That is, when current voters side with current politicians to drive a government deeper into debt, they hand down a big fat bill to future taxpayers and citizens who have no say in the matter right now:
There are significant moral implications of having a large national debt. Money which is borrowed today will have to be paid back at some point in the future, perhaps by people who are yet to be born. As a result of the profligacy of current governments, a burden will be placed on future generations who will have to pay higher taxes and have less money to spend on essential services. It is one of the defining principles of Parliamentary Supremacy that Parliament cannot bind its successors. The reasoning behind this is that it would be an affront to democracy to allow future generations to be bound by previous generations.However, by having such a high national debt, the government binds future generations and curtails their freedom to choose by ensuring that they will have to spend a significant proportion of their money servicing the debt which also places restrictions on what they can spend their money on, and will also have implications for levels of taxation.
Therefore, increased borrowing will result in a burden being placed on future generations. A high national debt can have numerous negative consequences. For example, a high level of debt can lead to an increase in the yields paid on UK sovereign bonds. This is because if investors believed that the UK’s national debt was so high that it would be at risk of defaulting on its debt or that the country would inflate them away, they would need to be incentivised to purchase the UK’s gilts by high yields. Very high national debt can have a negative impact on economic growth. For example, borrowing can crowd out other investment as investors loan money to the government, rather than to the private sector. Nations typically see growth slow when their debt levels reach 90 percent of GDP, with the median growth rate falling by 1 percent and average growth falling by even more.
Moreover, research focussing on the US has found that raising the Federal deficit has an adverse effect on the economy by reducing private sector investment, economic growth, and employment. As mentioned above, government debt has to be paid. Furthermore, interest payments have to be paid on the debt. This, therefore, places restrictions on government budgets and so diminishes their ability to be able to spend money on essential services. Moreover, in order to repay and service the debt, governments tend to either raise taxes or decide not to lower them. An in depth explanation of the folly of increasing taxes and the benefits associated with tax cuts goes beyond the scope of this paper, and the TaxPayers’ Alliance has written extensively on this topic. However, the evidence is clear that tax increases tend to be harmful for the economy, whereas tax cuts tend to have a positive impact.
Although it may seem an attractive policy to borrow money in order to fund government spending, this is not a sensible approach. Although interest rates are historically low, government borrowing is not free and has to be funded. Furthermore, although there have been other periods in its history when the UK has had a high level of national debt, the socio-economic situation is very different from those periods. It should also be remembered that not only has this money got to eventually be paid back, but that also interest has to be paid on the debt too.
These interest payments represent a significant proportion of government expenditure, and is money which could have been spent on essential public services such as healthcare, education, or provision for the elderly. Moreover, proponents of the idea that the government should take advantage of low interest rates by borrowing more are correct to point out that rates are historically low, but that is precisely the point. They are historically low, and so one should not expect them to remain as such over the coming years and decades. Furthermore, we have seen that even a small increase in rates of one per cent, increases the national debt as a percentage of GDP significantly in the long term. Furthermore, there are serious economic and moral ramifications to increasing national debt. For example, a high national debt can seriously hamper economic growth. Moreover, increasing the national debt places a burden on future generations who will have to pay it back.
As Ramanauskas notes, it's not just a matter of higher bills for government services either. All that extra spending discourages private-sector investment as well, creating a more run-down, more capital-impoverished version of the future than would have otherwise been the case.
In America, at least, this is the legacy of the current Baby Boomer generation, and their parents. They want their Medicare, and their highly-paid government jobs, and federally-subsidized roads, and endless wars fought in the far reaches of the world. But their children and grandchildren will be paying the bill.