While I am pleasantly surprised that many so-called “conservatives” can now spot an obvious bankruptcy when they see it, I am less than impressed with their understanding of what bankruptcy entails for a government. Almost invariably, they naively assume that government bankruptcy is analogous to the bankruptcy of a private company. Just as a bankrupted company like Enron shrivels up and disappears from the economic stage, they assume, bankrupted governments will shrivel up and, if not disappear from the world stage, at least take on severely limited roles.

The bankruptcy of governments is, thus, assumed to be a positive development for individual liberty, according to many so-called “conservatives,” because governments will be forced to live within their means and abandon most of their unsustainable and meddling schemes. A golden age of liberty and respect for the Constitution is assumed to be right around the corner.

This idea that government bankruptcy is a positive development for individual liberty is just plain wrong, however. More than that, it is just plain delusional. Governments are not, in any way, analogous to private companies, and it cannot be sanely assumed that they will shrivel up or disappear like private companies, just because they are bankrupt.

Governments obtain their wealth by “taxing” people, and bankruptcy in no way impedes their ability to seize wealth (unless they, like the Romans, stupidly neglect to pay police and military salaries). On the contrary, their desperate need for money during bankruptcy should be expected to induce them to try to suck even more money out of their subjects than they did before.

And why shouldn’t they? A politician’s job always entails spending other people’s money. Some of this money is seized in the form of taxes from the hapless taxpayers of the country, some is printed out of thin air and some is borrowed from people or politicians in other countries that are too stupid or economically ignorant to know better. When a government goes bankrupt, as Greece and Italy are currently in the process of doing, and the flow of funds from the suckers abroad dries up, the government loses only one of these three sources of other people’s money. It can still tax the daylights out of its own subjects, and it can still print money. What’s to stop it?

The example of interwar Germany is instructive in this regard. As a result of the disgusting Treaty of Versailles following World War I, the German government was made insolvent in exactly the same way that today’s Western governments are insolvent. The gigantic war “debt” foisted on the German government’s books was, literally, impossible to pay off, just as most Western governments today have debts and future liabilities on their books that cannot possibly be honored.

What was the result of this de facto bankruptcy of the German government in the 1920s? Did it automatically usher in a golden age of individual liberty and limited government in Germany in the 1930s? Did the German government stop taxing its subjects or printing money? Did the German government learn its lesson about wasting its people’s money on pointless and extravagantly wasteful wars? (N.B.: If you don’t know the answer to these questions, you are about as bright a “conservative” as Newt Gingrich or Mitt Romney.)

The problem with assuming that governments will shrivel up just because they are bankrupt is that governments, unlike private companies, can still strong-arm people into giving them money, even when they are bankrupt. When Enron went bankrupt, it was not in a position to send armed thugs to the homes of its investors to hustle up more money. Nor was it able to simply print a pile of money in order to pay off its mounting debts. In other words, it went down, as it should have gone down, because it couldn’t force people to keep funding its idiotic and wasteful operation. Government, by contrast, does have a literal army of enthusiastic and sadistic men on the payroll, who will follow orders to kick in doors, bust heads and gas people in order to hustle up money to keep the wasteful operation rolling along. (N.B.: If you think people pay their taxes out of the kindness of their hearts, instead of out of fear that cops will haul them away to the American gulag, you, too, are about as bright a “conservative” as Newt Gingrich and Mitt Romney.)

Moreover, governments are very careful to continuously waste a very large chunk of money on the military and the police. After all, governments claim that their primary purpose is to “protect” their subjects from foreign threats, so they are mindful to spill a nice chunk of their budget on these strongmen when times are good. (Whether government does, in fact, “protect” its subjects from foreign threats can be gauged by the fact that governments often bankrupt themselves trying to fund their militaries. With a “protector” as financially irresponsible as Enron, how much protection are we really getting?)

So when a government goes bankrupt, there exists a giant horde of armed men in the military and police who expect to get paid, and who will not take kindly to budget cuts. Ever mindful that a horde of armed men is a constant threat to the civilian government when they are unpaid and unhappy, the political class should be expected to do whatever it takes to keep paying the salaries of the horde. And where, do you suppose, will this money be hustled up when the government has bankrupted itself and can no longer borrow money from foreign suckers? (N.B.: If you don’t know the answer to this question, you are definitely as bright a “conservative” as Newt Gingrich and Mitt Romney.)

Hustling enough money up to pay the salaries of the military and police (and other privileged and militant bureaucrats, as in Greece) is not always easy, however, because subjects don’t often appreciate having more and more of their money confiscated by wildly irresponsible politicians.

Fortuitously for governments, shaking people down ain’t what it used to be. They no longer need to send their armed thugs to kick down doors, crack skulls and gas their subjects in order to confiscate money. They can simply print money out of thin air and — voila! — now they can make payroll! If their subjects are stupid enough to trust paper money, then why not skin them a little in order to “solve” the government’s problems? Do you really think that an organization with a budget problem that has the ability to print money will not choose to do so for its own benefit? Do you really think Enron would have refrained from printing money to prop itself up if it had had the ability to do so?

The reason so many so-called “conservatives” cannot grasp these obvious and foreseeable consequences of a government bankruptcy is that they do not have a true understanding of what government is. Government is not a private company or a charitable organization. It does not abide by the same laws as the rest of society. It can continue to exist — nay, thrive — even when its debts vastly outweigh its assets and income. It can print its own money and continue to tax its subjects even when it has bankrupted itself. Hence, government cannot be likened to an Enron or a Lehman Bros. as a relatively benign entity when it goes bankrupt. It is an economic vampire that will not shrivel or die easily. It can continue to suck its citizen victims in order to nourish itself even when the absurdity of its balance sheet is evident to everyone.

Hence, if you are a self-identified “conservative” and you are sick and tired or scared to death of the government we have today, you should not look to our government’s impending bankruptcy as some sort of cathartic and purifying event that will usher in a new age of liberty. It will not. More than likely, if history is any guide, the slew of government defaults that are in the pipe in the Western world will usher in a golden age of government.

Government bankruptcy is not a substitute for the hard work of liberty-minded people to advance the cause of freedom. In and of themselves, a thousand government defaults would not advance the cause of liberty one iota. What is needed in the time leading up to the government’s default is a cadre of devoted, almost fanatical, freedom-fighters who are willing and able to teach the masses about the nature of government and the nature of money. Only with the persistent help of this devoted cadre will there be any chance of fighting the growth of government and the devaluation of money that government default will inevitably tow in its wake.

Regards,

Mark R. Crovelli

The Golden Age of Government Is Just Beginning was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Freedom for Federalism. Some of us have actually read the U.S. Constitution. Readers may know the document I mean, the written one, the one containing the set of behavioral limitations placed upon the created government. Not the imagined version penned with invisible ink whose words and meaning are discernible only by elites with special glasses. (Pointedly many of these elites so-called have either been elected or appointed and thus have been required by the written Constitution’s Article VI to take an oath “to support this Constitution,” meaning, because of the Framers’ deliberate use of the definite article “this,” the one visibly available to the rest of us.(*)) When reading that Constitution, we know that the created federal government has no authority to legislate on any matter dealing with education. On this point we have Mr. Madison in our corner. “The powers delegated by the proposed Constitution to the federal government, are few and defined [(**)]. Those which are to remain in the State governments are numerous and indefinite.” ~ Federalist #45.

(*) In addition to Clause 3 of Article VI (the Oath/Affirmation Clause), the phrase “this Constitution” appears in 11 other provisions of the Framers’ 1787 document, demonstrating unequivocally that the Framers’ use of the definite article “this” in pointing at the words of their written document was intentional, not inadvertent.

(**) We know precisely what those few and defined powers are because they are listed – in writing – in the document itself. Education is not on the list.

This understanding undergirds the 9th and 10th Amendments. “You may go this far, but no farther.” Despite these clear restrictions, we have today a huge federal superstructure called the U.S. Department of Education(!) which intrudes not only into K-12 education but also into the collegiate system. Since no provision in the Constitution authorizes federal involvement in education (among countless other federal intrusions), this can only be the result of government officials being unfaithful to their voluntarily-taken oaths to “this Constitution,” acting without the consent of the people, compounded by the people’s own failure to appreciate the genius of the American constitutional system: by restricting governmental power, individual freedoms are maximized.

There is nothing inherently American about a top-down, one-size-fits-all public school system, a system drawn from the authoritarian Prussian model (promoted circa 1840s by Horace Mann, a Massachusetts liberal, among others). Hearthside teaching aka home schools, private tutoring, and small community-based private schools (with the emphasis on small) are representative of the American tradition.

The elimination of the public schools would deprive Congress of the excuse that it “must” take money from taxpayers in order to support education by connivingly offering “help” to the several states, provided of course that those states agree to a few controlling strings. In short, eliminating the public schools assists Congress by forcing it to obey the written Constitution. When government is limited, then ipso facto the people have more freedom. “The course of history shows that as a government grows, liberty decreases.” Thomas Jefferson.

That Congress has strayed from the essence of the Constitution – limiting the reach and power of the created government – can ultimately be laid at the feet of the electorate. Not enough of us have demanded that Congress obey the Constitution because not enough of us know the Constitution, not a co-incidence since the public schools have gone out of their way to avoid teaching the country’s foundational underpinnings. It’s no surprise then that a sizeable percentage of the population does not honor our Constitution since appreciating its ingenuity has been replaced by academically-approved Statism and its worship, a tactic accelerated under Obama but which began in earnest in the 1930s. Certain constitutional symbolisms may still prevail – congressional and presidential terms still begin and end on January 3rd and January 20th respectively; those nominated for federal office still receive the advice and consent of the Senate; state of the union addresses are given “from time to time”; and so forth – but the substantive core thesis of the Constitution – its raison d’être, namely, strictly limiting the reach of the created government – has been so grossly ignored that the “system as practiced” would be unrecognizable to the Framers.

Consider the all-too-typical routine: (i) Congress (whether D or R controlled) passes a putative “law” that has no textual authority, thereby neglecting its institutional duty to check-and-balance itself and only enact measures for which there is express constitutional language, with affirmatively-voting Members disregarding their individually-taken constitutional oaths to support “this Constitution.” (ii) The president, failing in his independent check-and-balance duties to ascertain a law’s compliance with the Constitution and unfaithful to his special constitutional oath, signs that “law.” (nb: Both D and R presidents have been equally guilty.) (iii) That “law” when tested in the federal courts is, surprise, surprise, found to be “constitutional” because the judiciary, ducking out on its own independent check-and-balance duty, relies on a long-practiced, judicially-created legalistic convenience, wink-wink, nudge-nudge, known as presumption-of-constitutionality, an artifice which holds that anything and everything done by Congress is to be presumed by all courts (both federal and state) as constitutional. [Having the benefit of this presumption is an enormous strategic advantage: it shifts the burden of proving constitutionality from the government (the proponent) onto the shoulders of citizen-challengers who are then burdened to disprove the “law’s” constitutionality, a very high legal standard to overcome.] In all other venues of life, a proposition’s proponent bears the burden of proof and persuasion, but perversely not in the one venue where it really should be mandated because in the federal law-making venue can be exercised the greatest measure of control over the greatest number of people. The ObamaCare “law” easily comes to mind, and supporters of this pretense at law-making have been quick to assert the presumption-of-constitutionality trump card against the people.

In short, we have the textual and apparent form of a limited, appropriately checked-and-balanced government, but not the actual substance which will only occur, indeed, can only occur, when men and women of honest character, whose “yes” is their “yes” and whose “no” is their “no,” serve, individuals to whom the letter and spirit of the Article VI oath to maintaining a government of limited reach is a meaningful undertaking. To this point Founder John Adams was prescient in assessing the efficacy of paper handcuffs, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

Today we have Members who openly acknowledge that they do not read bills before voting, even apart from performing a thoughtful analysis of a bill’s provisions for compliance with the Constitution, a document to which they have taken a personal oath to support. Some even openly acknowledge that most of what Congress does is unconstitutional (see the recent remarks of Democrat Rep. James Clyburn, SC-6, found here). Despite these admissions, they’re re-elected! Again and again! have we gone mad? A private employer would never tolerate such behavior from an agent or an employee, but we the American people do. That we are in this state of affairs can be blamed in large measure on the American public school curriculum where an appreciation of the ingenious American system is neither taught nor admired. We’ve now arrived at the point where a sitting Congressman (Democrat Rep. Phil Hare, IL-17) can openly state (see this recent video here, at 00:45) that he doesn’t care what the Constitution says, a sentiment obviously held by a majority of Members since Congress continues to putatively enact “laws” in the utter absence of express constitutional text. The recent health care reform act may be the largest and ugliest example, but it hardly stands alone. Contrast the Clyburns and Hares of the world with Davy Crockett (yes, that Davy Crockett), a former Member of Congress (Tennessee, 1827–1831, 1833–1835), in an attributed speech, “Not Yours To Give,” found here.

Where is the express authority to enact so-called health care reform legislation; or the authority to give billions in “foreign aid”; or the authority to enact national educational funding and academic standards; or the authority which enables the executive branch to conduct war/s without express declarations; and on and on? Obviously no such authority exists except in the minds of those privy to the Constitution’s invisible ink. To maintain that Congress’s authority to do as it wishes may be found in the Interstate Commerce Clause, or in the even more nebulous General Welfare Clause, is to say that the Framers went through their painstaking work of setting forth limitations on power, with memories of the harsh treatment which British unlimited government meted out still fresh in their minds, only to learn that they had written two clauses (ICC; GWC) that swallow and emasculate the core concept of limitation. With this sort of open-ended reasoning, nothing is beyond the reach of Congress, Article I, section 8’s enumerated listing be damned.

On this score there is no middle ground: Either we have limited government, or we live under its only known alternative, unlimited government. What should we see as worse: Having Members of Congress who are ignorant of the Constitution’s purposes, or having Members who understand those limiting purposes but who intentionally undermine them through blatant disregard? One is dim-witted, the other dishonest. The answer to this question may be of little moment since the result is the same: a corrupted government that does not play by the people’s agreed-upon rules for conducting self-government. Want proof? Listen to the recent words of Democrat Rep. Alcee Hastings, FL-23, member, House Committee on Rules, “When the deal [i.e., the process of legislating, -editor] goes down, all of this talk about rules, we make [th]em up as we go along.” Video found here.

Contrary to the portrayal by the MSM and the left generally, the current 10th Amendment and Tea Party movements are not anti-government; rather, they are anti-corrupt government. Their existence and the various state proposals to fight the perversion of the Interstate Commerce Clause through intrastate statutes (for example on gun matters or health care reform “mandates”) are healthy signs of an engaged citizenry acting as self-governors. That more and more Americans are carrying pocket-sized versions of the founding documents is evidence that a strong sense of independence from government animates many, and is further evidence that the pathetic efforts of the public schools to erase the personal responsibility heritage of our history have not been altogether successful. Could all these efforts at reviving federalism flourish? Yes, without question, but only if the people follow through and do what they must: Insist that their federal and state representatives strictly confine Congress, binding it, borrowing again from Jefferson, “with the chains of the Constitution.” Such should be a bedrock principle found in the 2010 campaign literature of every worthwhile candidate.

Regards,
Paul Galvin
LewRockwell.com
Whiskey & Gunpowder

May 4, 2010

Eliminate Public Schools, Part II was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

I am fairly vocal amongst my friends (and a few strangers) regarding my bias towards limited government.  The typical response I get is something along the lines of, “Are you crazy, America is the freest country in the world!”  I think the secondhand dealers in information (public school teachers and the sensationalist media amongst others) have done a great job of indoctrinating the general population into believing that we are truly free.  They really don’t notice the subtle effects of a new law here and a new regulation there.  It’s kind of like the curse of income tax withholding where by stealing our hard-earned money a little bit at a time (each paycheck) we don’t notice that we are being robbed.  I feel that our freedom is being stolen a little bit at a time.  To help drive home the point, I’ll use an average day in my life as an example.

My alarm goes off each morning somewhere between 6 and 7 am.  I am not a big fan of the buzzer so I typically set my alarm to “radio” mode.  I haven’t paid up for satellite radio, so I still wake up to “Free FM.”  Well, I am awake for a whole 10 seconds and here is my first interaction with Big Brother.  The beast known as the Federal Communications Commission (FCC) has a complete stranglehold on what we hear over the radio waves.  As is the case with the majority of government regulation, we supposedly need the FCC to “protect” the people.  In this particular case, we are being protected from offensive material on the airwaves.  Of course, “offensive” is defined by whoever happens to be calling the shots at the FCC at the time.

Next, it’s time for breakfast!  Thank goodness for those FDA-mandated nutritional labels.  Without those, I would be a confused soul eating nothing but glazed donuts and breakfast sausages.  The FDA says it best on their website under their 2009 budget recap, “FDA affects the lives of every American every day.”  After polishing off my breakfast, I head to the shower.  I have to be honest with you: I didn’t really think about how the federal government regulates my showering activities until I read an entertaining article by Jeffery Tucker which discusses the Department of Energy water-pressure regulations.  I proceed to get dressed and get ready to leave my house.  Just to recap, I have already rubbed shoulders with the FCC (2009 budget of $339 Million), Department of Energy (2009 budget request of $25 Billion) and the FDA ($2.4 Billion).  I haven’t even left the house yet!

I live in Chicago, so to avoid the perpetual road construction and ensuing traffic, I typically commute via public transportation, constructed and managed by the Chicago Transit Authority (CTA).  The CTA’s motto is “On-Time, Clean, Safe, Friendly.”  If you polled 100 CTA riders on the accuracy of the above motto, my guess is 99 of them would proceed to laugh in your face.  Now — of course — if you only ride the CTA through the nice parts of town where political pandering results in significantly more expenditures on amenities, you might agree with their motto (except for the on-time part).  I happen to ride the CTA (both busses and trains) throughout the entire city, and I can ensure you that, “Late, Dirty, Dangerous, Arrogant” would be a better slogan.  But, that doesn’t solicit additional state/federal funding, so I don’t expect to see that one used in any marketing materials in the near future.

It would be one thing if the CTA were fully funded by its riders so that some aspect of market forces would take hold.  That isn’t the case.  As you can see from page 20 of the 144-page 2009 proposed budget, CTA only recovers only 53% of its expenses through system-generated revenue.  The remaining $723 million is footed by taxpayers, many of whom don’t ride the CTA (or even live in Chicago).

Well, I’m finally at work, and now the fun really begins.  Without getting into too many details, I provide investment advisory services to qualified retirement plans.  In short, this means that I probably could not have chosen a more regulated industry (maybe health care, but I am not conceding this one just yet).  In short, I deal with the Department of Labor (DOL), the IRS, the Securities and Exchange Commission (SEC), the State of Illinois, the Federal Deposit Insurance Corporation (FDIC), the Securities Investor Protection Corporation (SIPC), the Social Security Administration (SSA), the Department of the Treasury, and a host of others that I probably don’t even know about.

In fact, many of these organizations have underlying agencies that focus on different areas of the big picture (for example the DOL has no fewer than 27 different sub-agencies).  Is it really a wonder that America is facing a retirement funding problem?  How much wealth is being destroyed by all of these agencies and their vague, subjective, regulations?  There is only so much to go around, not to mention the opportunity cost of this perverse anti-business mentality.  We have to remember that every $1 that funds one of these agencies is $1 siphoned out of the pockets of taxpaying citizens (or created out of thin air by the Federal Reserve) that could have been put to more productive use elsewhere.

Well, it’s been a long day, and its time to go home.  I board the CTA train (after a 15-minute delay) and finally get home for some R&R.  I flip on the TV (please refer to FCC comments above), for about an hour before I hit the sack for the night.  As I lay in bed, dreaming of life in a truly free society where free trade, personal property, and low taxes rule the day, I feel a scratching sensation on my cheek.  Low and behold, I haven’t even escaped Leviathan in my bed.  The scratching sensation I feel is from the tag attached to my pillow that tells me that my pillow meets the requirements of The Bureau of Home Furnishings Technical Bulletin # 117.

Regards,
Chris Lakumb

May 8, 2009

An Average Day in a Free Country was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.