Tag: capital

Are American Libertarians Inherently Consequentialists?

Atilla Sulker | United States

At the superficial level, libertarianism is split into two main camps regarding a moral doctrine. There is the old Aristotelian natural law tradition, sometimes referred to as deontological libertarianism, which draws some of the most passionate libertarians, including the likes of Ron Paul, Andrew Napolitano, Murray Rothbard, and Ayn Rand. And there is the consequentialist (often called utilitarianism) approach to libertarianism, advocated by many pillars of libertarianism including, Ludwig Von Mises, Milton Friedman, and David Friedman. The former group believes that libertarianism is valid because initiating force in any way is morally wrong. The latter on the other hand supports libertarianism simply because, in their minds, it leads to the greatest prosperity.

But the adherence to any form of libertarianism in America makes for a perplexing phenomenon. America has the greatest total wealth in the world and is the hallmark of the great machine that is capitalism. Surely there is some amount of freedom in America, despite the squabbles of libertarians. If not, the great works of entrepreneurial enterprise and competition would not be present to provide the average American with such goods as cars and electric ovens, products once classified as “luxury goods”.

Yet at the same time, the State tramples on the liberties of its citizens every minute. Wiretaps are initiated whenever the president feels like doing so. The state drafts young men to fight in territories unknown to them, showing how frugal its citizens are in its menacing eyes. Bureaucrats interfere with progressive efforts espoused by communities to take back control of their schools. Mandatory minimums tear apart families and lead to the mass incarceration of individuals who are supposedly detriments to society. Regardless of how you assess this claim from a moral standpoint, the argument could be strongly made that government in this day in age has become a far greater detriment to society than any drug lord.

Despite the mass regulations enforced by the state, the great bulwark of capitalism cannot be stymied. Sure, competition is slowly dying off and the Fed creates a false illusion of the growth of prosperity. But despite the destruction created by the Keynesian saga, prosperity still thrives to a much greater extent in America than most other nations around the world, further validating the extent of the notion that entrepreneurship drives the improvement in the material quality of our lives. Indeed the machine of entrepreneurship is far more powerful than the government. The great technological revolution of the late 20th century shows how the hindrances established by the government could not stop the glorious consequences of a market economy.

Now here’s a head-scratcher. Does an increase in the quality of goods in the market due to competition in the private sector necessarily signify an increase in liberty? Does a vibrant capitalist economy necessarily fall in line with a free world? Quite obviously not, as our country represents a good case study of this seemingly paradoxical phenomenon. But only superficially does it occur to be perplexing, for going beyond the layer of gloss shows that the situation is not that complicated.

A larger amount of wealth simply means a larger amount of capital for the state to exploit in its nefarious affairs. It means government simply has more wealth to steal and hence more wealth to fund the welfare-warfare state. This is evident with such tragedies as the growth of the military industrial complex and the bureaucratization of education. Lew Rockwell sums up this phenomenon:

In reality, the State is far more dangerous in a productive, capitalist society than it is in an impoverished, socialized society, simply because it has far more private resources to pillage and loot for the State’s own benefit. Availing itself of the vast fruits of private production, the State engages in self-aggrandizement, expansion, and, inevitably, imperialism.”

In retrospect, we see that much of the past imperialist adventures were supported through the exploiting of private capital, e.g. FDR’s redirecting of resources to support World War Two, or the rapid proliferation of nuclear arms during the Cold War. Indeed a capitalist economy could well be a catalyst for the expansion of the state. And more importantly, a desensitized public needs to be conditioned to express obedience. Think of the state as a block of sodium and the capitalist economy and obedience as a tub of water. Without the water, the sodium remains stable, but when put in the water, it becomes volatile. This is how the state works, it works parasitically- the more blood there is to suck, the bigger it becomes.

Comparing the United States to a garden variety third world country, we discover something interesting. While the former professes to be the beacon of the free world, it is so bloated and volatile that it tramples on the liberties of its people daily. The latter advertises itself as a monstrous entity that will drop the guillotine on any dissenters but is often so poor that it can’t actually enforce these codes.

Regardless of what a country’s government may proclaim itself to be, whether a slaughterer of masses or a liberator of worlds, to truly judge how free it is, we must focus on the actual situation of the country, i.e., the effectiveness of its means in realizing its desired ends.

Economic historian Robert Higgs adheres to this view, and used it to make a case for leaving the United States in search of another country. In a speech he gave, Higgs said:

If I were in your position, I would consider seriously getting out of this country, not because I think any other country is a paradise by the way. But because I think no other country has the means (emphasis added) that the government of this country has to carry out these horrifying surveillance programs, and other measures of state tyranny. So, I’m going to move. I’d suggest you might consider moving somewhere else.”

Higgs himself moved to Mexico in October of 2015.

So if one proclaims himself to be a natural rights libertarian, wouldn’t he be contradicting this assertion if he continues living in the United States? Natural rights libertarians are defenders of liberty even if it leads to economically inefficient outcomes. It would then follow that if they truly hold this to be true if they are truly the bleeding heart natural rights supporter that they claim to be, they would move to another country that does not have the means to enforce such control as our own.

I don’t believe that any libertarian can be classified as fully of the natural rights tradition or fully a consequentialist. Surely a consequentialist would become inclined to believe in some sort of natural rights if the government began to kill members of his family. He wouldn’t oppose it only on the grounds that it disturbs order and leads to disutility.

Now certain issues may invoke a more natural rights based defense. Such issues may include abortion and the defense of the second amendment. It would be hard not to be rooted in the natural law tradition to an extent, yet be an ardent supporter of the second amendment or the right to life.

Based on the actions of libertarians here in America however, on the economic front, the consequentialist doctrine trumps any belief that they may have in natural rights, not fully, but to an extent that libertarians have decided to stay here rather than follow the Higgsian vision. It would be foolish to try and sit here and say that we would defend liberty even if it didn’t lead to economically sound outcomes, yet live in a country in which the means to the destruction of liberty are far greater than most any other country in the world.

It is clear that we enjoy the fruits of entrepreneurship and capitalism as present in this country. For the American libertarian, the loss of this great prosperity in exchange for a more free lifestyle is not a convincing trade-off. Let’s face it, we all enjoy the constant new innovations in technology, in medicine, etc. We wouldn’t be willing to give up our cellular devices or our polio-free bodies in exchange for a more libertarian way of going about our lives.

America can be seen as a coin, having a free side to it, and an unfree side. As Lew Rockwell explains:By way of illustration, in the US today, we have two economies, one free and one unfree. The free one has given us the great abundance of consumer goods, the widest distribution of wealth, and the fastest pace of technological innovation known in the history of man. The unfree one—characterized by the two trillion dollar federal budget and the more than one-quarter of that spent on apparatus that builds and administers weapons of mass destruction—has produced what we have been reading about in the headlines for the last two months. Military Socialism, which exists by pillaging the free economy, is responsible for a brutal and immoral war on a civilian population halfway around the world—the destruction of hospitals, churches, nursing homes, residential neighborhoods, and town squares.”

So yes, it is the prosperity in the capitalist economy that keeps us here in this country. It is the reason why we enjoy the economic freedom present in this country. The atrocities committed by our government won’t drive us away, but the market economy keeps us latched. It thus follows that the American libertarian is inherently, to an extent, a consequentialist.


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Marx is Wrong About the Workers

By Mason Mohon | @mohonofficial

In my recent reading of Marx and Engels’s The Communist Manifesto, I was kind of surprised by the characterization made of the relationship between the employers and the workers. Marx calls the relationship exploitative multiple times throughout the work. The workers produce, and then the employer steals away the product of his or her labor. With this characterization, it is no wonder people are so against modern-day capitalist relationships. But this characterization is not the reality of the situation. It is based on loaded language and misrepresentations of the market process.

Continue reading “Marx is Wrong About the Workers”

Cronyism, not the Free Market, Causes Unfair Wealth Distribution

By Joshua D. Glawson | United States

Cause and Consequence:

The world consists of income inequality, and some nations even greater disparity between the rich and the poor than others. In the United States, it is suggested that the wealthy have a far more significant amount of money and capital than that of the lower socioeconomic classes. For some, this is a moral issue, for others it is a legalistic issue that deserves to be addressed. I find it to be neither of these, if the contracts between the working classes and those of the wealthy were voluntary and free.

Despite this, there should be major moral and legal concern when this wealth difference is acquired through unjust cronyism. Conducted between governments and businesses or individuals, this is a way to redistribute wealth from one class to give to another through coercive means. There are many instances where we are well aware of cronyism taking place. This includes governments privileging particular companies, preventing competition, or creating strong barriers to enter the market place. This leads to coercive monopolies, which can only legally be produced with government threats.

Without a doubt, these companies should be stripped of their privileges. The restrictive governmental barriers for others to enter the market should be erased. Cronyism and other barriers restrict a market from flourishing to its fullest potential, and the outcome is greater disparity between the poor and the rich.

Thusly, the strong arm of government restriction on the market is causing unjust income inequality. On the contrary, the marketplace does not need restrictions and more regulations. As stated previously, the market, and capitalism in general, has done more to save people from poverty than any king, army, or government could possibly dream of.

Responsibility:

When governments utilize acts of cronyism, rent-seeking, labor unions, coercive monopolies, etc., the politicians, as well as they business owners, are behaving immorally. This is an act of ‘theft and threat’ by creating wealth solely for a particular group, while threatening punishment to those that dare challenge such restrictions. Additionally, it subsidizes these groups through coercive taxation on the public. An optimally flourishing market consists more of unrestricted, legally speaking, free trade, as in a laissez-faire capitalist economy.

There is a great deal of difficulty in approaching this issue of cronyism and addressing it in the US. Doing so relies on the people of the economy and politicians in Congress to act in unison to correct the relation between government and the market. For the same reasons Church and State are separate, so too should Market and State. They corrupt one another absolutely.

Without a cultural change, any violent measure to force governments and businesses to cease their cronyism would jeopardize the newly established government to subjective force by others later. A democratic republic requires peaceful engagement in civil acts within society to establish justice and equality under the law, which also ensures a large degree of freedom exists. A government, in order to maintain justice, not only needs clear and objective laws for protecting Life, Liberty, and Property. It also needs to be able to correct and prevent overreach such as cronyism.

This leaves only perspective shifts within government as a reflection of the people’s motivation through a new Enlightenment to actively make positive change towards ending cronyism. The power lies in the people’s hands to change those in power, or become those in power, and the initial resources will be up to the market to decide. If it is possible to convince Congress to abide by the Constitution, then there would not be cronyism, so this could potentially be changed immediately by Congress but it is highly unlikely they will act since many of them currently benefit from the corruption of the system.

Policies:

The first policy to propose is maintaining a unilateral form of justice and equality under the law within the US. It is an ongoing issue seen in the news and online that certain people and businesses are pardoned or exonerated of their crimes against others because of their status in society or state. The pro of this policy is that it would create more confidence in the US market, and nation as a whole, for investors and entrepreneurs around the world. When policies threaten the incentive of success, i.e. unjust high taxes for the wealthy over a certain income or even high taxes for everyone, it forces production to go to places that will benefit them the most.

The second policy to propose is to end all forms of favoritism and cronyism in the US. This would require a system overhaul of eliminating privileges, subsidies, class related protections, many business regulations and license requirements, etc. This often scares people into thinking chaos would emerge, but it can be demonstrated through the market that the market would begin to regulate itself as varying organizations and businesses that keep a watchful eye on the market will naturally sprout.

As Dr. Steve Horwitz points out, since Adam Smith and forward, “We do not need ‘regulation’ in the sense of State intervention for markets to generate socially beneficial outcomes.  And when we do attempt to ‘regulate’ them through the State, the result is a variety of undesirable unintended consequences.” The pro of such a policy is that it creates an equal platform for everyone to compete in and benefit from a free market.

The con of such a policy is that some major companies will leave or fail because they will no longer be granted favoritism or cronyism. This could have a negative impact on the economy upon the immediacy of such an act, therefore it would require a strictly scheduled progression. Without a transitional period, many people in protected industries would lose jobs and money until they find work elsewhere. Due to the precarious nature of such a drastic and positive turn towards equality under the law and preventing favoritism, and for the mistakes made by those of the past, people will understandably need a transition into a freer market.

Conclusion:

The rich are not getting richer, the poor are not getting poorer. Capitalism has helped not only those at the top, but it has surely helped most people escape abject poverty. Those that say otherwise and complain how capitalism has made the rich wealthier, should now consider how ending the greatest human social mechanism, i.e. capitalism, will help the poor.

If the wealthy have benefited drastically better than the poor, then it would behoove everyone to be a part of such a system. Viz., ending cronyism, rent-seeking, political power and regulations of labor unions, coercive monopolies, and various other regulations and license requirements in the market, etc. would benefit everyone in the long run, as tendencies towards free trade has already proven. This would also alleviate any of the governmental coercive means of income inequality, allowing for people to live and trade more freely. This is not faith in a system. Rather, this is allowing people to live and trade as they see fit, with a government that will protect those that are infringed upon, instead of favoring and benefiting a few.


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A Look at Finland’s Universal Basic Income

By Isaiah Minter | United States

Last month, the Finnish government rejected a proposal to extend its universal basic income trial. Contrary to most media reports, this does not mean that basic income in Finland has failed. Rather, the program is going to expire at the end of 2018, as planned.

Finland wants to gather data on the results of the program before making a decision on it, but one would never know this from the media.

To no surprise, however, political pundits have tried to explain this supposed failed UBI trial through one of two prevailing theories. The first theory, as offered by Dr. Gigi Foster of ABC News, suggests that the UBI creates a disincentive to work worse than traditional welfare programs. But there is no merit to this claim: unconditional cash transfers had no significant effect on Alaskan employment, nor did Iran’s UBI reduce employment.

It never occurs to Gigi Foster that a basic income is a cash supplement. Under a UBI, individuals receive a monthly check and remain free to earn more money through work. The measure does not, in stark contrast to America’s current welfare system, make it more profitable for recipients to collect benefits than to seek out employment. Nor does it cut the individual off from their monthly check in the event that they make enough gross income. Ultimately, a basic income, by its very nature, sets a minimum income floor under which people may not fall.

For those less critical of Finland’s failed UBI trial, the popular theory seems to be that it didn’t go far enough. This is the route that Leonid Bershidsky of Bloomberg took, and it’s one I want to steer clear of.

First, Finland has been practicing small-scale cash transfers for years, and with great success. Similarly, in an earlier piece of mine on UBI, I made note of the poverty reduction achieved by non-universal cash transfers throughout Africa. If Bershidsky’s claim was true, in the sense that a lack of universality is to blame, then one would expect these cash transfers to have failed. But that isn’t the case.

Similarly, even if he meant that Finland’s UBI failed because it didn’t do enough to reduce poverty, he is wrong. Finland isn’t extending its UBI trial because it wants to gather data on the program’s results and determine if it was a success or a failure. In other words, it’s too early to tell what the effects of the basic income trial are.

Somehow, Bershidsky’s claim manages to both lack evidence and run contrary to it.

But I want to get to his central theme, for it’s a dangerous one. The notion that we need to redistribute to level Y because level X of redistribution didn’t work pardons any bad outcome of wealth redistribution.

Allow an example: in America’s War on Poverty, we’ve taken over $20 trillion from the rich and given it to the poor. In the wake of this lies a destroyed black community and more than 40 million Americans in poverty. This was of little to concern to Sasha Abramsky of The Nation, who published an article some years ago titled “Why We Need a New War on Poverty.”

It never occurs to Leonid Bershidsky that the shortcomings of programs often stem from the very institution that enacts them: government. It is illogical to expect that imperfect humans with imperfect knowledge can come together and form a perfect government. With all the different incentives and motives of politicians in a government,  there is often tampering with programs. Enough to the point where the actual program may differ greatly from the original model envisioned by policy proponents.

Indeed, Finland’s activation measure, apart from serving as an obstacle to the basic income trial, absolutely did more harm than good. In withholding benefits from unemployed persons who were determined to not be actively seeking work, the program restructured welfare policy for the worse.

In this, I am not saying that a basic income is inherently flawed, nor that we must avoid government action altogether. For, in fact, the tampering of said program may very well make it more effective than originally planned. Rather, I am suggesting that citizens be wary of the incentives politicians face and the finite knowledge they possess.

In the end, it would do us well to reject the approach of Foster and Bershidsky. While I am sure they mean no ill, both of their claims are baseless. Each of them looked at some facts of the case and drew conclusions supporting their beliefs. This confirmation bias behavior simply fails to benefit our current political environment, and us as individuals within it.

The Senate Tax Bill is Lowering Tax Rates. That’s a Great Thing.

By Ashton Barwick | USA

The United States Senate recently passed a tax reduction bill by a narrow margin of 51 to 49. The bill lowers the top corporate tax bracket from 39.1% to 20%, and the top income tax bracket will be lowered from 39.6% to 38.5%. This will allow individuals to keep more money they earn which will grow the economy, but what will become of the deficit?

 

The Secretary of Treasury, Steve Mnuchin, has repeatedly said that the tax reduction will pay for itself with the additional wealth created. This cliche sentiment has become ubiquitous among those that fantasize over tax breaks. Although I am personally fond of economic liberty, I also realize that government cannot take in less than it spends. These tax breaks will allow for more private sector investment to grow our economy, but allowing debt to accumulate will only result in economic stagnation from inflation.

Unemployment is expected to shrink due to the new legislation. When the government reduces its influence in the market, competition then begins to lower prices and allow more people to find work. Regulation often doesn’t work as expected either. Once inflation forces people into higher tax brackets they then reduce their taxable income. They accomplish this with a myriad of different methods such as moving trade to the black market, working less, spending more money on accountants, and most famous of all: offshoring.

The United States currently has one of the highest corporate tax rates in the world. This forces many potential companies to relocate in order to avoid the high regulatory burden. A common misconception associated with offshoring is that businesses move offshore in order to exploit workers in the third world. However, this conceited notion cannot stand up to rational scrutiny. Offshoring leaves some with a bitter taste because it is often associated with sweatshops in poor southeast Asian countries. While this is sometimes the case, workers in the third world are often close to busting down the door in order to fill out an application. Corporations such as Nike pay their workers in Vietnam double the average annual income. While conditions still leave much to be desired from our standpoint they see it as the opportunity of a lifetime. These opportunities are only available to these people because of the low amount of red tape. As Ludwig Von Mises once said, “Capitalism breathes through loopholes.”

Another great benefit of lower tax rates is more American jobs. President Trump promised Americans that jobs will return. Lower taxes and regulations will move the supply curve to the right. Thus, incentivizing more people to enter the market. With our exorbitant taxes, it is no surprise we have lost jobs. If the marginal cost to employ someone exceeds the benefit then that person will most likely remain unemployed. Moreover, these burdens upon businesses are shifted upon the consumer with higher prices. Corporations actually pay more money complying with regulation than they make in profits. Lowering the tax burden will incentivize businesses to put more money into production and employ more domestic workers.


Rappeport, Alan. “Ahead of Vote, Promised Treasury Analysis of Tax Bill Proves Elusive” The New York Times. Nov. 30, 2017.

Goldman, Henry. “Mnuchin, Ivanka Trump Pitch Tax Plan’s Benefits for New Jersey.” Bloomberg Politics. Nov. 13, 2017.

Crews, C.W. “Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State. Competitive Enterprise.

Nivola S, Pietro. “Inside Outsourcing: More Bad News from Business Regulation?” Brookings Institute. Nov. 1, 1996.