Power & Market
In the last decade or so there has been a concerted attempt by some economists associated more or less closely with the Austrian school to deny Rothbard’s central role in the modern revival of Austrian economics and to downplay his status as a leading proponent of the Misesian paradigm. In response, I have provided what I believe to be compelling textual evidence that Mises himself, as well as some of his closest followers, regarded Rothbard as Mises's foremost intellectual heir (here, here, and here). Now from the Rothbard archives comes a small treasure that corroborates the evidence I adduced in my earlier posts. This is in the form of Mises’s charming and pithy inscription in Rothbard’s copy of the third edition of Human Action, which reads:
To Murray N. Rothbard, pioneer of praxeological analysis with all good wishes. March 2nd, 1967.
“Pioneer of praxeological analysis”—given Mises’s well-known restraint in meting out compliments to fellow economists, this is high praise indeed and fits nicely with Mises’s remarks about Rothbard’s work in his letter defending praxeology to the French positivist Louis Rougier, which I cited in an earlier post:
The proof of the cake is in the eating. I can only refer to the systematic exposition of the whole doctrine of praxeology in my book Human Action and nowadays in the brilliant book of a younger man, Murray N. Rothbard, Man, Economy and State. . . .But, please, first of all read the book of Rothbard. It is very interesting also from the epistemological point of view.
While many of America’s founders are justifiably famous, others have received too little attention. St. George Tucker is one.
Born in Bermuda on July 10, 1752, Tucker was a militia colonel in the American Revolution, who even wrote Liberty: a Poem, on the Independence of America (my favorite line being “Freedom! thy joys alone are riches to the brave!”), that George Washington said “was equal to a reinforcement of 10,000 disciplined troops.” Afterward, his service included his appointment, with James Madison and Edmund Randolph, to the 1786 Annapolis Convention that led to the Constitutional Convention, and his opposition, with Patrick Henry and George Mason, to adopting the Constitution in the absence of a bill of rights.
Tucker’s greatest service to posterity, however, involved the law. Not only was he a law professor and judge on three different Virginia courts, historian Clyde Wilson noted that,
St. George Tucker’s View of the Constitution of the United States was the first extended, systematic commentary on the Constitution after it had been ratified by the people of the several states and amended by the Bill of Rights. Published in 1803 by a distinguished patriot and jurist, it was for much of the first half of the nineteenth century an important handbook for American law students, lawyers, judges, and statesmen.
David Kopel wrote, “St. George Tucker is perhaps the preeminent source of the original public meaning of the Constitution. His 5-volume American edition of Blackstone’s Commentaries was by far the leading legal treatise in the Early Republic.” Tom DiLorenzo summarized it as laying out “the Jeffersonian interpretation of the Constitution, which was replaced by the centralizing, big government … interpretation after 1865.” The fact that the Supreme Court has cited Tucker 40 times illustrates the importance of his work.
Today, with St. George Tucker’s commitment to limited government, states’ rights, and the judiciary’s role of preventing government oppression a too-dim memory, his insights into liberty and the original understanding of government under our Constitution are worth re-visiting.
In this country … the blessings of liberty have been … dearly purchased.
In a government founded on the basis of equal liberty among all its citizens, to be ignorant of the law and the constitution is to be ignorant of the rights of the citizen.
What can be more absurd than that a person wholly ignorant of the constitution should presume to make laws pursuant thereto?
A distinction … does exist between the indefinite and unlimited power of the people … and the definite powers of the congress and state legislatures, which are severally limited to certain and determinate objects.
All men being by nature equal, in respect to their rights, no man nor set of men, can have any natural, or inherent right, to rule over the rest.
Legitimate government can … be derived only from the voluntary grant of the people, and exercised for their benefit.
Every extension of the administrative authority beyond its just constitutional limits is absolutely an act of usurpation in the government.
Government originally founded upon consent, and compact, may by gradual usurpations on the part of the public functionaries … become a government of force. In this case, the people are as completely enslaved as if the original foundations of the government had been laid by conquest.
No people can ever be free, whose government is founded upon the usurpation of their sovereign rights.
If in a limited government the public functionaries exceed the limits which the constitution prescribes to their powers, every such act is … treason against the sovereignty of the people.
A constitution is a thing antecedent to a government. … Hence every attempt in any government to change the constitution (otherwise than in that mode which the constitution may prescribe) is in fact a subversion of the foundations of its own authority.
A written constitution … [is] a beacon to apprise the people when their rights and liberties are invaded, or in danger.
Abuse of power is despotism … the right of one man is at the mercy of another, and freedom in such a government, has no existence.
It is indispensably necessary … that there be a perfect equality of rights among the citizens. … Equality of rights necessarily produces inequality of possessions; because, by the laws of nature and of equality, every man has a right to use his faculties in an honest way, and the fruits of his labor, thus acquired, are his own.
The rights of property must be sacred.
A thousand … pretexts and arguments … form the ladder by which the agents of the people mount over the heads of their constituents … from whence they behold those who have raised them with contempt.
The American states have reserved to themselves … the administration of justice … in all cases whatsoever, in which they have not specifically consented to the jurisdiction of the United States.
[Federal] jurisdiction extends to certain enumerated objects, only, and leaves to the several states a residuary and inviolable sovereignty over all other objects.
This original compact … is to be construed strictly, in all cases where the antecedent rights of a state may be drawn in question … it ought likewise to receive the same strict construction, wherever the right of personal liberty, of personal security, or of private property may become the subject of dispute.
The authority of the federal government … ought therefore to receive the strictest construction. Otherwise the gradual and sometimes imperceptible usurpations of power, will end in the total disregard of all its intended limitations.
The federal government. … Having no existence but under the constitution, nor any rights, but such as that instrument confers … can possess no legitimate power, but such as is absolutely necessary for the performance of a duty prescribed and enjoined by the constitution.
Until, therefore, the people of the United States … shall think it necessary to alter, or revoke the present constitution of the United States, it must be received, respected, and obeyed among us, as the great and unequivocal declaration of the will of the people, and the supreme law of the land.
The powers delegated to the federal government … have no relation to the domestic economy of the state. The right of property, with all its train of incidents … and the rights of persons appear to be no further subject to the control of the federal government, than may be necessary to support the dignity and faith of the nation in its federal or foreign engagements, and obligations.
Since the citizen is on no other account obliged to pay taxes, or undergo any other public burden, but as they are necessary to defray the expenses of the state, it ought to be the singular care of the government to draw no further supplies than the exigencies of the public require.
The first question is whether the power be expressed in the constitution.
All governments have a natural tendency towards an increase and assumption of power; and the administration of the federal government, has too frequently demonstrated, that the people of America are not exempt from this vice ... parchment chains are not sufficient.
A representative democracy ceases to exist the moment that the public functionaries are by any means absolved from their responsibility to their constituents.
The right of self-defense is the first law of nature.
Every power which concerns the right of the citizen, must be construed strictly, where it may operate to infringe or impair his liberty.
In the United States, the great and essential rights of the people are secured against legislative as well as executive ambition … by constitutions, paramount to all laws: defining and limiting the powers of the legislature itself, and opposing barriers against encroachments.
The congress of the United States possesses no power to regulate, or interfere with the domestic concerns, or police of any state.
Absolute independence of the judiciary … [is] necessary to the liberty and security of the citizen, and his property.
The judiciary … is that department of the government to whom the protection of the rights of the individual is by the constitution especially confided, interposing its shield between him and the sword of usurped authority.
A law limited to such objects as may be authorized by the constitution, would … be the supreme law of the land; but a law not limited to those objects, or not made pursuant to the constitution, would not be the supreme law of the land, but an act of usurpation, and consequently void.
The object of the several states … was not the establishment of a general consolidated government … but a federal government, with powers limited to certain determinate objects.
Acts of congress to be binding, must be made pursuant to the constitution; otherwise they are not laws.
As the subjects upon which congress have the power to legislate are all specially enumerated, so the judicial authority … is limited to the same subjects as congress have power to legislate upon.
People of America have not thought proper to suffer the freedom of speech and of the press to rest upon such an uncertain foundation as the will and pleasure of the government.
Whenever [civil] liberty is, by the laws of the state, further restrained than is necessary … a state of civil slavery commences. ... This species of slavery also exists whenever there is an inequality of rights, or privileges, between the subjects or citizens … for the pre-eminence of one class of men must be founded and erected upon the depression of another; and the measure of exaltation in the former, is that of the slavery of the latter.
St. George Tucker searched for “the criterion that distinguishes laws from dictates, freedom from servitude, rightful government from usurpation.” And Clyde Wilson suggests that his answer is best summarized in his statement that, “It is the due [external] restraint and not the moderation of rulers that constitutes a state of liberty.” Given that today, the federal power to oppress has clearly increased at the expense of Constitutional restraints, we should give Tucker’s understanding as much serious thought now as our forefathers did when our great experiment in liberty began.
Arthur Laffer, the recent Presidential Medal of Freedom winner and occasional Peter Schiff gambling partner, made headlines yesterday for questioning the value of an independent Federal Reserve.
As he told CNBC's Squawk Box:
I don't understand why the Fed is independent, to be honest," said Laffer, a former economic advisor to President Donald Trump and former President Ronald Reagan. "Fiscal policy is not independent. Military policy is not independent. Social policy is not. Why should monetary policy, this very powerful tool to control the economy not be subjected to democracy just like every other instrument of government?"
As expected, this quickly came under attack by Fed romanticists who believe that an independence should never be questioned (a faith they grasp on to in spite of the record of both Fed failures and its history of being politically influenced.)
In fact, as Dr. Joseph Salerno has written about over the years, there may be real value in getting rid of the illusion of an independent central bank.
As he wrote in The Austrian:
The desideratum of the Austrian political economist with classical-liberal or libertarian leanings involves the complete separation of government and money through the establishment of a commodity money like gold (or silver), the supply of which is determined exclusively by market forces. Nonetheless, there is great merit in replacing the opaque and pseudo-scientific control of “the money supply process” by entrenched Fed employees and officials with overtly political control of money by elected officials and partisan administration appointees. There are a number of benefits of stripping the Fed of its quasi-independent status and transforming it into a handmaiden of the Treasury, as the American Monetary Institute (AMI) and early Friedmanite reform programs call for.
Of course, a better approach would be to open the Fed up to competition by repealing legal tender laws and exempting parallel currencies from taxes. But, considering other Fed reforms that have been discussed in recent years, Laffer's suggestion is hardly that outlandish.
Or at least be treated with considerable skepticism by anyone with a rudimentary knowledge of economic affairs.
Apparently financial journalists aren’t very familiar with real-world evidence.
Here are some excerpts from a news report in the Wall Street Journal.
The economy was supposed to get a lift this year from higher government spending enacted in 2018, but so far much of that stimulus hasn’t shown up, puzzling economists. Federal dollars contributed significantly less to gross domestic product in early 2019 than what economic forecasters had predicted after Congress reached a two-year budget deal to boost government spending. …Spending by consumers and businesses are the most important drivers of economic growth, but in recent years, government outlays have played a bigger role in supporting the economy.
The lack of “stimulus” wasn’t puzzling to all economists, just the ones who still believe in the perpetual motion machine of Keynesian economics.
Maybe the reporter, Kate Davidson, should have made a few more phone calls. Especially, for instance, to the people who correctly analyzed the failure of Obama’s so-called stimulus.
With any luck, she would have learned not to put the cart before the horse. Spending by consumers and businesses is a consequence of a strong economy, not a “driver.”
Another problem with the article is that she also falls for the fallacy of GDP statistics.
Economists are now wondering whether government spending will catch up to boost the economy later in the year… If government spending were to catch up in the second quarter, it would add 1.6 percentage points to GDP growth that quarter. …The 2018 bipartisan budget deal provided nearly $300 billion more for federal spending in fiscal years 2018 and 2019 above spending limits set in 2011.
The government’s numbers for gross domestic product are a measure of how national income is allocated.
If more of our income is diverted to Washington, that doesn’t mean there’s more of it. It simply means that less of our income is available for private uses.
That’s why gross domestic income is a preferable number. It shows the ways – wages and salaries, small business income, corporate profits, etc – that we earn our national income.
Last but not least, I can’t resist commenting on these two additional sentences, both of which cry out for correction.
Most economists expect separate stimulus provided by the 2017 tax cuts to continue fading this year. …And they must raise the federal borrowing limit this fall to avoid defaulting on the government’s debt.
Ms. Davidson applied misguided Keynesian analysis to the 2017 tax cut.
The accurate way to analyze changes in tax policy is to measure changes in marginal tax rates on productive behavior. Using that correct approach, the pro-growth impact grows over time rather than dissipating.
And she also applied misguided analysis to the upcoming vote over the debt limit.
If the limit isn’t increased, the government is forced to immediately operate on a money-in/money-out basis (i.e. a balanced budget requirement). But since revenues are far greater than interest payments on the debt, there would be plenty of revenue available to fulfill obligations to bondholders. A default would only occur if the Treasury Department deliberately made that choice.
Needless to say, that ain’t gonna happen.
The bottom line is that – at best – Keynesian spending can temporarily boost a nation’s level of consumption, but economic policy should instead focus on increasing production and income.
P.S. If you want to enjoy some Keynesian-themed humor, click here.
P.P.S. If you’re a glutton for punishment, you can watch my 11-year old video on Keynesian economics.
P.P.P.S. Sadly, the article was completely correct about the huge spending increases that Trump and Congress approved when the spending caps were busted (again) in 2018.
Originally published at International Liberty
I woke up this Independence Day morning, surprised to find out that Bill Greene, the great 2016 faithless elector who cast his vote for Ron Paul, passed away. Among other things, Bill was a fierce advocate of making gold and silver legal tender, and was an assistant professor at South Texas College. He was an early supporter of Ron Paul, his support going as far back as Paul’s 1988 campaign.
[Editor's note: see Greene's Mises Institite author profile.]
Last summer, I had the privilege of interviewing Bill while working on a paper on the history of the Mises Institute and the Austrian Revival. Here, we discussed various different subjects, including Ron Paul’s 1988 campaign, and the growth of the Mises Institute. This has not yet been published, and I would like to do so as a tribute to Bill. Below is our interview, conducted on 6/19/18:
Atilla Sulker: Describe the state of the libertarian movement in 1988, and the extent to which the Mises Institute influenced the overall movement in America at this time?
Bill Greene: In 1988, the Mises Institute was only six years old, having split off from the Cato Institute in 1982 (a Mises co-founder, Murray Rothbard, had co-founded Cato). Up until that split, the Cato Institute was the leading influence on the libertarian movement in the United States since its founding in the mid-1970s (not long after the founding of the Libertarian Party itself in 1971 – Cato’s co-founder, Ed Crane, was the LP’s National Chair from 1974-1977). Even at such a young age, the Mises Institute had already begun to have a strong impact on the libertarian movement – specifically, on its economic policy foundations. Cato’s focus was on government policy recommendations from a libertarian-leaning position. Since that time, the Mises Institute’s influence on libertarianism in the U.S. has equaled, if not surpassed, Cato’s influence. [The Mises Institute was in fact never part of Cato.]
AS: Describe the relationship Ron Paul had with the Mises Institute in 1988, and the extent to which the organization influenced his campaign platform?
BG: Ron Paul’s relationship with the Mises Institute in 1988 was initially through one of its co-founders, Llewellyn (Lew) Rockwell, who had been Paul’s chief of staff, (from 1978-1982) when Paul was a Republican U.S. Congressman. When Rockwell left for Mises in 1982, Paul – who had been heavily influenced by the works of Rothbard beginning in the 1970s – continued his relationship with the co-founders of Mises, drawing much (or most) of his policy positions from the writings of Austrian school economists. When Paul ran for President as the LP nominee in 1988, most of his campaign platform was pulled from these same policy positions. He has continued to be a Senior Fellow of the Institute since that time, often working, writing, and speaking with others connected to it.
AS: Is there a point in Dr. Paul’s career in which it appeared that the Mises Institute’s influence on him was climactic?
BG: I don’t think so, because the relationship has always been symbiotic, and Ron Paul was already firmly in the Austrian school’s camp even before the Mises Institute was founded. Since its beginnings, it’s been difficult to separate the two from each other.
AS: Describe the influence the Mises Institute had on Dr. Paul’s VP candidate Andre Marrou.
BG: I don’t have any personal knowledge of the Mises Institute’s influence on Andre Marrou.
AS: Describe the overall size and sentiment of Ron Paul’s 1988 presidential campaign based on your experience.
BG: Ron Paul’s 1988 presidential campaign appeared to me to be more extensive than the LP’s past campaigns, as this was the first time they had two former elected legislators on the ballot (Paul was a former GOP U.S. Representative, and Marrou was a former LP Alaska Representative). As usual, the campaign’s biggest challenge was getting on the ballot in all 50 states plus the District of Columbia. Due to highly restrictive ballot-access laws in a number of states, Paul’s campaign was only on the printed ballot in 46 states & DC (although he did achieve write-in status in Missouri –and in North Carolina, where I headed the N.C. Students for Ron Paul and participated in ballot-access petitioning). Despite Paul’s (and Marrou’s) extensive travels across the country, the campaign was excluded from any debates and only achieved 432,179 votes (0.5%) – still twice as much of Lenora Fulani’s (New Alliance Party) campaign, which actually did achieve 50-state ballot access.
AS: Describe the nature of Andre Marrou’s 1992 Libertarian presidential campaign.
BG: I was not active in his 1992 presidential campaign, although I remember reading news stories on it here and there, such as when he received the highest vote total in the primary results of the first town in the nation to report its votes (Dixville Notch, NH).
AS: Briefly describe, based on your experience, the development of the libertarian movement in America up from Dr. Paul’s 1988 presidential campaign to his 2008 presidential campaign, and outline the role of the Mises Institute in this development.
BG: Based on my own experience, the Mises Institute played a vital role in the development of the libertarian movement in America during the 20 years after Dr. Paul’s first campaign for U.S. president. During the first decade, they published and disseminated massive amounts of literature, newsletters, books, audio, video, and more; once the internet became more and more ubiquitous, they were able to have an ever-growing impact, rivalling the much better-financed Cato Institute in scholarly publications and economic education activities. The Mises Institute’s website soon became the highest-trafficked economics website in the world, and when Dr. Paul decided to run for president again in 2008, he was able to draw upon, and direct his new followers to, that large body of works in support of his policy positions. As a result, his following grew and became ever more educated in libertarian thinking.
BG: When I ran for various political offices over the years, most of my own policy positions were influenced by publications I got from the Mises Institute. This was especially true of my unsuccessful campaign for the Florida House of Representatives in 1994, when I became the first state house candidate to be officially endorsed by the Political Action Committee of the nascent Republican Liberty Caucus (the “libertarian wing of the GOP” co-founded in 1991 by Paul). I had followed Dr. Paul out of the LP and back into the GOP, and I have been a member of, and active in, the RLC since that time.
AS: Is there anything else we should know about Dr. Paul’s 1988 campaign, or anything pertaining to the subject matter?
BG: My favorite story from Ron Paul’s 1988 campaign for President is from the time our N.C. Students for Ron Paul group brought him to the University of North Carolina at Greensboro for a speech to around 150 students and local residents. Following his speech (which professed many of the same policy prescriptions as his speeches today), he opened the floor for questions. A local group of Socialist Workers’ Party members were in attendance, and began challenging his free-market stances in a number of different areas. I remember Dr. Paul’s eyes lighting up at that, as he almost gleefully shot down every challenge with logical rebuttals, point by point. Twenty years later, when I chanced to run into Dr. Paul at a local restaurant while he was campaigning in Florida, I mentioned that event – and he remembered it, clearly and (quite obviously) fondly, remarking on how much fun he had that day. I was, to say the least, impressed.
In a series of outstanding posts, the Bionic Mosquito has written on “The Search for Liberty.” In these posts, he presents a penetrating analysis of natural law and metaphysics. I admire these posts and have learned a great deal from them
In his latest post, he argues that Murray Rothbard’s defense of natural law fails. Rothbard thinks that human reason can establish natural law. But, Bionic says, “if each of us are free to make up our own minds – especially regarding ends – how will we come to a natural law that is useful toward liberty and peace? How will justice be determined? Who will arbitrate our ‘differences of opinion’? On what basis?”
Bionic thinks that if you say human reason can establish natural law, then you are holding that “the judged [human beings] can also be the judge.”
This criticism of Rothbard seems to me to be mistaken. Suppose, like Mises and Rothbard, that you claim reasoning can show maximum price laws cause shortages. You are not thereby claiming that it is up to human beings whether this is so. Rather, you are claiming that it is not up to human beings: the effect holds, regardless of what people think about it.
In like fashion, in claiming that human reason can establish natural law, Rothbard is not claiming that the content of natural law is up to human beings. I do not think Thomas Aquinas would have disagreed with this. He offered proofs, based on reason, that God exists. These proofs do not make it up to human beings whether God exists, nor does accepting their validity depend on first accepting Christianity. The principal aim of the first three books on the Summa contra gentiles is to demonstrate the existence of God, and some of God’s attributes, to unbelievers.
Even when I disagree with Bionic, though, I continue to learn from him
Marxists hate capitalism and want to replace it with socialism because they believe that profits are stolen from wages. They begin with the idea that originally there were workers but no capitalists and that the value of the products the workers produced and sold was all wages. But then allegedly came the capitalists, who proceeded to deduct a part of wages and claim it as profits. Adam Smith expresses this idea in paragraphs 1,2, & 5-8 of his chapter on wages in bk. I of The Wealth of Nations.
Marx took over Smith's view of profits and went on to claim that the alleged deduction of profits from wages would be so great as to leave the wage earner with nothing more than minimum subsistence, for which he would have to work unbearable hours in unbearable conditions.
I will now show that PROFIT, not wages, is the original and primary form labor income and that this follows both from the actual nature of Smith's "original state of things" and from Marx's version of it that he called "simple circulation."
In simple circulation, "C-M-C," workers produce commodities, "C," sell them for money, "M," and use the money they receive, to buy other commodities, "C." I say that the money the workers receive in exchange for the sale of their commodities is not wages but sales revenues. (To my knowledge, I am the first economist to identify this, and its implications. I was inspired by reading Henry Hazlitt's discussion of John Stuart Mill's proposition "demand for commodities is not demand for labor.") Wages are money paid in exchange for the performance of labor. Here, money is paid not in exchange for the performance of the workers' labor but for the workers' commodities. Thus, the workers have sales revenues, not wages.
However, because this is simple circulation, not "capitalistic circulation," there are NO COSTS to deduct from these sales revenues. Costs appear only in capitalistic circulation, "M-C-M," where they are the reflection of the first "M."
(Costs in business are the prior expenditures of money for the purpose of bringing in the sales revenues. If there are no such expenditures, there are no costs to deduct. Simple circulation is characterized precisely by the fact that there are no such expenditures.) (For the benefit of those unfamiliar with Marx, capitalistic circulation means the outlay of money, "M," for the purpose of producing commodities, "C," which are to be sold for a further sum of money, "M," [or "M'," to indicate a larger sum of money].)
As I say, given the absence of capitalistic circulation and its first "M," there are no costs to deduct from the sales revenues and thus the entire amounts of the sales revenue is profit. In addition, because there is no first "M," there is no monetary capital. The workers of simple circulation have not spent anything for tools or materials, let alone the labor of other workers. Thus, the amount of capital on their books is zero. It follows that in simple circulation profits are both 100% of sales and an infinite percentage of capital invested, which capital is zero.
As I've shown, the workers of simple circulation are not wage earners. Because they sell their commodities rather than their labor, they are more correctly described as small businessmen. They are small businessmen without costs and without capital. Simple circulation morphs into capitalistic circulation as and when some of these worker/businessmen begin to save and productively expend a portion of their sales revenues and profits rather than consume them all. These worker/businessmen are now worker/businessmen/capitalists
Their productive expenditure (i.e., their expenditure for the purpose of making subsequent sales) is the first "M" in capitalistic circulation. It buys capital goods and labor and has the following further major consequences: it brings into existence costs of production in the income statements of business and capital with a monetary value on their balance sheets. Thus, it reduces both the percentage of sales revenues that is profit and, doubly, the percentage that profit bears to capital invested.
I say that the rate of profit on capital is doubly reduced because, per dollar of sales revenue, not only is the amount of profit reduced but also the amount of capital on the books is increased. Marx's sequence for capitalistic circulation can be used to provide a simple formula for measuring the economic degree of capitalism, namely, the higher is the ratio of "M" to "M'," the more economically capitalistic is the economic system.
In a characteristically excellent post, the Bionic Mosquito calls attention to Murray Rothbard’s ethical “absolutism”. In this view, human beings can grasp what is objectively case in ethics. If, for example, stealing is wrong, its being wrong is not just an expression of individual or group preference. Rothbard held that an adequate defense of libertarianism depends on objective values and that political freedom was not the only such objective value needed for this defense. Moreover, this position does not contradict the subjectivity of preference in Austrian economics.
The state is often assumed to be nature’s default, benevolent caretaker. Government agencies are free from the short-sighted profit motive, we are told, and can steward land for the long term. If only this were true. In fact, in a myriad of ways, governments are among the worst polluters in the world, and even the agencies of the state specifically devoted to environmental stewardship have themselves helped cause environmental disasters.
Land Use Planning and Subsidies
For environmental and aesthetic reasons, many believe that mass transit options like railways, as well as pedestrian routes, aren’t widespread enough in the U.S., and that Americans are too reliant on smog-emitting cars. They may be surprised to find one major culprit hidden in plain view. The state has long used tax dollars to build and maintain approximately 2.8 million miles of paved roads and highways in the U.S., subsidizing urban sprawl and automobile use, and hence undermining the market viability of substitutes like mass transit and walking.
Without tax-funded provision of roads and highways, had private enterprise had to consciously pay for each new mile of road — not to mention the sewer, gas, water, and electricity lines that suburbs require — land resources and transport would be markedly different. Cities may have instead been more compact, leaving more wilderness untrammeled. Public transportation may have been more widespread. Cities may have also been connected to one another to a greater degree by (privately-owned) trains rather than by today’s interstate highway system.
It’s impossible to know what the counterfactual world would have looked like, but it’s reasonable to assume that had the state not used tax money to fund 2.8 million miles of a particular form of transportation (paved roads and highways), then competing forms (railways, pedestrian routes), which have been subsidized to a lesser extent, would have been more prevalent.
The Military as Prime Polluter
The military provides another outlet through which the state corrodes the environment. According to Alexander Nazaryan:
The U.S. Department of Defense is one of the world's worst polluters. Its footprint dwarfs that of any corporation: 4,127 installations spread across 19 million acres of American soil. Maureen Sullivan, who heads the Pentagon's environmental programmes, says her office contends with 39,000 contaminated sites.
The purpose of the military, of course, is not to steward natural resources. So how do agencies which are dedicated to husbandry fare?
Mis-Managing Natural Resources
The four largest federal land management agencies in the U.S. are the Bureau of Land Management, Fish and Wildlife Service, National Park Service, and Forest Service. For the 2018 fiscal year, their total maintenance project backlog was an estimated $19.38 billion. The National Park Service was responsible for the bulk of this figure with $11.92 billion of delayed projects, compared to a 2016 annual budget of about $3 billion.
In addition to the inability to implement planned maintenance on schedule, federal land management has suffered from failure to formulate adequate policies to begin with. Over 1.2 million acres of California burned in wildfires in 2017, followed by over 1.8 million acres in 2018. National Forest Service policy had a direct role in the contributing to the problem. According to Robert Nelson:
Nineteen million acres of California forests—almost 20 percent of the state’s total land area—are owned and managed by the federal government. The fires are in significant part the product of past federal forest mismanagement.
The Forest Service policy of total fire suppression, in place for most of the 20th century, meant California's national forests contained large volumes of kindling-like small trees and underbrush. Before the Forest Service embarked on its crusade to suppress them, frequent but much smaller fires routinely removed these "excess fuels" while leaving the larger trees little affected.1
After helping set the stage for the fires, bureaucratic impotence failed to contain them:
Federal land management agencies remain mired in gridlock and dysfunction. This past summer, the Forest Service itself acknowledged that "catastrophic wildfires and the corresponding loss of lives, homes, and natural resources have continued to grow, partly because our treatments have been uncoordinated and not at the right scale."2
It’s difficult to imagine a private land conservation trust or forestry company being so inept as to allow millions of dollars of its own assets burn to the ground year after year, let alone in a way that resulted in the destruction of other people’s lives and property. This is true, in part, because private owners are legally and financially responsible for their actions. Employees of the National Forest Service, meanwhile, lose nothing as a result of decades of a ruinous total fire suppression policy. The taxpayers paid for the bureaucrats' mistakes — and also paid their salaries.
Given that we're often told government-planned economies are better for the environment, sure the centrally-planned Soviet Union preserved a pristine paradise within its borders? Unfortunately, the Soviets had a cartoonishly bad environmental record. To name just one example: the Aral Sea used to be the fourth largest lake in the world. Then, Stalin diverted its two major contributing rivers for crop irrigation, and now the Aral Sea — and all its surrounding ecosystems are now almost totally dried up and destroyed.
And then there are the rivers. In the 1971 New York Times article “Why Does the Volga Catch Fire?” Marshall I. Goldman comments on the five-year plan for 1971-1975, “Nothing is said about reducing the oil content of the Iset and Volga Rivers which have a tendency to catch fire so, that periodically fire men are called ‘to put out the river.’3 Most famously, the Soviet Chernobyl nuclear power plant meltdown resulted in a 1,000 square mile radioactive exclusion zone.
Why is the government such a terrible steward of the environment? Why not? When a government agency fails, it is declared to be “underfunded” and the outcry is for the agency in question to be trusted with more money and responsibility, not less. It hard to see why governments would have any incentive to change the status quo.
If there's anything I hate, it's a taxpayer-funded, pro-government party. I hate state dinners, I hate inauguration galas , and I hate the president's proposed "Salute to America."
The July 4 event, will feature military tanks lined up on the National Mall, war plane flyovers and a televised national address by the president. There will also be two firework displays.
And the event certainly won't be free:
According to The Washington Post , $2.5 million was diverted from the National Park Service to cover the costs associated to Trump's parade. Those funds, which were raised from entrance and recreation fees, were originally intended to help revamp parks across the country. Former Park Service deputy director Denis Galvin told the Post that the entire celebration usually costs the department around $2 million.
Trump tweeted on Wednesday morning that the parade will cost "very little compared to what it is worth." He also noted that the military already owns all of the equipment and the personnel needed to operate them, adding "all we need is the fuel."
But a finance expert told NPR that some of the planes and military weapons being used throughout the event cost thousands of dollars per hour to operate. The Boeing 747 plane used for Air Force One could be $205,000 an hour. Flying a F-35 jet can be $20,000 or more, according to Pentagon figures.
And just getting the military tanks from Fort Stewart in Georgia to Washington D.C. was costly. A White House aide told USA Today that the preliminary estimate for the transport was $870,000.
More observant readers will note, of course, that the event is not a salute to "America" at all. It is a salute to the Pentagon. According to the presdient, the purpose of the event is "showing to the American people, among other things, the strongest and most advanced Military anywhere in the World. Incredible Flyovers & biggest ever Fireworks!"
Were the event actually a salute to America, it would celebrate the private sector and all the taxpayers who are forced to pay more than $5,000 per year, per taxpayer, just to fund the Pentagon and its related agencies.1
Rather than a grotesque display of military hardware — such as the trillion-dollar boondoggle known as the F-35 — the "Salute" would line up tractor trailer trucks and commercial airliners to be admired by the people who benefit daily from the goods and services made possible by them. Meanwhile, the Salute would honor the truck drivers, airline pilots, insurance brokers, and janitors who produce all the wealth that is eventually skimmed by tax collectors to pay for — among other things — giant DC government parties.
At the Salute, government employees would be allowed to express their admiration to these productive taxpayers, with phrases such as:
- "Thank you for paying me a salary that is higher than what I could earn with my skills and education level in the private sector."
- "Thank you for providing us with state-of-the-art weapons, vehicles, and other equipment that keep casualties among American soldiers extremely low when compared with other militaries."
- "Thank you for subsidizing my higher education, my mortgage, and for providing funding for other programs designed to assist veterans."
- "Thank you for for getting up and going to work every day to so we call can enjoy a high standard of living, safe streets, and so much more that depends on a productive and hard working private-sector population."
Of course, if the president and members of Congress want to pay for a fireworks display out of their own pockets to show their thanks to the people who pay the bills, that would be fine.
Stop Making Independence Day a Military Holiday
In reality, no politico in DC is going to put on any events celebrating the taxpayer, and we all know it.
But at the very least, politicians and their fanboys could have the decency to stop pretending that Independence Day is the proper day for militaristic displays of pro-government nationalism.
After all, the spirit of the Declaration of Independence is one of contempt for the coercive apparatus of government. It is, essentially, a declaration of disobedience in the face of a military display by the British state.
It's true that, for obvious reasons, government institutions have little motivation to emphasize the Declaration of Independence or the philosophy it represents. This would amount to the government undermining itself. Consequently, many have attempted to turn the Fourth of July into a holiday that embraces vague notions of celebrating "America."
Independence Day should be a celebration against government and a reminder that Americans can once again walk away from tyranny, even if force of arms is required.
This does not defame or insult the American troops, but rather reminds us that we are a civilian nation and the government, and its troops, are supposed to be our servants rather than our masters. Slavish displays of patriotism and loyalty to the state are inimical to the real meaning of the holiday.
If Americans really wanted to celebrate the spirit of the Declaration, they'd demand a parade of smugglers, tax cheats, and secessionists. But then again, those people are usually busy working for a living, and it might be hard to get them to show up. Government employees, on the other hand, have plenty of spare time for yet another salute to themselves.
- 1. This calculation is based on the fact the military budget is more than 700 billion divided among 140 million taxpayers. See also: https://mises.org/wire/what-if-every-person-paid-equal-share-military-budget