Laissez Faire Links: Government Shutdown, Delaying the Obamacare Mandate, the Morality of Abortion, and Myths Against Capitalism

What would a proper government shutdown look like?  Why will President Obama need to delay his mandate provision?  Can a woman be charged with homicide for aborting her baby?  Did capitalism cause the 2008 financial crisis?

  • Ari Armstrong over at The Objective Standard talks about a government shutdown that would be welcomed.  His brief piece Toward a Shutdown to Celebrate makes the point that most government functions are superfluous, and there are many.  Beneath the umbrella of laissez-faire capitalism, the proper function of government is strictly limited to protector of individual rights.  He states, “In order to protect rights, the government needs to run an effective military, police force, court system, and the aspects of government necessary to support them. Those, and nothing else, are the essential functions of government.”
  • Forbes contributor Scott Gottlieb discusses problems the new government healthcare exchanges are having out of the gate.  Why President Obama Will Have To Delay His Health Insurance Mandate makes the case that technical problems with the virtual exchange rollout will necessitate a delay in the requirement for those uninsured to purchase coverage.  His prognosis is not optimistic: “The Administration started building these systems late, and rushed them online, without perfecting these networks. Working them out now, in real time, is going to take months, and maybe a year.”  With that large of a delay, the Obama Administration will have to backpedal on its threat to penalize the uninsured.
  • Just a little more from our friends at The Objective Standard tells us about a possible Colorado ballot measure that would effectively criminalize any and all abortions, even in cases of rape and incest.  The measure would go further though.  In addition to calling for “homicide prosecutions for killing the unborn,” the “Brady Amendment” violates a women’s moral right to choose how she lives and what is best for her and her body.
  • Did Capitalism Cause the Financial Crisis?  This is a short, but invaluable video regarding the common myth that capitalism failed, resulting in the 2008 financial meltdown. Yaron Brook, Director of the Ayn Rand Institute, states that this is erroneous because a true system of laissez-faire capitalism did not exist prior to 2008.  What did exist was a degree of government intervention that distorted the market, leading to bubbles in asset prices that never would have existed under natural market forces.  It is no coincidence that the three most highly regulated industries – housing, banking, and mortgages – were those that failed.  Pay particular attention to his comments on the Federal Reserve system.  For more information, see my discussions of the Federal Reserve.

Apathy in America, The Answer is Philosophy

20130228-174934.jpgThe degree of political ignorance among the American populace is difficult to surmise. On one hand, college enrollment has steadily increased over the past four decades, indicating a much larger educated segment of the population. In addition, the advantages of the internet in information dissemination is so great, it literally furnishes the potential for a truly informed democratic republic. On the other hand, the apathy of the American people in the face of our government’s oppression of individual rights in the name of the public welfare is equally astounding. Our lack of opposition, or of any useful degree of organized opposition, is symptomatic of apathy.

Yet in lieu of the information revolution, room for a more hopeful interpretation exist. Perhaps the lack of response stems not from apathy fueled by a largely distracted populace, but rather from a different kind of apathy, one that too often results from information overload. Too much information too quickly thrown into the homes of America, perhaps turns people away from the important issues of the day, i.e. the economy, government spending, privacy versus national security. Over the last decade, legislation such as the Patriot Act, Obamacare, and the National Defense Authorization Act (NDAA) have passed into law often unread by the very legislators voting yay or nay. Less likely is that the average American is familiar with these laws or how they affect individual rights. Nor is the bureaucratic language that often weaves these unintelligible bills together typically accessible to anyone without a law degree.

So the riddle is this. What does a person require in order to filter massive amounts of information often representing opposing viewpoints? What is required of people to be informed short of a genuine desire to maintain one’s general awareness of current events? While people will disagree on the specifics, the simple answer is philosophy. For philosophy is a framework by which information can be analyzed, compartmentalized, and analyzed again for future use. It allows one to establish a system of beliefs that coincide with one’s life choices. More importantly, philosophy furnishes a backdrop by which one can analyze choices and cause and effect, so that if the perceived outcome of a choice is not what was expected, one still has a means of looking back to see what caused the outcome.  Given America’s ongoing economic turmoil, I believe the following words from philosopher Ayn Rand are particularly relevant.

The power that determines the establishment, the changes, the evolution, and the destruction f social systems is philosophy.  The role of chance, accident, or tradition, in this context, is the same as their role in the life of an individual; their power stands in inverse ratio to the power of a culture’s (or an individual’s) philosophical equipment, and grows as philosophy collapses.  It is, therefore, by reference to philosophy that the character of a social system has to be defined and evaluated.

Passage from The Ayn Rand Lexicon, s.v. “Philosophy.”

In short, a good philosophy sheds ambivalence. It allows its user to see essentials without the gray that often accompanies political and social debate. And it also acts as a how-to guide amidst information overload.

When thinking of philosophy, we typically associate it with a time long passed, yet never before has the need for a solidly based system of thinking been so prescient.  As technology advances, the amount of information available will increase as well as its rate of circulation throughout society.  In this sense, philosophy acts as a how-to guide to living with and evaluating massive amounts of information.  Consequently, the times ahead will require that we all embrace philosophy more than ever before.

Liberty Links: “You Didn’t Build That”

The following are a few links I find of particular value to our political and moral dialogue.

  • There has been much controversy of President Obama’s notion of “collective” success rather than individual effort.  His comments are quite frightening.  Here is an excerptfrom his speech in Roanoke, Virginia.

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“There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there. (Applause.)

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.”

  • Few statements will induce more fear than this: “If you want to get involved in business,” Sen. Orrin Hatch warned technology companies at a conference in 2000, “you should get involved in politics.”  This of course begs the question: If successful businessmen answer to Washington, who does Washington answer to?
  • The Ayn Rand Institute’s Don Watkins on how to combat statism: “Explain that all productive individuals—whatever their income—have the same basic interest in common: freedom. Explain that anyone who takes responsibility for his own life, prosperity, and happiness requires freedom from government interference—not handouts or handcuffs.”
  • Mark Calabria, director of financial regulation studies at the Cato Institute, comments on calls to break up large banks that pose systemic risk to the economy.  “It is largely the moral hazard created by various government guarantees protecting “Too-Big-To-Fail” banks that caused the most recent crisis….Ultimately, Too-Big-To-Fail is a political problem, not an economic one. The solution is to be found in limiting government, not the banks.”

Recall, Atlas Shrugging from Washington Policy Hounds

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I recently found the following opinion piece that, although written two years ago, presents the case of Washington policy hounds in strikingly luminous and parallel fashion to Rand’s magnum opus.

“For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.”

The relevance of Rand’s masterpiece half a century after its entrance into the public forum is evident in two ways.  First and foremost, we are living its story.  Secondly and subsequently, the controversy over Rand’s ideas has grown to magnificent proportions since 2008.  Whether you are for or against Rand’s philosophy of Objectivism, one thing remains clear.  The more the government meddles, the more the government is called to meddle.  So the question is to examine whether such meddling has been more beneficial or harmful. What has such meddling produced beyond additional calls for government stimulus, bailouts, and tax reform?  Most recently and attributable to the heavy hand of government fiscal policy and the Federal Reserve’s perpetual devaluation of the dollar – the world’s reserve currency – is the S&P downgrade of U.S. credit.  While many mainstream Washington pundits attempt to rationalize S&P’s move, I suspect they do so in modest aspirations to avert potential panic among investors; this of course makes sense.  However, what they overlook is the more fundamental implications of such a downgrade, instead maintaining by a posteriori logic that U.S. credit is still good to foreign investors like China and Japan from the simple fact that they have nowhere else to invest.  But a credit downgrade of this type carries with it much deeper implications that cannot be shucked aside due to the dollar’s preeminent place in the global markets.  Indeed it is for this very reason why investors, foreign and domestic, should be concerned.  The implication is this: when the dollar fails due to government mismanagement, whether from loose fiscal or monetary policy, the entire global financial network, due to the dollar’s preeminent place in it, will surely follow.     There will be no “stimulus-effect,” no bailouts, nor any liquidity because to a large degree, global liquidity is furnished by the dollar.  To deny this, is to assume some other universal currency will provide a safe haven for investors.  Perhaps gold, but such a shift still necessitates the destruction of the dollar, U.S. Treasuries, and much of the wealth of our nation.

It should become quite clear at this stage that government interference in the economy – whether one calls it Keynesian economics, deficit financing, or stimulus spending – encroaches upon and binds up the free-market.  Such programs as the $700 billion Emergency Economic Stabilization Act of 2008 (H.R. 1424), the Auto Industry Financing and Restructuring Act of 2008 (H.R. 7321; note that this bill was never voted on in the Senate, but was passed in the House), the American Recovery and Reinvestment Act of 2009 (H.R. 1), and the most recent Budget Control Act of 2011 (S.365) with its 13-member ‘Super Congress’ have failed to generate adequate job growth.  Instead, the national debt has grown to proportions even Washington is unable to manage.  Much can be gleaned from the general descriptions of these bills.  For example, H.R. 1 is summed up as follows: “Making supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization.”  Job creation and investment are primarily functions of the economy, not government, while assistance to the unemployed – when done in perpetuity – only exacerbates natural market fluctuations, which delays natural readjustment by the market.  Moreover, state fiscal stability, so long as it lies at the federal level negates the very core conception of statehood.  If I live in Georgia and decide I do not agree with its policies, I can move to Oregon.  But if both states depend too heavily on federal sustenance, where does one go?  Where has one’s choice gone?  The end result here is statism, whereby the State (i.e. the federal government) controls most aspects of private life.  Economic policy that negates market principles in place of political ideals inevitably fails because this is to replace principles grounded in reality (i.e., the market) with those conjured from the depths of human emotion.  While not the only avenue of statism, this is arguably its most far reaching.

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The ideological and practical implications of this are enormous for Republican government.  It is critical to realize that the more a people rely on their government, the less freedom they allow themselves.  I am reminded of Hobbes’ classic political tract written in defense of the monarchy during one of England’s most turbulent times.  I am reminded of this because Leviathan assumed the natural inferiority of the people to their government and the doctrine of the “Divine Right of Kings.”  He argued the necessity of an absolute monarchy, lest we fall back into the “state of nature,” whereby the weak succumb to the brute force of the strong.  I recall the cover of Leviathan (seen left), whereby the body (the people) is incomplete – dysfunctional – without the head (the state).  The political (post-9-11) and cultural (welfare-dependence) ideologies of America today resemble more closely than at many times past the traditional justification of the authoritarian state called from the necessity for stability and safety. This ideology is highly antiquated.  Hobbes published this tract in 1651, yet we still see today the fear-mongering that has become the cornerstone of big government.  The state is quickly becoming the sole arbiter of private disputes, the sole thinker of our generation.  Rand once stated that “A country without intellectuals is like a body without a head” (For the New Intellectual, p. 12).  What she meant was that a generation without those willing to think and judge will sink beneath the weight of government.

Gold, The Only Objective Standard of Value

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The following is a seminal passage from Ayn Rand’s Atlas Shrugged.  As Francisco explains the importance of money as the only moral base for man’s existence, he highlights an inevitable fact we would all do well to recognize from current trends resulting from both fiscal and monetary policy coming out of Washington and the Federal Reserve respectively – the declining value of our fiat money.

“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence.  Destroyers seize gold and leave to its owners a counterfeit pile of paper.  This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values.  Gold was an objective value, an equivalent of wealth produced.  Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it.  Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtues of the victims.  Watch for the day when it bounces, marked: ‘account-overdrawn’.”

Atlas Shrugged, 383-84

The “legal looters,” are of course those in Washington, and yes, I mean to include everyone because if you are not part of the solution, then you must by logical necessity be part of the problem.  The account “which is not theirs” is of course that of the taxpayer.  S&P’s recent downgrade of U.S. credit is evidence that the “day when it bounces, marked: ‘account-overdrawn'” is not so far off.  Also interesting to note is that gold recently topped $1800 per ounce following S&P’s announcement and a highly volatile market here at home and overseas.  It only makes good sense that the value of gold would climb as the value of the world’s reserve currency no longer commands the highest credit rating.

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