"The Greens are proposing one of the most aggressive tax regimes of its kind anywhere in the developed world, resulting in a broad-based raid on Kiwis who’ve worked hard, saved, and built something over a lifetime.
"The idea this only hits the wealthy simply doesn't stack up. One in five Kiwi homes is held in a trust, and the Greens would tax those assets from the first dollar. In Auckland, that means an annual bill of over $18,000 on a mortgage-free family home, or $3,600 for first home buyers with a twenty-percent deposit.
"And it doesn't stop there. A 33 percent death tax would force many families to sell farms, homes, or businesses just to pay the bill. Inheriting the average dairy farm would trigger a $1.2 million tax bill. There is nothing fair about taxing grief, or taxing the same income again when it's earned, saved, and finally passed on.
"Most countries that have tried wealth taxes have scrapped them because they drive investment and talent offshore. Death taxes are even worse, New Zealand tried one and abandoned it in 1993 because it crushed farming families and raised almost nothing.
“This package is light on evidence, heavy on populism, and green with envy.”
"One 'solution' to inequality ... is the wealth tax. ... This taxing away of capital means less means of production and thus less production and higher prices. At the same time, it means less demand for labour and thus lower wages. [The] programme is a call for mass impoverishment....
"Taxing wealth is not merely a levy on individuals but a direct seizure of the capital required for production, which ultimately harms everyone's standard of living. ...
"As [Ludwig Von] Mises observed* ...., almost all of the technological advances of the last centuries are available to and can be fully understood by engineers in even the most impoverished corners of the world. What stops the implementation of those advances is not any lack of technological knowledge but a lack of capital. Thus, a farmer in India who has seen a tractor on television can easily understand the value of using one. What stops him from using one is certainly not any lack of technological knowledge. It is certainly not that he does not know how to operate a tractor or could not easily be taught how to do so. What stops him is that he cannot afford a tractor. He does not possess the capital necessary to buy a tractor and cannot find a lender to provide it. This is a lack of capital that probably could not be made good by any rise in the local capital/income ratio. It reflects generations of insufficient local capital accumulation."
"New Zealand’s productivity challenges are strongly linked to low capital intensity. ... New Zealand’s slowing labour productivity growth is likely to reflect both slowing growth in innovation and declines in the capital to labour ratio. ... New Zealand’s capital intensity [already] lags other countries...."
* Ludwig Von Mises, in his chapter 'Capital Supply & American Prosperity'--in which he observes that "the average standard of living is in [America] is higher than in any other country of the world, not because the American statesmen and politicians are superior to the foreign statesmen and politicians, but because the per-head quota of capital invested is in America higher than in other countries."
Anyone — anyone! — has the moral right to assert their ownership of something — and, under a common law system, they have the ability to go to court to try to prove that assertion. To make their claim. (Or try to.)
Common law recognises that not all legitimate claims to land or water use or ownership come as grants from a fictional entity called "the crown." Instead, it recognises the imperfection of that system, and allows claims to be made on occupation, on long use, on recognised practices.
Our common-law system however has been so buried by statute law that it's now hard to find it. And in recent years successive governments of both hues have been desperate to avoid anyone — anyone! — making any sort of common-law based claim of ownership.
That seems to go double for iwi.
The kerfuffle over foreshore and seabed began when Helen Clark rejected the right to Ngati Apa to go to court to try to assert its right to part of the Marlborough foreshore and seabed based on long use and occupation. She decided instead to nationalise it, trumping both court and claim. Ironically now, she sent out John Tamihere to sell the poisonous solution to unwilling Māori buyers.
Bear in mind Ngati Apa were simply arguing for the right to appear in court to try to make a claim. (As they and others of every hue were fully entitled to.) But that was enough for Clark.
The rights rort continued with the John Key Government's further politicisation of the foreshore and seabed, coming up with a bastardised replacement of the Clark Government's Foreshore and Seabed Act that tried to square an illegitimate circle.
Didn't work, said the Court of Appeal last year. Property rights remain legitimate even in the absence of government recognition, they suggested. And iwi, they agreed, are entitled the chance to claim legitimate rights in court (even if National's replacement Act bars full recognition).* And so the Luxon Government is now all a-scramble trying to keep the illegitimate cork in the bottle, acting to legislate away the court's decision.
It's not a good legal look.
Ironically (ironies abound here) the politician promoting the politically-expedient pre-emption, Paul Goldsmith, is a historian by profession. I can't help wondering how different New Zealand's history may have been if principled common law had won out over political expediency over the last one-hundred and eighty-five years.
We may be a different, and better. place for it.
* * * *
* No Right Turn summarises the court decision, and National's (over) reaction:
"The decision ... basically reinterpreted section 58 of National's Marine and Coastal Area (Takutai Moana) Act to make it consistent with its purpose clause and te Tiriti o Waitangi by allowing "shared exclusivity" according to tikanga. The upshot is that it would become significantly easier for iwi and hapū to gain customary marine title over their foresore and seabed - a fact confirmed in subsequent court decisions. National doesn't want that to happen - in fact, they don't want Māori to be able to gain customary title at all, despite what they promised Te Pāti Māori when they passed the law in 2011 - and so they plan to legislate it away (which they disguise as "restoring the intent of Parliament" - which is effectively an admission that they dealt in bad faith with their coalition partner in 2011). Of course, they're pitching this as being about beach access, like they always have, even though that is not and never was under threat. But they're quite open in the Herald about what its really about: protecting the aquaculture industry. So Māori rights are going to be sacrificed to protect National's donors and cronies. Which sounds just a little corrupt."
And where it was at before was with Maori needing to prove to the courts that they possessed a common law property right in their portion of NZ’s foreshore & seabed. And if they could prove such a right to a legal standard of proof, then why on earth should anyone object?
What could possibly be wrong with recognising the right of people to claim the property in which they have a right? Everyone, including divers, miners, aquaculture owners, and iwi.
What could possibly be wrong with the protection of property in which people can prove that right, which is all that a repeal of the Foreshore and Seabed Act could have done.
And that’s all there really is to it. See how uncomplicated it really is? Or could still be.
"[What's the problem with] the left wing policy fad/clever corporate power grab once known as 'corporate responsibility' and now known — for the moment, at least — as environmental, social and governance (ESG)? ... "[T]he problem isn’t so much that a company takes ideological considerations into account in its business practices so much as that governments — such as state-run pension funds — are imposing ideological agendas on businesses via this financial control. ... "[And] government has no business forcing an ideology ... on anyone. "Let’s consider how this applies to ESG.... "[W]hen state pension plans ... start making or 'encouraging' companies to change how they operate based on ideological issues (such as causing oil companies to get behind green anti-fossil fuel initiatives), this amounts to the state adding the further injury of lower profitability for such companies to the original one of what amounts to nationalisation by stealth. "These are both bad, but they are not the essence of what is wrong with ESG, which is a further wrong than state ownership and mismanagement. "State interference in ideology is the real problem with ESG. A truly free market would allow investors to make clear-eyed decisions about where to place their money and whether they want to earn higher returns or support political causes with their money. "But when the state sets up a retirement fund with the supposed purpose of reducing taxpayer costs of a pension plan by high returns, it should not then use that money to support causes the retirees may or may not outright oppose, and finance the shortfall by taxes on others (wrong to begin with!) whose opinions also aren’t being consulted. "Of course, any investment strategy has to have an implicit basis, so there is no way for a state to run a pension plan without running afoul of separation of ideology and state. "The proper response by lovers of liberty is not ... merely object to the particular ideas that underly some state investment strategies, but to work towards the real solution, namely to privatise the investment sector. "This won’t eliminate ideologically-driven companies from the marketplace (although a free market would cull unprofitable ones), but it will end the gross abuse of government officials improperly forcing their political beliefs into corporate boardrooms throughout the economy all at once, as we see them doing today."
Those who still believe that government ownership of things like water and supermarkets would help produce more goods and services "might learn something from a report in today’s Wall Street Journal," says Pierre Lemieux at Econ Lib. "It explains the Russian government’s problems in boosting production of military supplies for the war in Ukraine," even when (not to say especially when) the Russian government owns and controls everything in the supply chain.
"A 2021 report from the Swedish Defence Research Agency describes the industry as 'top-down controlled and primarily government funded'.” In other words, the wet dream of every nationalising politician and plunderer around and about our Parliament.
And yet, in this central planner's paradise, the chairman of the defense committee in Russia’s Duma has just had to send "a request to the country’s prosecutor general to investigate why the Defense Department couldn’t properly outfit the mobilised troops given it was fully financed to do so, according to state media."
It's similar to something the Ardern Government has been gradually discovering, in everything from building houses to centralising health and water to fixing mental health to remedying child poverty: that spending alone isn't enough. That including something in a budget doesn't just make it happen. That even in a full centralised production system, it takes more than issuing orders and throwing cash around to make something happen.
As if it were sufficient for a government to 'fully finance' something on a stack of paper called 'budget' for the stuff in question to be produced in the required volume and at an acceptable quality! The difficulty of a government to milk its subjects is of course as true in civilian as in military matters.
And it's not just the corruption problem. This is not unique to Russia. Nor is it due to war. Without the price signals and incentives of private ownership in a relatively unhampered market, those productions decisions just can't be properly planned -- and so the 'production possibility frontier' (what an economic system can ultimately produce) necessarily shrinks.
Once again, we face an economic crisis (stagflation? crash? debt bonfires?) from which few appear to have long-term answers. As guest reviewer David Weinberger outlines, Lawrence White's book does a masterful job of reconstructing the twentieth-century's contest over economic ideas of our time, helping to explain why the noisiest economists today seem to have so little of sense to say .... and from whom the most sense (and best answers) might be found.
'The Clash of Economic Ideas': The Perfect Book for Understanding Our Economic Climate
guest review by David Weinberger
Few books on economics today are readable, let alone interesting, but Lawrence White’s The Clash of Economic Ideas (2012) is both. It offers a lively overview of the major policy debates of the last century and the economists who shaped them, and in so doing it provides helpful context to make sense of our current economic landscape.
For example, what caused economists to move away from free-market ideas? Contrary to what many assume, it was not the Great Depression. Dr. White explains that two ideologies developed in the late-nineteenth century: first a political movement known as “Progressivism,” and second an intellectual movement known as the “German Historical School.” Together they encouraged the belief that “experts,” or self-anointed leaders of a newly emerging “scientific” mode of inquiry, should use the government to direct other people’s lives. Furthermore, early forms of Marxism and Socialism were also seducing intellectuals into self-flattery at this time. It is thus no wonder that in the US, federal power was significantly expanded around the turn of the 20th century, through legislation such as the Sherman Antitrust Act, the Hepburn Act, the Federal Reserve Act, as well as the establishment of the federal income tax. [And here in New Zealand, the illiberal Liberals with the persuasive influence of Pember Reeves were busily ramping up the engine of state for the First Labour Government to then manufacture NZ's Welfare State.]
Moreover, the growth of government power was hardly unique to these places. In fact, major countries around the globe centralised their economies in even more destructive ways. The disaster of Soviet communism is well known. Lesser known, however, is the economic record of Nazi Germany. An important section of the book delineates the extent to which the National Socialist German Workers (Nazi) Party exacted control of the economy under Hitler, which included exchange controls; a centralized “Four Year Plan”; nationalised agricultural policies; import quotas; price and wage controls; rationing; and decrees dictating the quantities of goods that businesses must produce. Put simply, the Third Reich was no friend of free markets.
As much of the world degenerated into centralised graveyards during the 1930s and 1940s, capitalism remained under fire due to the mistaken belief that it caused the Great Depression plaguing the globe, which cast serious doubt on free-market solutions. Nevertheless the mercurial F.A. Hayek -- fresh from his best-selling success with The Road to Serfdom -- emerged to combat this erroneous view. Together with others including Milton Friedman and Karl Popper, they launched the Mont Pelerin Society in 1947 to reintroduce the virtues of free enterprise and classical economic principles, and to expose the folly of central planning.
Building on the insight of earlier economists like Ludwig von Mises, one of their arguments against centralisation was that government planners face an intractable “calculation problem.” In a free economy, businesses plan based on information provided by prices on the market, which are determined by firms and entrepreneurs freely bidding for resources. If a business plans a project that cannot cover the cost of resources plus earn a profit, it means that the fruit of that project—the final good or service—is not in high enough demand by consumers to render the use of those resources worth the cost, and the business should not proceed. This profit-and-loss calculation is vital for planning and growth, both for individual firms and for the economy, and its absence lies at the heart of what is wrong with central planning. Lacking market prices, central planners have no way to know whether their plans cover their costs, which leads to a squandering of resources and wealth so monumental that even basic necessities like food go unproduced. Hence the widespread famines engendered by communist states.
Moreover, consider the fate of the consumer in each of these cases. While we often hear that under capitalism corporations “exploit” customers, the truth is that in a profit-and-loss economy consumers are ultimately the ones in control. They decide the price of the products and services that corporations produce, not the other way around. Firms survive by pleasing consumers, by producing goods and services that their customers want, which is all the more reason why price signals are imperative for planning, as even minor miscalculations by a business can mean the difference between survival and failure. Under communism, by contrast, the consumer counts for nothing and state planners face no consequences for exploiting them while recklessly devouring resources. They, not the desires of the customer, dictate what resources get created and in what quantities.
White does a masterful job of reconstructing issues like these - including a masterful takedown of the Keynes/Fisher fiscal and monetary meddling that still plagues us today -- and readers will walk away with a good introductory grasp of the economists and ideas that animated the policy debates over the last hundred years. For that, it is well worth a read.
People are losing their minds -- and it's not just about the virus.
According to half the internet, several advocacy groups who should know better, and much of parliament (who never will), this morning we witnessed the central government nationalising local government's water assets.
"The great water theft is on," screams Davis Farrar's hyperbolic headline. National's Chris Luxon, spokesman on the local branch of government, hurls out a claim that transferring water assets from local to central is "tantamount to state-sanctioned theft of assets.” "Make no mistake," says the Taxpayers Union, "this is an asset grab."
An asset grab!
State-sanctioned theft!
Nationalisation!
There was a time when words meant something.
Since the National party is already a lost cause, I'll focus on the words of that last organisation, one representing (so they say) the interests of all those making forced contributions to all branches of government -- so that you might think they may realise the difference between what happened to (say) the British motor industry in the seventies, and what's happening now.
Because what happened then was nationalisation, i.e., state theft of privately-owned assets. And what's happening now is simply this: moving the management and water assets out of the hands of the country's 67 councils, to four large water entities that will be effectively controlled by central government and iwi.
So it's not a state-sanctioned theft. And what difference does it really make if it's central government rather than local government who's making an expensive balls-up of things?
Oh, but it will lead to "higher water costs" and "inefficiencies" says the Taxpayers Union at its new protest website. Yet you could hardly say that water costs under current council management are in any meaningful way "constrained," and anyone under Watercare's care over the most recent period of undersupply could hardly vouch for them being efficient.
But it will lead to "unnecessary bureaucracy," says the Taxpayers Union. All bureaucracy is unnecessary; its' not clear to me that 67 council water entities is any less (or more) unnecessary than four? Hard to see this as a reason to be so opposed?
But councils will "lose their rights of control," says the Taxpayers Union, who argue that "decisions around selling assets, receiving dividends, and setting charges will [now] be made by unelected entities." So what? It's not clear that those who have actual rights, i.e., you and I (councils qua councils don't have rights), are any better served whether decisions about these things are put beyond us at local govt level, or beyond us at central govt level. In either case, we're not part of the bureaucratic management involved. So how is this new plan worth opposing so savagely?
It's not really clear from their protest website why they're so incensed enough to start a protest campaign -- one involving a dedicated website, a petition, TV commercials, for all of which they're asking for crowd-funded. It's very far from the Bolsheviks storming the Winter Palace. And like I say above, it's not even anything like the nationalisations that crippled post-war Britain.
Indeed, it's not nationalisation at all -- and in the way the minister is spinning off these 67 creaking and partially shambolic entities into just four, and partially transferring of control to various iwi, it could in the future lead to something more like the sort of privatisation that happened to water in Britain in the late eighties. And since I'm very much in favour of that sort of thing -- and have advocated before for iwi to have greater property rights recognised as a pathway to that sort of thing -- I find it hard, myself, to understand why so many seem so opposed.
A new generation is increasingly under the illusion that socialism is simply "big government with lots of handouts financed by class-warfare taxation." Since that’s the common perception however, is that the definition we should use?
The technical definition of socialism is government ownership of the means of production. This requires central planning, price controls, and other forms of force and intervention. So, at the risk of being pedantic, is that how the term should be defined?
A few years ago, I tried to reconcile this definitional conflict by creating a diagram to show that there are several strains of socialism (or statism, leftism, progressivism, or whatever you want to call it).
I also created a 2×2 matrix to show how various nations should be characterised when measuring redistribution and intervention.
The Problem is That Even Socialists Don't Know What Socialism Is
If you think I’m somehow being unfair, check out this recent column in the New York Times. Even an advocate for socialism has a hard time saying what it is:
Public support for socialism is growing. Self-identified socialists like Bernie Sanders, Alexandria Ocasio-Cortez and Rashida Tlaib are making inroads into the Democratic Party… Membership in the Democratic Socialists of America, the largest socialist organisation in the country, is skyrocketing, especially among young people. …what do we mean, in 2018, when we talk about “socialism”?
… Socialism means different things to different people. For some, it conjures the Soviet Union and the gulag; for others, Scandinavia and guaranteed income. But neither is the true vision of socialism. What the socialist seeks is freedom. … when the basic needs of life compel submission to the market and subjugation at work, we live not in freedom but in domination. Socialists want to end that domination: to establish freedom from rule by the boss, … from the obligation to sell for the sake of survival.
If his claim that "socialism is freedom" sounds bizarre, well, that because it is. But it’s not new. It’s the crazy idea of so-called “positive liberty” that was the basis of FDR’s so-called economic bill of rights - that, basically, we should all be “free” to live off of other people (with those "others" having little or any say in the matter).
This cartoon sums up one reason Venezeuelans, for one, are discovering why that approach doesn’t deliver the goods:
Though that’s just the start. Socialism eventually will mean…well, the proletariat will decide at some point. From the New York Times:
There’s not much discussion, yet, of classic socialist tenets like worker control or collective ownership of the means of production. …today’s socialism is just getting started. … In magazines and on websites, in reading groups and party chapters, socialists are debating the next steps: state ownership of certain industries, worker councils and economic cooperatives… Mass action — sometimes illegal, always confrontational — will determine socialism’s final form. … . As Marx and Engels understood…it is workers who get us there, who decide what and where “there” is. That, too, is a kind of freedom. Socialist freedom.
You can either sit and wait and see. Or you can reach for a history book and calculate how long it generally takes a truly socialist society to get there.
The Many Downsides of Socialism
Writing for Bloomberg, the hand-wringing Professor Noah Smith is both sympathetic and worried about the putative resurgence of socialism:
Observing the disaster that is Venezuela, many free-market proponents are inclined to say that socialism always fails. To bolster their claim, they can also point to the Soviet Union, to North Korea, or to Vietnam and China before those countries implemented free-market reforms. Those self-described communist systems generated vast poverty and famine… defenders of socialism have their own historical examples to cite. … Though one can quibble over the definition of the word “socialism,” there’s little question that the so-called social democracies of Denmark and Sweden offer some of the world’s highest living standards.
That being said, even Smith is concerned that advocates of socialism don’t understand the risks of too much government. He cites a couple of examples, including the failure of price controls and how India suffered from statism before initiating reforms in 1991.
But his comments about the United Kingdom and the Thatcher reforms may be the most important because the Brits actually did try real unalloyed socialism, i.e., government ownership of the means of production:
… the U.K. provides a cautionary tale. After World War II, the U.K. nationalised industries like steel, coal, aviation, electricity, rail transport and some manufacturing. But the British economy lagged behind its continental European peers during the midcentury. Manufacturing and transportation especially stagnated. By the time Margaret Thatcher became prime minister in 1979, both France and Italy were richer in per capita terms… Thatcher unleashed a wave of privatisation, along with other free-market policies. Britain…growth accelerated, and by 1997 it had caught up and passed France and Italy.
Here’s a chart from his column showing how the U.K. fell behind when it was socialist, but then regained the lead following pro-market reforms.
Professor Smith’s cautionary words are noteworthy since he (based on having read dozens of his columns) leans to the left.
And here’s another criticism of socialism, this time from an unabashed liberal (in the modern sense of the word, not classical liberalism). Bill Scher has a withering review of a new book by a group of socialists:
Felix Biederman, Matt Christman, Brendan James, Will Menaker and Virgil Texas—of the socialist, satirical podcast 'Chapo Trap House'… make bank by selling you a candy-coated version of socialism, one that may offend real socialists even more than liberal gruel-peddlers like myself. …The indoctrination begins with a condemnation of America’s containment of Soviet communism. …“Who cares?” if the Soviets won the Cold War, they write. … After blaming American-led capitalism for the world’s ills, the authors take aim at their favourite target: liberals. … In their evisceration of liberals and establishment Democrats, we get the usual left-wing criticisms of the Barack Obama and Bill Clinton presidencies… The Chapo crew’s romp through the history of feckless liberalism doesn’t stop with Obama and Clinton. Jimmy Carter is slammed… Lyndon Johnson is excoriated… Not even Franklin Delano Roosevelt escapes.
By the way, I can’t resist interjecting to point out that socialists had good reasons to condemn Bill Clinton’s presidency. After all, economic freedom increased during his tenure, though I suppose they also should be free to criticise other Democratic administrations for the supposed sin of not moving to the left at a faster rate.
The conclusion of Scher’s review however is brutal:
After slogging through 276 of the book’s 282 pages of bad history… the authors finally get around to their grand plan. Spoiler alert! This is literally it, in its entirety:
“After setting everyone on equal footing (by seizing the billionaires’ money, socialising their wealth, and handing the keys of production over to workers), you’re looking at an economy that requires something like a three-hour workday, with machines taking care of most of the drudgery; and—as our public fund pays for things like health care, education, scientific research, and infrastructure—all this technology actually makes work quicker, easier, and more enjoyable.”
The notion that socialism is going to slough off all that annoying labour to our forthcoming legion of robot slaves may come as a surprise to many socialists. …The Chapo hosts’ aversion to hard work extends to this book. Why suffer the details of how this non-workers’ paradise, free of paper pushing and ditch digging, is going to be realised, when you can take in more than $1 million a year by dressing up stale arguments and thin policy ideas with inside jokes? The infomercial socialists of Chapo have exploited the free market expertly, and at least saved themselves from the 9-to-5 prison.
I confess that these clowns were unknown to me until I read this review, but I’m going to take a wild guess that (like Michael Moore) they don’t share their wealth with the masses.
A Serious Critique of Socialism
Let’s close by now perusing a serious economic analysis of socialism -- which is important because, when socialism fails people economically, its leaders invariably pull out the guns to enforce the behaviour they deem economically necessary. Mark Perry explains Why Socialism Fails, from which I'll pull out a short series of excerpts:
Socialism is the ultimate Big Lie. While it falsely promises prosperity, equality, and security, it delivers the exact opposite: poverty, misery, inequality, and tyranny. Equality is achieved under socialism only in the sense that everyone is equal in his or her misery. …Socialism does not work because it is not consistent with fundamental principles of human behaviour. …it is a system that ignores incentives. …
A centrally planned economy without market prices or profits, where most of the property is owned or controlled by the state, is a system without an effective incentive mechanism to direct economic activity. …
The strength of market-based capitalism can be attributed to an incentive structure based upon the three Ps: (1) Prices determined by market forces, (2) a Profit-and-Loss system of accounting, and (3) Private Property Rights. The failure of socialism in countries like Venezuela can be traced directly to its neglect of these three incentive-enhancing features.
The price system is a remarkable means of informational transmission that sets economic activity humming. This system however is non-existent in the socialist nirvana.
The only alternative to a market price is a government-imposed price that always transmits misleading information about relative scarcity. Inappropriate behaviour results from a controlled price because false information is transmitted by an artificial, non-market price. …
The situation in socialist Venezuela provides a current example of the chaos and inefficiencies that are guaranteed to result from government price controls. As could be easily predicted, the widespread price controls imposed by the socialist regime in Venezuela in recent years led to chronic shortages of basic goods like milk, flour, rice and toilet paper, and long lines of customers waiting for hours to buy groceries at stores that frequently have mostly empty shelves.
Just as the price system is rendered non-existent and non-effective, so too are profits. Here are excerpts from Perry's analysis of socialism and profits:
A profit system is an effective monitoring mechanism that continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving consumers are rewarded with profits. … the profit system provides a strong disciplinary mechanism that continually redirects resources away from weak, failing, and inefficient firms toward those firms that are the most efficient and successful at serving consumers. …Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various firms and producers. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. … Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
And here are portions of what he wrote about socialism and property rights:
The failure of socialism around the world is a “tragedy of commons” on a global scale. …When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. …Public ownership encourages neglect and mismanagement. …Venezuela today is moving in the opposite direction. Under Hugo Chavez, the private property and assets of foreign-owned oil companies from the US, France, and Italy were nationalised and converted to state-owned, state-managed assets. The results were completely predictable: corruption, lack of investment, deteriorating capital assets, mismanagement and a sharp and ongoing decline.
His conclusion is especially powerful:
By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned, socialist economies deprive the human spirit of its full development. Socialism fails because it kills and destroys the human spirit… Programs like socialised medicine, free college, guaranteed jobs, free housing, and living wage laws will continue to entice us… But those programs, like all socialist programs, will fail in the long run…because they ignore the important role of incentives. …
Socialism is being repackaged and recycled by today’s left-leaning politicians including Sanders and Ocasio-Cortez and is being taken seriously by a new young and gullible generation, many who weren’t even alive when the historic events of the 1980s and 1990s occurred including the fall of the Berlin Wall and the collapse of the Soviet Union. But the lessons from history about the defects, deficiencies, and failures of socialism are very clear. As we’ve learned from countless examples throughout history, including now Venezuela, the main difference between capitalism and socialism is this: Capitalism works.
Amen.
The observation that capitalism works and socialism fails is the point of my two-question challenge for my left-leaning friends.
To be sure, my challenge applies to conventional leftists, as well as all varieties of socialists.
The advocates of bigger government surely should be required to show at least one example of how their policies work in the real world. But they can’t.
I’ll close by sharing this wonderful video of Dan Hannan explaining to Jeremy Corbyn and the Oxford Union why liberty is better than socialism -- because socialism's defining characteristic is coercion:
If you enjoyed that video, you can also watch Hannan in action here and here.
P.S. And if you want to laugh at socialism, check out this collection.
[Cartoon by Nick Kim. Guest Post by Daniel J. Mitchell from his post at the Foundation for Economic Education]
It's been said that when somebody says "Smith is a fascist," what he really means is "I hate Smith." But "fascist" really does mean something ...
The defining characteristics of Fascism do not include jackboots, smart uniforms and violent racism. Fascism is simply Socialism/Communism with a cosmetic difference: whereas Socialism/ Communism nationalises and abolishes private property and the 'commanding heights' of the economy, fascism permits the façade of private ownership of property to remain, while nationalising instead the people who own them.
Under fascism, the illusion of ownership remains but the government assumes power of use and disposal over the property – that is to say: under Socialism/Communism the state becomes the de jure owner, whereas under Fascism the state becomes the de facto owner. “Let them own land or factories as much as they please,' declared Adolph Hitler: "The decisive factor is that the State, through the party, is supreme over them, regardless of whether they are owners or workers. All that, you see, is unessential. Our Socialism goes far deeper… Why need we trouble to socialise banks and factories? We socialise human beings.”
Hitler’s published utterances are an instructive testimony to the essential unity of Socialism and Fascism. His National Socialist Party’s 25-point political programme reads in part like a Green Party wish-list, which, when first implemented, won plaudits from many collectivist politicians in freer countries. Unemployment was artificially eliminated, grandiose welfare programmes were enacted, onerous taxes, regulations and controls imposed.
For too long, people have allowed themselves to be diverted by a phoney dichotomy between Communism and Fascism, whereas careful analysis shows that both are forms of collectivism, treating the individual as a means to an end: the “common good.” Neither in theory nor in practice is there any essential difference between the core utterances of Marx and Hitler: between Marx's “From each according to his ability, to each according to his need,” and Hitler's “Each activity and each need of the individual will be regulated by the party as the representative of the general good.”
The real dichotomy is not between Communism and Fascism, but between freedom and dictatorship. The 'dichotomy' between Fascism and Communism is merely between two competing forms of dictatorship.
* * * * *
A HELPFUL SHORT GUIDE TO THE ~ISMS:
Under Communism: You have two cows. The government takes both, and gives you a chit for vodka.
Under Socialism: You have two cows. The government takes both, and gives them to your neighbour. Under Fascism: You have two cows. The government takes your milk and sells it back to you. Under New Dealism: You have two cows. The government takes both, shoots one, buys milk from the other cow, then pours the milk down the drain. Under Nazism: You have two cows. The government gives both to your neighbour and shoots you. Under Capitalism: you have two cows. You sell one, and buy a bull.
This was part of a continuing series explaining the concepts and terms used by libertarians, originally published in The Free Radical in 1993. The 'Introduction' to the series is here. The list so far can be found down there on the sidebar.
Originally posted here in 2005, this post is looking long overdue for a re-post...
I've noticed some bloggers and commentators around the traps still upset at claims the Nazis were socialist.
What’s that? Nazis?? Nazis were socialists?!! Well, yes they were.
It's true that the National Socialists didn't nationalise their economy's commanding heights on coming to power as Lenin would have had them do; they didn't nationalise them because they didn’t need to -- as Hitler said, they simply nationalised people instead. Political correctness at the point of a gun. The result for Hitler's Germany and in the end for most of Europe was the same as it was for Lenin's Russia. Destruction.
George Reisman makes the case for Nazism = Socialism in an article here, (which he also delivered as a lecture on video.)
De facto government ownership of the means of production... was logically implied by such fundamental collectivist principles embraced by the Nazis as that the common good comes before the private good and the individual exists as a means to the ends of the State. If the individual is a means to the ends of the State, so too, of course, is his property. Just as he is owned by the State, his property is also owned by the State.
Contrary to myth, Germany was a socialist state, not a capitalist one. And socialism, understood as an economic system based on government ownership of the means of production, positively requires a totalitarian dictatorship. Indeed, the identification of Nazi Germany as a socialist state was one of the many great contributions of Ludwig von Mises.
And as if your eyebrows aren't already heading for the ceiling, here's another claim of Reisman's that might get them there that is arguably even more important than the title thesis: "In the United States at the present time, we do not have socialism in any form. And we do not have a dictatorship, let alone a totalitarian dictatorship." Read on to find out what Reisman says about the present system in the US, and by implication the rest of the west: that we do not have a dictatorship, nor do we (yet) have Fascism. "Among the essential elements that are still lacking are one-party rule and censorship. We still have freedom of speech and press and free elections," he says...
It really shouldn’t matter who the President is. (Or the Prime Minister for that matter.) Yet over the years folk have attached an almost god-like reverence and celebration to the office.
At best the president should be a manager of the simple and limited affairs of the state, says our guest poster Jeffrey Tucker. An equal with the Supreme Court and Congress. But people become enamoured with power, both politicians who one assumes are perpetually power hungry but also everyday people who want to believe that the person in the White House will deliver prosperity, and perhaps more importantly, goodies to them.
Freedom lovers everywhere are biting their nails, wondering how the damage can be limited. Depending on who gains control, we could have trade wars, nationalised health care, the pillaging of Wall Street and Main Street, more wars in the Middle East, a VAT tax, surveillance of your smartphone, mass deportations, internment camps, and worse.
Read that sentence slowly in a deep voice and it sounds like the trailer to a dystopian film. But it’s not.
Another Way
Let’s take a step back and ask whether it has to be this way. What if the power of government were so limited that it didn’t matter who occupied the White House? Wouldn't that be a vast improvement?
Let’s say that Rutherford B. Hayes, who was president from 1877 to 1881, had been revealed to be a fascist demagogue and bearded would-be dictator. Maybe the same could be said of Presidents Chester A. Arthur (1881-1885), James Garfield (1881), or Benjamin Harrison (1889–1893). Let’s say they were all crazy authoritarians who longed to rule the country as a private fiefdom.
Would it really matter? Probably not.
These were not the presidents who “made history,” and good for them. Hardly anyone remembers them, which is to their credit. They are usually listed by historians among the “worst” presidents, because (in those historians’ view) they simply made too little history. Which is to say they didn’t cause giant upheavals. They inhabited the office at a time when the private sector was growing at incredible rates while the government was playing a relatively diminished role.
No Power, No Problem
As a result, they had no large bureaucracy to control. There was no CIA, NSA, FBI, HUD, DHS, DOL, EPA, and so on. These agencies didn’t exist, and neither did their functions. The Supreme Court didn’t do much. There was no IRS for the president to lean on to persecute his enemies. Surveillance of the population wasn’t yet possible. The government owned no weapons of mass destruction. Not even a printing press.
There was no central bank to bail out wars and welfare. In fact, the federal government had to balance the budget year to year (as the states still do) because the country was on a strict gold standard. You couldn’t just print money without limit. If the money wasn’t there, it had to be borrowed at market rates. The military was tiny. There were virtually no migration controls, direct taxes, or even passports.
There was no federal government involvement in education, health care, or commerce generally. There was no antitrust regulation, no social security tax, no regulation of consumer products, no environmental land management, no price controls or labor laws to stand between workers and employment, no drug war, no decades-long process of pharmaceutical testing, no gun-free zones, no giant military contacts, and no ability to tax earnings.
Most of the power that presidents had amounted to steering some infrastructure contracts to their friends. And here, their corruption was truly revealed, but the damage they could do was limited. Their money came from a few very small tariffs, and the tiny federal budget reflected that. Presidents were managers of a limited government that didn’t intrude into any intimate aspects of life, much less on the whole population. The governments these men headed had strict, meaningful, and practical limits on what they could do. They had no policy plans to speak of, because policy as we know it barely existed.
Leviathan as we know it had not been invented yet. That came later, in the 20th century. Whatever great ambitions of Gilded Age presidents, they couldn’t be realised through their official capacity. Therefore, the stakes of any one election were extremely low for the country at large. That's why these men’s names are barely known (much like that of the Swiss president now). Even back then, hardly anyone paid attention to the presidency as such. The president was a caretaker, holding an honorary position, of interest to only those directly affected.
As bad as the candidates are this year — as threatening as each of them is to someone’s rights and liberties — none would pose a threat if the power to act on ambition were still limited.
"Good Guys" in Office
Limited government means that, no matter how bad a person is who holds office, he or she lacks the tools necessary to inflict great damage on the population. They are chained up constitutionally. We may do whatever we please unless it is proscribed by law; while they may do, as part of their office, only what the law allows them.
Under a small government with limited and well-defined powers, Americans are safer, not because a “good guy” won the election, but because the institutions he or she controls cannot be used as tools of oppression. This is what the old liberals meant when they spoke of "a government of laws and not of men."
There is a sense, then, that when we talk about how grim the policies of a Trump or Clinton will be, we are not getting to the core of the problem. We should not have to worry about the character or ambitions of the person we elect. A good system of government is one that is protected against control by wicked people such as these. (Although absent their ability to use the levers of power to be wicked, the office would attract many fewer of this ilk.) The system should even be protected against good people who want to use state power to realise their “noble” ideals. Government should be impervious to the personal zeal of its temporary managers.
Under such a system, we would have fewer hysterics from both right and left demanding that power be used for this group and against that one. You can scream all you want, but it has no more effect than yelling at the paint on the wall to change color. This is what it means to live under rules rather than arbitrary dictates.
Mo' Power, Mo' Problems
Blaming those who are currently demanding crazy, scary, destructive policies misses the deeper point. The real blame should go to the generations who, over the course of a century, overthrew a system of laissez-faire and replaced it with the planning state, a central government with the power to run our lives, take our income, redistribute wealth, manage the industrial sector, enter into unlimited military conflicts, create financial bubbles, and bail out and pardon their cronies.
Power once created will be used. That the special interests and then the masses clamour for it to be used on their behalf is the inevitable result.
With power also comes a divided population, people seething with hatred against those who stand in their way, interest groups consumed by loathing for anyone with a chance of using power to their own advantage.
The presence of power itself, not the people who seek to turn it to their advantage, is the source of conflict. And such a conflict threatens to destroy friendships and even the social fabric itself. Overweening government is the reason we all can’t get along.
Most of the people who created this mess are long dead, but they still rule us. They bequeathed us a monster that the present generation must contend with.
There is really only one responsible way forward: dismantle Leviathan before it destroys us.
Republican embarrassment candidate Donald Trump frequently argues that the developing world is eating America’s lunch, implying that the growing economic progress in India, in China, in many other developing countries (including Mexico), is coming at the expense of the economic progress of the United States.
Nothing could be further from the truth than this zero-sum view of the world, explains Jason Kuznicki in this guest post.
* * * *
Americans have lately been debating the trade-offs we face as the global poor rise. Their gains have been enormous and unprecedented. And yet the American working class has struggled to better itself even as conditions have improved for most others:
Percentiles 80-95 contain many from the relatively rich countries’ lower-income classes; there are a lot of Americans [and New Zealanders] in there. The left-hand side of the graph is mostly made up of people from India, China, and Africa. Other factors may be at work, but let’s say for the sake of argument that the gains by the global poor on the left have on balance harmed at least some of those on the right.
So why is this happening? Is it part of some other nation’s malicious plan? Is it China, perhaps? Or India? Or did we inadvertently do it to ourselves, through bad trade agreements or “soft” foreign policy?
What's the Secret Ingredient to Global Growth?
It’s natural to want to make the story about us, or our actions, or a villain who threatens us. Those sorts of explanations are politically useful; they suggest that the right leader can get us out of the mess we’re in.
But maybe the correct explanation isn’t about us at all. One way to see this is to ask a slightly different question: Why is the Great Global Enrichment happening right now? Why didn’t it happen in the 1960s? It happened in the 1960s in Japan, after all. It presumably could have happened elsewhere too. So why not?
The left-hand side of the graph contains few Americans, Australasians or Europeans. It’s mostly made up of people from India, China, and Africa.
In the 1960s, India was undergoing a slow-motion economic suicide, nationalising major industries under Jawaharlal Nehru and Indira Gandhi, and pursuing economic autarchy in the false belief that that’s just what industrialising nations need to do.
China’s economic suicide was much more dramatic, with the Great Leap Forward bringing ecological disaster, mass starvation, and tens of millions of deaths.
Over in Africa, a colonial-era infrastructure geared toward extraction found ready use in the hands of socialist and nationalist state agents, who expropriated foreign and domestic investments to enrich only themselves, while scaring away most future investments for a generation.
So… maybe the story is not about us at all, no matter how politicians paint it that way. It’s also not about an enemy who threatens us. Instead, it’s about the rest of the world not shooting itself in the foot anymore. It’s about other societies increasingly adopting economic liberalism, which (by allowing people greater freedom to produce) happens to be very good at lifting people out of poverty.
In the process, the rest of the world is exposing even protectionist America to market discipline, which, yes, is going to hurt. But the only way to stop this process would be to re-impose repressive economic regimes on billions of people. Surely nothing no-one would truly want. That’s a step that’s equal parts unwanted, unrealistic, and unethical, and the transformation at hand is just too big to be much affected by anything else that we might do – not even building walls around borders (which would only re-create the economic autarchy that was the developed worlds’ original route into poverty).
Both authoritarian sides of our political spectrum have purely venal reasons to want the story to remain about us. The left doesn’t want to admit that economic liberalism beats command-and-control socialism when it comes to mass enrichment. The right has lately embraced economic populism as a check on a purportedly hostile world – a worldview that positively requires one or more villains.
But maybe we don’t live in a hostile world at all. Maybe we live in an increasingly excellent world, one that we created inadvertently, through the power of good examples. If so, that’s not a change that we should want to undo. Let them have their freedom, let the curse of poverty be lifted, and let the competition continue.
Jason Kuznicki is a Research Fellow at the Cato Institute and is Editor of ‘Cato Unbound.’ His ongoing interests include censorship, church-state issues, and civil rights in the context of libertarian political theory. He is the author of the Policy Analysis “Marriage against the State: Toward a New View of Civil Marriage.” He is currently revising a book manuscript entitled ‘What Is Government For? A Skeptical History.’ His post previously appeared at FEE and Cato’s Human Progress site.
The Resolution Foundation dug into things and found that the [75-90 percentile] trough is mostly dismal performance among former Soviet economies and Japan, with population growth and countries transitioning from fast growing developing countries into slower mature ones also playing a role.
Some folk recently on a local Facebook group called ‘Anarkiwi’ were discussing socialism and how (and here I paraphrase a little just to make the point clear), libertarians have been very poor in describing the process of collapse of a socialist country (here, for example), and further: that the world’s more socialist countries are not even collapsing as we libertarians say they will.
I mean, NZ's a socialist country, right? And I'm not scavenging for food, in fact I just purchased and enjoyed a Moa Five Hop English ale at the local supermarket.
And who wouldn’t enjoy that?
Still, as I pointed out to the fellow who wrote that, NZ is hardly a socialist country by any real definition.
Best description is: it's a hampered market. Or maybe a mixed economy.
And that’s why today’s socialists talk more today about “inequality” and “poverty” and “progressive taxation” than they do about worker’s revolution – and why no Labour Party manifesto today, with the possible exception of Jeremy Corbyn’s is going to call for nationalising everything that moves.
But it’s still untrue to say that we’ve been bad at explaining the process of socialist collapse. Following the lead of Ludwig Von Mises’s Socialism which expained how socialism could never work, Hayek’s own Road to Serfdom was perhaps the first and briefest to explain how the transition to and the collapse of a fully-blown socialist chaos would happen.
Building upon both of those and fleshing out the economic process of collapse was George Reisman’s Government Against the Economy, which first explains how a market works, then the process by which (absent any political pressure to the contrary) a market can become increasingly hampered; how a hampered market can lead inexorably to controls, to more controls and increasing economic chaos; to rationing and police action and confiscations; and then inevitably to tyranny as shortages and revolt against the leaderhip becomes necessary just for human survival.
The former mayor of London, who is a keen classical scholar, argues that the past 2,000 years of European history have been characterised by repeated attempts to unify Europe under a single government in order to recover the continent’s lost “golden age” under the Romans. “Napoleon, Hitler, various people tried this out, and it ends tragically,” he says. “The EU is an attempt to do this by different methods. “But fundamentally what is lacking is the eternal problem, which is that there is no underlying loyalty to the idea of Europe. There is no single authority that anybody respects or understands. That is causing this massive democratic void.” Mr Johnson’s potentially inflammatory comparison to Hitler comes at a critical time in the referendum campaign, with senior Tories on either side publicly attacking each other in blunt terms.
So seen in context then, Johnson is not in fact saying what the headline writers report, nor is it at all “inflammatory” to point out that unifying Europe politically has been tried and failed before.
His main point, overlooked in the screaming headlines, is “that there is no underlying loyalty to the idea of Europe” whose strength has always been not in its centralisation, but its opposite. The point is echoed by Louis Rouanet below in today’s guest post.
The European Union is Anti-European Guest post by Louis Rouanet
What is Europe? It seems that no rigorous answer can be provided. Europe is not exactly a continent. It is not a political entity. It is not a united people. The best definition, in fact, may be that Europe is the outcome of a long historical process that engendered unique institutions and a unique vision of what men ought to be. The idea that men ought to be free from violent government interference. Europe has no founding fathers. Its birth was not orchestrated but completely spontaneous. Its development was not imposed by armies and governments but was the voluntary product of clerics, merchants, serfs, and intellectuals who were seeking to interact freely with each other. Europeans were united by their freedoms and divided by their governments. In other words, Europe was builtagainst States and their arbitrary restrictions, not by them.
After the fall of the Roman Empire a period of political anarchy followed where cities, aristocrats, kings, and the church all competed with each other. Therefore, as Dr. Ralph Raico noted in his article “The European Miracle,”
Although geographical factors played a role, the key to western development is to be found in the fact that, while Europe constituted a single civilisation — Latin Christendom [born out of Greco-Roman paganism] — it was at the same time radically decentralised. In contrast to other cultures — especially China, India, and the Islamic world — Europe comprised a system of divided and, hence, competing powers and jurisdictions.
In other words, over the centuries, a long evolution of the institutions gave birth to personal liberty. Although the European aristocracies and states were restricting freedom, they were forced to grant more autonomy to their subjects, for, if they did not, people were opting out by migrating or using black markets. As Leonard Liggio puts it, after 1000 A.D.:
While bound by the chains of the Peace and Truce of God from looting the people, the uncountable manors and baronies meant uncounted competing jurisdictions in close proximity. ... This polycentric system created a check on politicians; the artisan or merchant could move down the road to another jurisdiction if taxes or regulation were imposed.
Europe was where the road to freedom began. It was in Europe that the values of individualism, liberalism, and autonomy rose from history and gave humanity a sense of progress that no civilisation had ever experienced to such an extent before. Unfortunately, the values and institutions that made Europe great vanished under the pressures of political centralisation, nationalism, statism, socialism, and fascism in the nineteenth and twentieth centuries. Today, however, a new danger looms over Europe — the European Union.
The European Institutions Against the Free Market
Contrary to what is often said, the European Union has nothing to do with peace, freedom, free trade, free capital and migration movement, cooperation, or stability. All this can very well be provided in a decentralised system. The European Union is nothing more than a cartel of governments that tries to gain power by harmonising the fiscal and regulatory legislation in every member State. Article 99 of the Treaty of Rome (1957) clearly states that indirect taxation “can be harmonised in the interest of the Common Market” by the European Commission. As for Article 101 of the same Treaty, it explicitly restrains regulatory competition “where the Commission finds that a disparity existing between the legislative or administrative provisions of the Member States distorts the conditions of competition in the Common Market.”
Since the very beginning, with the creation of the European Coal and Steel Community (ECSC) in 1951, the European institutions were more planning agencies than anything else. Indeed, the coal and steel industries at the time were mostly nationalised, and the goal of the ECSC was not to liberalise activity but to coordinate governments’ activities in these two sectors.
This fact, that the ECSC was not about free trade but about government planning, was known by everybody at the time. It was Robert Schuman, the French minister of foreign affairs, who proposed in his declaration of 9 May 1950, that the Franco-German coal and steel production be placed under a common High Authority within the framework of an organisation in which other European countries could participate. Also, the ECSC created for the first time European anti-trust legislation, which as Austrian economists [and Objectivists] understand, is nothing less than government planning in the name of an erroneous vision of what competition is. Even the Treaty of Rome (1957), the basis of the EU as we know it, despite enacting the free movement of goods, capital, and persons, remains a highly statist treaty. Indeed, it is often forgotten that among other things, the Treaty of Rome created a “European Investment Bank,” a “European Social Fund,” the highly protectionist creator of butter mountains and subsidised empty farmlands: the “Common Agricultural Policy,” the “common transport policy,” and reinforced European anti-trust legislation. Therefore, if in the short and medium run, the Treaty of Rome, by breaking the neck of protectionism, was a boon for the European economy, it created institutions that could and did expand their regulatory power in the future.
Many free marketers support the European Union on the ground that even if their regulations are bad, they are still far better than those produced by our very prolific national governments. Such a line of argument, often used in more socialist countries such as France, is sheer nonsense. It is the equivalent of saying: “I don’t mind being robbed twice because the second thief will be much nicer to me.” The question is not how to make “better” regulations but how to expand free trade.
Europeanism: True and False
In 1946, F.A. Hayek wrote a pathbreaking article named “Individualism: True and False” in whichhe distinguished two different individualist intellectual traditions. One, as Hayek calls it, is “true individualism,” based on evolutionism, the idea that institutions and individuals’ behaviors are not planned consciously but are rather the result of a spontaneous process. True individualism follows the tradition of the Scottish Enlightenment. It is “bottom up.” False individualism, on the contrary, is based on extreme rationalism and solipsism. False individualism is based on the idea that society, freedom, and markets, can be planned and should be planned. This false individualism is the heir of the 1789 and — even more clearly — of the 1793 French Revolutionaries. It is imposed, or attempted to, from the top down.
These two sorts of individualism are today at the root of two different sorts of Europeanism.
True Europeanism admits that most of what made Europe was not planned but rather spontaneous. The implications are that we ought to have as much decentralisation as possible for Europe to continue to strive and to safeguard human liberties. False Europeanism on the other hand thinks that Europe can only truly become Europe if planning exists by virtue of common political institutions.
False Europeanists believe that the only alternative is between Nation States and the European Union. Their defense of a centralised European political entity is based on the erroneous idea that society, law, markets, prosperity, and the “European spirit” ought to be designed by rulers – that political centralisation is positively linked to the process of civilisation itself. Europe during the Middle Ages, those thinkers say, lacked trade integration because it lacked political unification. It follows that we must be grateful today for the existence of the European Union. In their narrative, economic progress took place only when “Europe” slowly began to develop new trading alliances that combined some aspects of military protection with something akin to a free-trade area. But this version of history is very far from the truth. In the Middle Ages for instance, the lex mercatoria, the law of merchants, was purely private. Furthermore, the protective tariffs were mostly ignored anyway by Europeans. Smuggling was so widespread that England in the late Middle Ages for example should be in fact considered not as a nation of merchants but a nation of smugglers. As Murray Rothbard noted in Conceived in Liberty:
Too many historians have fallen under the spell of the interpretation of the late nineteenth-century German economic historians (for example, Schmoller, Bucher, Ehrenberg): that the development of a strong centralised nation-state was requisite to the development of capitalism in the early modern period. Not only is this thesis refuted by the flourishing of commercial capitalism in the Middle Ages in the local and non-centralised cities of northern Italy, the Hanseatic League, and the fairs of Champagne. … It is also refuted by the outstanding growth of the capitalist economy in free, localized Antwerp and Holland in the sixteenth and seventeenth centuries. Thus the Dutch came to outstrip the rest of Europe while retaining medieval local autonomy and eschewing state-building, mercantilism, government participation in enterprise — and aggressive war.
Thus, the idea that a centralised authority, in our case the European Union, is necessary for free trade is pure fantasy, It is false Europeanism. Its constructivist approach has prevailed in European institutions since the beginning. For example, one of the goals advanced by the Treaty of Rome was to “create markets” through a unified European Anti-trust legislation. Similarly, the official justification of the Common Agricultural Policy introduced in 1962 was to create a unified agricultural market. But markets do not need States or treaties to exist and they certainly do not need the European Union.
The parallel between false Europeanism and false individualism is also relevant when it comes to their respective imperialistic tendencies. Whereas the French revolutionaries wanted to invade Europe to impose their “universal values” through force, the European Union does not tolerate, in the name of Europe, independent States that do not want to submit to Brussels. Switzerland, for instance, is forced by the European Union to adopt countless regulations concerning food safety and gun ownership. If the Swiss confederation does not comply with many provisions of European law, the European Union threatens to cut off Switzerland’s access to the single market.
The most incredible political success of the European Union zealots is their constant shaming of those who refuse to submit to a European hegemonic super-State. But we must understand that only so-called “Euro sceptics” can truly be pro-Europe. Only “Euro sceptics” can be loyal toward the history and liberal values of their continent. In other words, the European Union itself is a highly anti-European institution.
We Need Decentralisation
On June 28, 2016, the British will vote on whether they want to stay in the EU or not.
If the NO vote wins, it might be the end of the European Union as we know it. Historically, Britain played a major role in the maintenance of a fairly decentralised European order. Whether it was with Napoleonic France, or the German 2nd Reich, or Nazi Germany, it has always been Britain that ultimately helped to break up the hegemonic endeavours of empires on continental Europe. The question is, then, will Britain play its historical role this summer against the imperialistic European Union?
We should consider any attempt to establish a more decentralised system with more competition between States as a boon for Europe and the Europeans. To be sure, the Nation-States must be dismantled, but not if it means the creation of an even bigger European Leviathan. It is, on the contrary, the regionalists and independence movements that must be supported, whether it is Scotland, Catalonia, or Corsica. The European miracle can be revived only through extreme political decentralisation. What history teaches us is that Europe is greater than the individuals that compose it only insofar as it respects liberty. Insofar as it is controlled or directed by a monolithic and central political authority or by bellicose Nation-States, Europe is limited by the inability of Europeans to escape the arbitrary restrictions of their governments.
Image source.
