A review of Thomas Woods’ “Meltdown”

One of the marks of great writing is that, no matter how abstract a subject might be, the author’s text remains lucid and understandable.  It is not crowded with irrelevant information, unduly antiquated language, or a dense texture.  H.L. Mencken, Joseph Ratzinger, and Murray Rothbard all have this gift.  So does Tom Woods, whose recent book Meltdown I finished earlier this week.

The grand larceny that the government commits is probably aided in no small part by the abstract and difficult nature of the subject of economics.  Add to this factor the reality that most schools of economics, such as Keynes’ and Friedman’s, in addition to being absurdly objectivist, are also about as exciting as the first four and a half hours of Dances with Wolves.  The information that does get to the public is usually watered-down lies:  the GDP, which only measures the consumption of final products and not of raw materials, and the unemployment numbers, which are, at present writing, grossly underestimated, are but two examples.  Little mystery is left as to why there is so much misunderstanding, confusion, and downright indifference in the general public.

Enter into this lamentable situation the work of Tom Woods, whose latest book has descended into the hellish American political debates like dew from heaven.   Woods strikes at the root of the philosophical errors which have our economy trapped in a kind of samsara cycle of booms and busts, and he does so in a way that people whose eyes rightfully gloss over during the business reports on TV can understand and appreciate the nature of the problems that the United States now faces.  I have read many books on economics, but this one cleared up so many issues for me, including certain details on which I was foggy with respect to fractional reserve banking and the operations of the Federal Reserve.  But as understandable as his writing is, Woods does not gloss over anything, drawing carefully-written lines in just the right places.  Qui distinguit, bene docet.

In the center of this book, Woods takes on the myths surrounding the Great Depression, Herbert Hoover, and Franklin Roosevelt.  The conventional wisdom, of course, is that the Great Depression was worse than it needed to be because Herbert Hoover was a laissez-faire president and did nothing, and that FDR arrived on the scene, fully armed with public works projects and other chimeras which, along with a major war, allegedly saved us from further economic disasters.  Woods systematically dismantles this version of history, and in the process of showing that it was precisely the government intervention that made things worse, he brings to light the interventionist policies of the Hoover administration and a journal entry from Treasury Secretary Henry Morgenthau which admitted that none of the government programs were actually working, amongst a whole host of other fascinating information.  And yet again, he takes on the false notion that World War II ended the Great Depression.  As a matter of fact, the numbers did not improve until 1946, after the soldiers returned home and re-entered the work force.  In the midst of all this, Woods glances at something most wouldn’t think to consider:  the inexperience of the women and children who replaced the soldiers in their jobs while they were off at war.  What impact did their inexperience have on productivity?

Woods’ engagement of the Civic Religion surrounding New Deal politics is the great keystone of his book, for these myths are, for many people, the assumed truth that they bring to any conversation about economic issues, and if there is any progress to be made in re-establishing a market that is actually free, then these prejudices must be confronted.  In addition to his theoretical arguments, Woods examines a number of economic downturns in American history, many of which are cited by economists in an attempt to discredit the Austrian Theory of the Business Cycle which Woods promotes.  Time and again, the author brings facts to light that only buttress the work of Mises and Hayek, who were pioneering members of the school of thought in which Woods works.   Two of the most important examples used are the crashes of 1819 and 1920, the latter of which was worse than the crash of 1929 but which lasted only a year because the government did precisely nothing.

Back to contemporary issues.  Woods discusses the government’s role in creating the housing bubble which burst in 2008.  First there is Fannie Mae and Freddie Mac, whose careless policies encouraged banks to give out risky loans.  (This is made all the easier when everyone knows that the Fed will act as a “lender of last resort” in the event that the risky loans end up in default.)  Then there is the Community Reinvestment Act and affirmative action lending, which the government promoted by practically harassing banks to make loans which they knew to be ill-advised.  And in addition to discussing the various kinds of wreckless speculation which were taking place, such as “house flipping,” Woods also takes on the dishonest debate between the Republicrats and Democans about how much regulation there should be in the market.  The status quo has made this discussion fundamentally pointless, since neither party really supports the idea of a free market, however much one of those parties likes to bandy that term about.

Central to Woods’ thesis is the aforementioned Austrian Theory of the Business Cycle.  This system of thought, first developed by Ludwig von Mises, holds that business cycles are not intrinsic to free markets, but that they are rather a result of government tampering with the marketplace through the creation of central banks, manipulation of the currency, playing with interest rates, fractional reserve banking, and the like.  In support of the Austrian view, Woods offers up the dot-com bust and the crash in Japan in the 1990’s.  He explains how artificially low interest rates encourage mal-investment and send business leaders the wrong signals, encouraging them to embark on projects that are doomed, since an inflationary bubble does treacherous work on the factors of production involved in long term projects.

Woods devotes an entire chapter to money:  its origins (neither from government nor greed), its history, and the way it creates wealth by making trade more feasible.  He not only covers the hot topic of inflation but also ventures into the more obscure but no less important matter of deflation, the latter being considered by the voodoo economists as a bad thing.  This was the mistake that FDR made in the Great Depression, and his subsequent decision to enact price floors was disastrous for the American economy.  Woods’ discussion of commodity monies such as gold and silver is followed up by a reckoning with the usual bromides offered by the monetarists who are opposed to a hard money solution.  The author’s arguments are thorough, and though he seems not to deal with one issue—the contention that more gold could be mined to create more money and thereby destabilize the money system—he does address it obliquely in that he mentions the fact that gold takes a long time to produce and bring into the market, unlike paper, and especially unlike the electronic computer transactions which the Fed does in modern times.

Professor Woods is not content, however, only to tell us what’s wrong with our present situation, and he develops a final chapter on where we should go from here.  At the beginning of this argument he offers the useful distinction, first elucidated by Adam Smith, between productive consumption and non-productive consumption.  Woods uses the example of wearing out an air conditioner over a number of years to show what non-productive consumption is:  A good is exhausted without creating other materials to provide for its replacement.  A machine, on the other hand, is an example of productive consumption:  While it will eventually wear out, it will have performed sufficient work to provide more resources for the future.  Woods puts it pithily:  “Consumptive expenditure uses up, exhausts, and destroys; productive expenditure provides for its own replacement in the form of an increased supply of goods in the future.”  The diminishment of capital which takes place in the wake of the recent government stimulus packages is a form of non-productive consumption, Woods argues.  It is yet another aspect to the civic superstition that we can spend our way to a prosperous paradise.

From here (and I can only hope that I’ve explained the above distinction adequately) Woods goes on to suggest some concrete moves, including letting the companies who fail go bankrupt.  Their assets will be bought up by others, and certainly if they served a useful function in the market someone else will step in and fill the need.  Woods advocates the abolishment of Fannie Mae and Freddie Mac, as well as ending the Federal Reserve, which is really the sinister force behind most of our economic problems, not least because this bank is so difficult to understand.

It has been said that knowledge precedes love.  To love someone, you must know him first.  The same is perhaps true for ideas.  Libertarian economists—usually men of the Austrian School—have taken a beating over the years, having been accused of possessing an irrational hatred for the government and its programs.  Only one who is unfamiliar with the work of these men, however, would level such a charge, for the fruit of their elucidations is the insight that liberty and mutuality, not theft and coercion, are what create our prosperity.  Lying at the heart of the libertarian argument is a deep concern for the welfare of mankind.  Understanding the libertarian mindset is, of course, a prerequisite to seeing the truth in this, and I can think of no better way to start in this process than by reading this offering by Tom Woods.  Because of this, his greatest service is not that he has debunked the quacks, but that he has shown us the way to liberty and prosperity.  Will we have the courage to follow him?

What is a Rogue State?

A few days ago, I was flipping through the TV channels looking for something interesting to watch between football games.  Golf just doesn’t do it for me.  I zoomed past C-SPAN, which can be interesting at times, even if it’s also annoying.  I was on this channel long enough to hear some Republican congressman whipper-snapper use the term “rogue state.”

“What is a rogue state?” I thought to myself.  In the eyes of the U.S. government, a rogue state is a government that enjoys a monopoly on violence which refuses to do the bidding of America.  Certain governments are not allowed to do what all governments naturally do:  make weapons, enforce monopolies, engage in conquest, etc.  These governments are referred to as rogue states by the arrogant quacks who run the American machine.

In essence, however, the “good governments” are no worse than the bad ones.  They use the same monopoly on violence to drive weaker nations and peoples into submission.  A rogue state has simply suffered the misfortune of getting on the bad side of the sanctimonious oligarchs in Washington, DC.  Many of these “rogue states” were victims of American baiting and switching.  Saddam Hussein, were he still alive, would be able to testify to this.

A more basic question, however, is, What is a rogue?  A rogue is a criminal, a thief, gangster, mobster, murderer, etc.  So are all governments.  They steal the money of innocent civilians under threat of penalty as if the fruits of a man’s labor are not his own; force young men into military service as if the bodies of the citizenry are owned by the state; erode private property rights almost to the point of meaninglessness; go on conquest to enforce oil monopolies; and install puppet governments in far away lands against the consent of the people who live there.

In other words, all states are rogue states.  To use this term is redundant; it is like saying “yellow canary” or “red cardinal.”  The politicians get away with it, however, because most of us are unwilling to re-examine the assumptions that were taught to us in school.  Recently Sen.Harry Reid claimed that taxation is “voluntary.”  There should have been protests everywhere, but the remark went nearly unnoticed.  If memory serves, not even Matt Drudge took note of it.

The sad part of this whole story of “man’s inhumanity to man,” as Ronald Reagan called it, is that this kind of violence reigns on the throne of human ignorance and indifference.  If even a tithe of the citizenry were wide awake, most of the awfulness we see today wouldn’t be happening.  This leads to the most sobering lesson of all:  Most countries end up with the government they deserve.

The Obama Administration: Change in pennies, part 6,437

“This time, it’s different.”

How many times have we heard this before?  Oh yes, the mainstreamers say, all those other decisions—Vietnam, Korea, the Bay of Pigs, Iraq II, etc.—were mistakes, and the United States should never have stuck its nose into those situations.  But this time, it’s different.

In the video below, Congressman Ron Paul explodes U.S. foreign policy in front of Ambassador Richard Holbrooke, who, having listened—or at least remained silent—during Paul’s remarks, says, “Afghanistan is not Iraq.”  Then he pulls one of Dick Cheney’s rabbits out of his hat:  “September 11, 2001…..”

This man works for the administration of Barack Obama, the candidate of “change.”  Before the election, I warned people not to expect any real change from Obama.  “Oh, you’re being pessimistic,” I was told.  “Yes, every other president in the past two generations has backed away from his campaign promises, but…….(drumroll, please)……this time, it’s different.”

So much for that.  

Such lunacy will continue to the end of the world, so long as people allow themselves to be hypnotized by these mountebanks each time the olympiad rolls around.  It could change, but I doubt it ever will.  Human nature is flawed, and one of those flaws is gullibility.  One of the evils of the State is that the gullible, who elect these clowns, bring down the rest of us with them.  Maybe someday this will be different, but it doesn’t seem likely.

Hat tip to LRC.

Theft, Violence, and Propaganda

Thanks to LRC, I just had the pleasure (?) of watching this American tax propaganda video from the World War II era:

We hear the usual claptrap in this clip, words like “duty” and “sacrifice.”  The interesting thing about “sacrifice,” however, is that it is a lie:  When a thief breaks into your home and takes your most treasured possessions, that is not a sacrifice.  The divestment of your materials was not voluntary, so how could there be any giving or sacrifice?  In the Jewish and Christian traditions, sacrifice is voluntary.  I suppose that this means that the State is more like primordial religions, in which even human sacrifice was conducted without the consent of those whom it, well, impacted the most, if you catch my drift.

Another interesting feature of this excrement is that it glorifies violence and serving the State in the military.  What else are all those salutes and “Yes Sirs” meant to convey?  Couple this with the surprise when the talking radio reveals he’s actually discussing the income tax.  This seems to re-enforce the idea that military service is assumed to be good.  

Interestingly, however, one does wonder why the government, through its shills at Disney, felt the need to make this cartoon.  At the time the federal income tax was not a very old thing; many would have remembered much more peaceful times when they kept much more of their money.  Was there some resistance still?  How did the government prevail?  Were people as gullible then as they are now?  It would seem that tyranny benefits, if you’ll pardon my constantly bringing up this idea, from fragmentation and obsession, as Weaver called it.  This is the myopic fetish with detail that humanity has developed after it has lost sight of civilization’s founding principles.  The most obvious symptom of this is naked hostility to philosophy, most often seen in the neo-conservatives.  But the salient point here is that fragmentation and obsession keeps us from seeing the essential characteristics of a thing.  Indeed, to point out the relationship between theft and taxation is to waste one’s breath even in conversations with the “fiscally conservative.”  The government benefits from this because of the consequent stupidity which makes people more pliable to the idea that paying taxes is “different” from being robbed at gunpoint.

There is one tiny, tiny redeeming piece of this video, however.  It would seem that it shows how the tax system worked before the withholding racket got its start.  Would that each of us, every April 15, had to write a check for every cent in tax that we “owe” for the previous year.  That is to say, abolish the withholding system.  It is a nice trick the government uses, and it keeps most people, who are asleep in general as it is, from realizing just how much tax they pay every year.  It was sold to the gullible as a “convenience” but it is really a weapon:  Employers are required to withhold the money, and there is no chance for people to say to the government, “You’re not getting it.”  It makes any kind of tax revolt well impossible, doesn’t it?

For my part, I continue to pay my taxes honestly, if only out of a sense of prudence.  I value my ability to live freely over my natural right to keep the fruits of my labor.  I am like the coward who, when confronted with a gun-wielding mugger, hands over his wallet without even thinking.  Perhaps, however, the point should not be my cowardice, but rather that the government—that evil, parasitical pile of excrement in Washington—relies on such conundrums for its survival.

Remember that the next time some sports announcer asks you to stand up for the State Song.  “Deutschland ueber Alles…”  Ooops.  Wrong soundtrack.  Well, they’re all the same, though, aren’t they?

From one kind of murder to another

Barack Obama may be predisposed to commit fewer war crimes than his predecessor, though we must express such hopes with due caution if not downright skepticism, but one area on which he has turned the tables in the Murder-by-State department is abortion.

Obama has promised to push for the passage of FOCA, the Freedom of Choice Act, which among other things would force many healthcare providers to face the choice between performing procedures they find morally reprehensible, or shutting their doors.  So much for freedom.  This sounds to me like coercion, and, as usual, it is brought to you by the State.

But it doesn’t stop here.  Obama has already reversed the Mexico City policy, which under the W. Administration prohibited U.S. funds from going overseas to assist in the procurement of abortions.  Bush’s policy would seem to be the sensible one, for why should my tax dollars provide for a procedure which I find to be abhorent, either in a foreign country, or here at home?  Why should tax dollars support any ill-advised jaunt (such as the invasion of Iraq) that is morally controversial?  (Moreover, why should there be taxes, or the State, period….but I digress…)

Many would perhaps not want to admit it, but the key issue here is one of forcing American citizens to violate their consciences.  Perhaps this is a good sword to fall on, just the place to begin in the long battle against tyranny, for Ron Paul warned a year ago already that many of us would soon be facing tough choices and would have to decide if we were willing to commit civil disobedience.

The issue of abortion is a difficult one.  By saying that I do not mean to imply that I think the morality of it is hard to sort out.  It is difficult because it is hot, and sound reason is getting lost in the heat.   When I was a Statist (God forgive me!), I used to advocate a Constitutionalist approach:  Simply have Congress revoke this issue from the jurisdiction of the U.S. Supreme Court under Article III, Section 2 of the Constitution.  In all the years of Republican control of Congress, this option was never taken seriously, in spite of the fact that such bills were introduced.  This is one of the reasons that I don’t take the GOP seriously on this issue.

Many more, however, advocate a change in the make-up of the Supreme Court.  Good luck with that.  This is impossible to predict, and even with a pro-life president, even the best nominee is no better than a roll of the dice.  Besides, Article III, Section 2, and all that.

The real problem with trying to solve this through Constitutional means is that the Constitution really doesn’t matter anyway.  If it is true that the Lone Ranger President actually called it “just a G*ddamn piece of paper,” then, well, he’s right, and history proves him right.  The government has massaged, and even rended, the Constitution to get whatever it wants.  Why should it be any different with this issue?

The problem with the issue of abortion is that it would seem that civil law would be ineffective at truly preventing it from happening—as is the case with civil law so much of the time.  Yet, if there were to be no secular protection for the life of the unborn, who would be the defenders of the victims of abortion?  The best solution in the Statist milieu, it would seem, would be local laws that were enforceable.  Repeat:  this is within the Statist milieu.  (I’m dealing with present realities, for a change, but only for one paragraph.  You needn’t worry.)

Would it be better, however, for various religious institutions to institute their own penalties for this crime?  That has its own problems, not the least of which is that someone without religious affiliation would be unaccountable to anyone. Maybe the private common law courts that would be used in the anarcho-capitalist system envisioned by Murray Rothbard could be used to avenge the killing of the unborn.

Incidendentally, I do not accept Rothbard’s idea that the unborn child, being a parasite of its mother, does not have any rights.  It is the foetus’ parasitical nature which leads Rothbard to this conclusion that the unborn is really just property of the mother.  The implications of this, however, are ghastly.  What, then, about the nursing infant?  What about the mentally handicapped or deranged young adult?  What about the elderly, and those considered to be in “vegetative states”?  If being “parasitical” voids one’s rights, then most of our lives would be in danger at one point or another.

What is more, Rothbard really didn’t need to view the unborn as a parasite in order to keep his ethic of liberty consistent.  All one need do is define the unborn life as one belonging to itself, with all the rights that the rest of us have, and there is no problem of consistency.

Of course, that’s ultimately the rub, isn’t it?  In the final analysis, one’s views on abortion are not so much influenced by what one thinks the Constitution does or does not say, or by whether or not one is a Democan, Republikrat, libertarian, or anarchist.  It comes down to what one thinks a foetus is.  After all, if one believes that it is a life, then consistency requires that we stand up for its rights, and if one believes that it is not its own life, then that opens the door to toleration of, or even downright acceptance of, abortion.

We won’t all agree on this subject, and we might even disagree vehemently.  And that is the number one reason why the State should keep its grubby mitts out of the abortion industry.

Help to put an end to abortion by putting an end to the State.

The arts and the public sector

A while back, Aristotle introduced some discussion here about the relationship of the arts to the government–or you might say the relationship of the arts to the government’s money, which is another way of saying the relationship between the arts and the money that the government steals from your back pocket.

I am a musician and have been for my entire life.    I also happen to be opposed to any ties between the artistic world and the government.  Most of my colleagues would disagree with me, and in strong fashion, but there seems to be a number of considerations to which most have not given due reflection.

The foremost aspect of government sponsorship of anything at all is that money equals ownership, and ownership equals decision-making power.  This is not to say that the government, if it were to give money to the local opera house, would own either the building or the operation.  However, in deciding to give or not to give money to a particular endeavor, the State is determining which art is worthy of support and which is not.   They are being the artistic critic.

On what bases are such decisions made?  Art is fundamentally a folk phenomenon (folk in the real sense of that word…..not the hippie sense); it grows organically in the culture.  How can a bureaucracy be the arbiter of such a process?

It is frightening to me that some clown on the public payroll should get to decide which exhibit shows up at the art gallery and which does not.  In this way, the very real potential exists that society’s tastes can be shaped and molded by the art kommisars.  It all smacks of being so……Soviet.

“Ah, but surely as a musician you know that the tastes of the hoi polloi cannot be trusted, for modern man is artistically illiterate.”

Very true, particularly in the realm of music.

Let us consider one aspect of this artistic illiteracy.  (For now, we shall leave aside illiteracy in language which is no less a problem….)  I have friends who are music teachers in various states in the Northeast section of the United States.  Many of them have related to me the drastic cuts which arts education has suffered from W’s No Child Left Behind Act.  Schools, in a mad dash to make sure their students pass unconstitutional federally-mandated standardized tests, are leaving aside everything except reading, writing, and ‘rithmetic.  One is tempted to say that even these last three are studied only nominally.

As music education is cut, musical illiteracy will increase, and this will create an ever-growing inability amongst the hoi polloi to be artistically discriminating.  This will leave great art to languish, unnoticed, while the dunderheads who immerse crucifixes in jars of piss will be lauded as heroes.  (I am not as concerned about the “offensiveness” of such projects as you might think.  For me the stupidity is quite enough.)

Now this viscious circle seems quite convenient doesn’t it?  The State pulls the plug on arts education….but wait!  Lo!  It comes in as our Savior and rescues the artistic projects it deems to be worthy.  Oh thank you, arts kommisar, for saving me from a world devoid of beauty!  What would I do if it weren’t for you?  (end sarcasm here)

All of this seems to me to be a perfect argument to get the State out of all of this—funding for the arts, and even for arts education and education in general.  Let the smart people and the self-motivated in society create a milieu in which things of beauty can be studied with the deliberation they deserve.

Think I’m dreaming up the impossible?  Read up on monasteries.

Miscellaneous Political Thoughts

The presidential inauguration is barely a day away, and the United States of America is about to engage in a peaceful transition from one form of self-congratulation to another.  Not much change is really in store.

All across America, people are wetting their pants with the anticipation of a new president.  This is partially understandable, given the monstrous tyrants who’ve run this country for the better part of the past decade.  Nevertheless, the remainder of the excitement is, I’m afraid, based upon the legendary short memories of the American electorate, along with that ageless failure to understand human nature, and, more specifically, the nature of politics.

I do not hold any personal animosity toward Barack Obama.  None.  I’m sure he’s a nice guy.  The bottom line, however, is that he is a politician, and politicians practice politics, which is the art of legalized theft and violence.  This art is enacted to coerce one section of society to do something for the benefit of another section of society, usually at the former’s considerable expense or inconvenience.  Moreover, politicians are the consummate Statists and expect the citizenry to be, as well.  When it comes down to it, we all belong to the State in the minds of these bureaucrats.

With all of this in mind, it would be hard to get excited about change even if the next president were a nominally laissez-faire thinker, which Obama most assuredly is not.  At the same time, perhaps my pessimism guards me from the hysterical hooting and hollering of the self-styled conservatives who are still too stupid to know that they ruined their political standing without any help from their enemies and who actually believe that there is a dime’s worth of difference between the Democan and Republicrat parties.  Socialism or Fascism.  Take your pick.

In a sense I miss the days when I was just as susceptible to the moronic emotional vicissitudes of politics as so many others seem to be; it’s as though I have one less sport to watch.  Maybe I’ve been reading too much Albert Jay Nock.  Or maybe I’ve been reading just enough.

I suppose the danger here, however, in the midst of recognizing the intrinsic evil of politics and the insoluble morass that is earthly life in this vale of tears is the temptation to stick one’s nose in the air, declare oneself to be above it all, and then to walk away into isolation.  Then there is the temptation to think that, just because one has ascertained the depth of the moral turpitude of politics, that one is therefore a saint, someone untouched by the ugliness that happens when we men butt heads.

This is foolishness.  In particular, it is utter folly in the case of your humble scribe, for I am a jackass.  I always have been, and I probably always will be, even if I set out to improve society using means other than the political.

But at least I didn’t vote.

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