Blaming Freedom

Freedom is nearly always blamed for the bad consequences of unfreedom, that is, of government intervention. Take immigration.

We hear these days that migrant gangs are killing, terrorizing, and stealing from Americans. Some immigrants without government papers have definitely committed heinous crimes. Opponents of immigration say that migrants join violent migrant gangs to pay off debts incurred in the process of traveling to the United States. If that's true, we can see that it's not freedom that leads to crime, but rather the black market. Black markets by definition are products of unfreedom, that is, of government prohibition of peaceful behavior. Freedom is not the culprit.

Because legal migration is next to impossible, desperately poor and oppressed people pay thousands of dollars to coyotes to get them from Latin America to the United States. If migrants can't repay the money, they might be forced to work off their debts by joining a migrant gang. Their creditors are likely nasty people because that's what prohibition does. It doesn't make an activity disappear; it simply turns the activity over to organized crime. Think of U.S. alcohol prohibition in the 1920s.

Just as repealing drug prohibition would break the backs of the drug cartels, repealing immigration prohibition would break the backs of the coyote and migrant gangs. Under legal immigration, people would apply at U.S. consulates, gain approval if they weren't violent criminals, buy their plane tickets for a few hundred dollars, and come to America. End of.

Pretending that free immigration causes crime is like thinking that Al Capone was a free-market entrepreneur.

The Soul of a Socialist

 From the pen of H. G. Wells (1908), socialist:

War is a collective concern; to turn one’s back upon it, to refuse to consider it as a possibility, is to leave it entirely to those who are least prepared to deal with it in a broad spirit. 

In many ways war is the most socialistic of all forces. In many ways military organization is the most peaceful of activities. When the contemporary man steps from the street, of clamorous insincere advertisement, push, adulteration, underselling and intermittent employment into the barrack-yard, he steps on to a higher social plane, into an atmosphere of service and cooperation and of infinitely more honorable emulations. Here at least men are not flung out of employment to degenerate because there is no immediate work for them to do. They are fed and drilled and trained for better services. Here at least a man is supposed to win promotion by self forgetfulness and not by self-seeking. And beside the feeble and irregular endowment of research by commercialism, its little shortsighted snatches at profit by innovation and scientific economy, see how remarkable is the steady and rapid development of method and appliances in naval and military affairs! Nothing is more striking than to compare the progress of civil conveniences which has been left almost entirely to the trader, to the progress in military apparatus during the last few decades. The house-appliances of to-day for example, are little better than they were fifty years ago. A house of to-day is still almost as ill-ventilated, badly heated by wasteful fires, clumsily arranged and furnished as the house of 1858. Houses a couple of hundred years old are still satisfactory places of residence, so little have our standards risen. But the rifle or battleship of fifty years ago was beyond all comparison inferior to those we possess; in power, in speed, in convenience alike. No one has a use now for such superannuated things.

TGIF: Full versus Shrunken Liberalism

Language, like the old common law and other customs, is a decentralized, undesigned, spontaneous institution. It serves humanity well. Nothing is perfect, of course, but no alternative—if one were conceivable—could hold a candle to it.

One of the downsides is that people may change how they use handy expressions; more wordy phrases may be needed to replace a "corrupted" one. Here's one: classical liberal. Liberal, of course, originally related to individual liberty and its conditions and consequences: private property, constraints on government power, and free markets. It still means something like this outside of America. (A few pioneering liberals, such as Gustave de Molinari, thought the free market could produce security better than the state could.)

Then "progressives" hijacked the word liberal in America and England. Perhaps they didn't want to be associated with socialism. Now it meant advocating the welfare state and government intervention in the market for the sake of so-called "social justice." Private property was pushed to the back burner. The commitment to free speech and other civil liberties continued, but "modern liberalism" had little else in common with original liberalism even in the matter of war and peace.

Because of this change, the qualifier classical became necessary to distinguish original liberals from the welfare/warfare-state, or mixed-economy, advocates. Later, classical liberals started using libertarian to ensure no one was confused. That word has the same root as liberty, and even though socialists of various stripes had used it, the word has nothing to do intrinsically with socialism, that is, the abolition of private property in the means of production. Since socialism must extinguish liberty, the word libertarian is supremely inappropriate for that philosophy.

Like free people and free markets, language never stands still. Lately, classical liberalism has come to mean not advocacy of individual liberty across the board; rather, it signifies a "modern liberal" (an opponent of laissez faire) who continues to believe in free speech. Today we have the spectacle of nonclassical classical liberals. Go figure.

Why did this happen? It seems this came about because in this century, many welfare-state liberals, Democrats for the most part, gave up on free speech. Their former heroes, such as Supreme Court Justices Hugo Black and William O. Douglas, stopped being heroes. Just recently Barack Obama, John Kerry, Hillary Clinton, and Democratic VP candidate Tim Walz have unambiguously opposed free speech and First Amendment protection on the internet and social media. Kerry summed up his side's case well: because all sorts of views and information are easy to come by these days, "it's really hard to govern today." Poor politicians. Meanwhile, Clinton, who favors repealing Section 230—which exempts social media companies from liability for what users post—says that if those companies do not monitor content as the government wishes, "We lose total control." Control of what? Us, you and me. Obama says government oversight is required, and Walz compared freedom of expression to shouting fire in a crowded theater. First Amendment? What's that? Pathetic, all of them.

These alleged liberals were delighted to see the government lay its heavy hand on social media to suppress information they did not like about COVID-19, Hunter Biden's laptop, and other matters. In some quarters, opposition to free speech combined with a rising interest in an anti-Western value system ("woke-ness") and cultural Marxism left over from the 1960s. Criticism of the Enlightenment grew more common.

Fortunately, this was too much for some "modern liberals." So those who remained committed to reason and free speech picked up the label classical liberal to distinguish themselves from their former colleagues.

The new classical liberals, of course, are not original classical liberals. They are modern welfare-state interventionist liberals, not advocates of individual liberty across the board, including the free market. I've heard some of these thinkers, whom I admire and have learned from, insist that they are still on the "left" and so are not "economic liberals." (I would not put original liberalism on the left-right spectrum, which is incoherent.)

Hence, I suggest we distinguish full liberalism from shrunken liberalism.

Shrunken liberalism espouses free speech, free press, abortion rights, and other civil liberties —but that is pretty much it. What's missing? Any direct reference to so-called economic liberty!

As I've explained before, I don't like the term economic liberty because full, original liberalism refused to carve the individual into personal and economic spheres. The a person is an integrated whole. Each pursues a variety of chosen ends, some involving money and some not, and adapts means best suited to his objectives. Economics is necessary for analyzing those pursuits and the social implications, but the ends are neither economic nor non-economic. They simply are personal ends. The marketplace for goods and services is a marketplace of ideas. The price system, which communicates information to us all, should be protected by the First Amendment.

That is why full liberals proudly did and do champion full-spectrum freedom: civil liberties, the free market, and peace, with its complementary opposition to imperialism and what Jefferson called "entangling alliances." It's as important today as it was in the time of Richard Cobden, John Bright, Lord Acton, Herbert Spencer, William Graham Sumner, and Ludwig von Mises.

It was Sumner who answered the charge of isolationism leveled against the opponents of the empire-building during the Spanish-American War (a charge made today against noninterventionists) with this:

When the others are all over ears in trouble, who would not be isolated in freedom from care? When the others are crushed under the burden of militarism, who would not be isolated in peace and industry? When the others are all struggling under debt and taxes, who would not be isolated in the enjoyment of his own earnings for the benefit of his own family? When the rest are all in a quiver of anxiety, lest at a day's notice they may be involved in a social cataclysm, who would not be isolated out of reach of the disaster? What we are doing is that we are abandoning this blessed isolation to run after a share in the trouble.

in his book 1927 book, Liberalism, laissez-faire advocate and intellectual destroyer of socialism Mises declared:

The liberal critique of the argument in favor of war is fundamentally different from that of the humanitarians [who sought a bloodless "moral equivalent of war"]. It starts from the premise that not war, but peace, is the father of all things. What alone enables mankind to advance and distinguishes man from the animals is social cooperation. It is labor alone that is productive: it creates wealth and therewith lays the outward foundations for the inward flowering of man. War only destroys; it cannot create. War, carnage, destruction, and devastation we have in common with the predatory beasts of the jungle; constructive labor is our distinctively human characteristic. The liberal abhors war, not, like the humanitarian, in spite of the fact that it has beneficial consequences, but because it has only harmful ones.

The list of full-liberal positions is not random. As Mises pointed out, war is antithetical to individual freedom, private property, the division of labor, and global free exchange, Altogether this constitutes social cooperation.

So we must point this out to the well-meaning shrunken liberals. Bravo on your continued commitment to free speech, other civil liberties, and reason! But don't stop there. Without full liberalism, we aren't fully free.

Interview on "Ideas Having Sex"

Chris Kaufman interviewed me about my book What Social Animals Owe to Each Other on his podcast Ideas Having Sex. Listen here or on your podcast platform.

TGIF: Tariffying Trade-Warmonger Trump

"The word tariff, properly used, is a beautiful word. One of the most beautiful words I’ve ever heard. It’s music to my ears." —Donald Trump

The once and possibly future president threatens to wage economic warfare against countries and companies everywhere if they don't knuckle under to his nationalist demands. He promises to impose tariffs on American firms that calculate that moving operations to Mexico or other foreign locations makes good business sense. He's also ready to strike at allied countries that irritate him by, say, slighting the dollar. (Watch or read his economic-policy speech.)

To his credit he promises to lower taxes on investment and to cut the regulatory burden. He also wants lower energy prices, which would be good all around, but exactly how matters. He's no laissez-faire advocate.

At any rate, Trump's determination to restore the American economy to what it was when much of the world lay in ruins after World War II suggests that, despite all the changes since then, he would much do more than de-tax and deregulate. For example, he promises to lure foreign companies here. Again, how? His government would no doubt play an active role in what should be private matters. He's already promising to make the taxpayers pay for business infrastructure projects. As he said about the audio industry, "It’ll be like it was 50 years ago." He won't be able to turn the clock back, but he can do much damage trying.

This is economic nationalism. He sees the world as an arena in which countries—as if they were companies—compete against one another: for one country to win, the others must lose. Powered by this worldview, Trump wants to be the CEO of the company known as the United States.

His vision is dangerously wrong. The world is not an arena in which countries compete with one another, where one nation's gain is the others' losses. That American manufacturers routinely buy foreign-made materials, tools, machines, and semi-finished products demonstrates this. We have a global division of labor in which capital, resources, and all kinds of goods have been able to move across national boundaries fairly freely as market forces require. As a result, world poverty has diminished unbelievably, and Americans are richer than ever. (The rough spots can be attributed to unabated domestic government intervention.) This progress has been in the making for about 80 years, but the liberalization responsible for it has been reversed recently—to the world's detriment.

Trump understands none of this, and he has no incentive to do so. Since entering politics, his demagogic promise has been to wreak vengeance on the world for, as he sees it, taking advantage of the United States. This is his aggrieved-nation shtick. The U.S. government has been the biggest bully since 1945, but Trump would have gotten nowhere politically had he promised to stop throwing America's weight around. Instead, he portrays the United States as a pitiful giant that has been everyone's chump. It's nonsense.

What's foreign to Trump's mentality is any notion of an unplanned, spontaneous market order built on individual freedom and choice, which is at the heart of sound economics. He must see himself as a hands-on CEO who can solve any problem. That's the last thing we need. He should read Leonard Read's "I, Pencil." (The video version is here.)

In a word, Trump is an economic warmonger, a not-too-distant cousin of a regular warmonger. As the old free traders said, "When goods can't cross borders, soldiers will."

It would be one thing if Trump were promising to shrink the government so much that businesses everywhere wanted to flock to these hospitable shores. But his "New American Industrialism" is an old-fashioned industrial policy in which he or his team of experts would pick winners to carry out his glorious vision. Which firms and industries get protected or subsidized and which don't? Those decisions would be made on a political, not an economic, basis. The problem is that Trump and his experts could not know what they would need to know to carry out their plan. Only the free market—through the unhampered price system—can produce that knowledge, which would be widely dispersed, often tacit, and therefore unavailable to a central bureaucracy. Even the great Donald Trump cannot defy the laws of economics.

What would Trump do if other countries tried to make their economies more hospitable to the world's businesses, say, through rigorous liberalization? Would he up the statist ante? The economic nationalist is not likely to back down.

No one should be surprised that Ludwig von Mises—the unparalleled champion of peace through full liberalism—had much to say about economic nationalism. In Human Action, he wrote: "Economic nationalism is incompatible with durable peace.... It is an illusion to believe that a nation would lastingly tolerate other nations’ policies which harm the vital interest of its own citizens."

Trump might endorse Mises's last sentence, but he'd be missing the point. Other countries would respond to Trump's program. If he responds in turn, he will hurt Americans for sure (and perhaps foreigners). Consumers will largely pay the tariffs and, along with import-using American manufacturers, face higher prices. That's the point!

Freedom in the economic sphere, as in all other spheres of life, is in the deepest interest of all citizens. Protectionism and other interference are not. One industry or firm may calculate that if it can win protection from the state, it will prosper even if others suffer. But protection granted to one interest will encourage others to ask for it too. Now the original gain begins to dissolve. As Mises put it in Socialism: An Economic and Sociological Analysis,

A system which protects the immediate interests of particular groups limits productivity in general and, in the end, injures everybody—even those whom it began by favouring.... The greater the protection afforded to particular interests, the greater the damage to the community as a whole, and to that extent the smaller the probability that single individuals gain thereby more than they lose....

[I]f all particular interests were equally protected, nobody would reap any advantage: the only result would be that all would feel the disadvantage of the curtailment of productivity equally. Only the hope of obtaining for himself a degree of protection, which will benefit him as compared with the less protected, makes protection attractive to the individual. It is always demanded by those who have the power to acquire and preserve especial privileges for themselves. [Emphasis added.]

Why would they all lose? Because, as we've known at least since David Ricardo formulated the law of comparative advantage (or what Mises called the law of association), the division of labor and free exchange bring specialization that yields immense gains to all—even when an individual, group, or nation is less efficient than others at producing a whole range of goods.

Trump displays the words Made in the USA onstage. The wiser course is to specialize and to trade with others rather than trying to produce everything. Market price signals, not Trump, should be our guide. If the frontiers were closed to foreign goods, Mises wrote in Socialism, "Capital and labour would have to be applied under relatively unfavourable conditions yielding a lower product than otherwise would have been obtained."

Thus Trump's blustering warfare would shrink incomes and risk conflict by disrupting the signals that channel productive energies to where consumers most want them.

TGIF: Who Cares about Inequality?

What accounts for the preoccupation with income and wealth inequality? We hear about it every day. Isn't our absolute living standard what matters and whether it is improving or deteriorating? I'll bet that's what regular people care about. However, the professional grievance mongers see things differently, They want you to resent those who are richer.

To start with the basics, we are not talking about inequality. We're talking about income and wealth differences. Substitution of the term inequality is an appeal to emotion, a cashing in on other senses of the word. "You oppose equality? Don't you believe that 'all men are created equal'?" That's demagoguery not argument.

In a market-oriented economy, most income is not distributed. There's no distribution to describe as equal or unequal, fair or unfair. (What the government does is another story.) As Ludwig von Mises, wrote 102 years ago in Socialism: An Economic and Sociological Analysis, "Under Capitalism incomes emerge as a result of market transactions which are indissolubly linked up with production." That's not distribution or allocation.

Mises continued:

We do not first produce things and afterwards distribute them. When products are supplied for use and consumption, incomes for the greater part have already been determined, since they arise during the process of production and are indeed derived from it. Workers, landowners, and capitalists and a large number of the entrepreneurs contributing to production have already received their share before the product is ready for consumption.

"[T]he concept of distribution is only figurative," Mises added. What people call "the income distribution" is not the outcome of a grand allocation plan. It's a snapshot of a dynamic, decentralized series of exchanges and is always subject to change.

People transact, trade, only when they expect to gain. Otherwise, they wouldn't bother. That's true for both parties to a transaction. It's win-win. Among the things people trade are labor services for money and vice versa. That people have to work so they can eat is not the fault of employers, who also have bosses to satisfy; they're called consumers. That's the nature of reality. But in a free and competitive market economy, few people are dependent on only one buyer or one seller. They are free to choose.

If no distribution occurs in a market economy, then no redistribution is possible. When the government taxes our incomes and gives the money to others—be they low-income people or military contractors—that's plain old distribution. And it's illegitimate.

Taxation and other forms of political manipulation are objectionable even if large-scale wealth and income differences do not result. So that cannot be the primary objection. Political manipulation is objectionable because it aggresses against nonaggressors and disrupts the process that best serves consumers. It would be odd to say, "I see inequality, so I wonder what government manipulation has brought that about." It would be reasonable to say instead, "I see government manipulation, so I wonder if, on top of all the other bad consequences, it also has disrupted the wealth-creation process."

Economic differences among individuals and groups are to be expected among free people and ought not to arouse suspicions of illegitimacy. To expect economic equality as the default is to commit the fallacy Thomas Sowell has exposed concerning all sorts of disparities among groups. Uniformity is found nowhere in the world.

Everyone knows that people's contributions to productive activities vary widely, with a relatively few people at the top and bottom and most in the middle. No mystery here. Individuals differ in intelligence, age, ability, disposition, upbringing, energy, alertness, patience, ambition, education, work habits, culture, risk tolerance, entrepreneurship, and much more. No one should be surprised that their contributions to wealth creation also differ vastly or that they change over time. Thus vast differences in income and wealth are to be expected. I couldn't have done what Bill Gates, Steve Jobs, Serge Brin, or Jeff Bezos, did—and, appropriately, my income reflects that.

Despite the seeming paradox, the huge economic differences that can result from innovation benefit everyone. Much would be lost without that possibility. Incentives matter. Moreover, the innovators' gains are minuscule compared to the total gains to consumers. A system designed to prevent or stamp out those rewards to innovation would impoverish us all. It would also put us on what F. A. Hayek called "the road to serfdom."

It should also be noted that the price system, of which income levels are a part, signals to producers what consumers want most. It's our way of telling producers where to put their efforts and scarce resources.

What indicates progress or regress in society is not the latest dubious measure of a gap between rich and nonrich, but how easily people of determination can climb the income ladder. If the government stays out of the way, the obstacles are minimized. Gaps don't matter. Think of an elevator that can expand like an accordion: the floor can rise even if the distance to the ceiling increases.

Most people don't envy wealthy innovators. They admire them. But anti-freedom politicians, intellectuals, and activists think you should resent anyone who is considerably wealthier. They're running a scam designed to obtain power. We need to call them out.

If you like gaps, check out the shrinking consumption gap, the product of the growing availability of resources worldwide thanks to the spread of economic liberalization and the liberation of human ingenuity and entrepreneurship.

 

TGIF: "We Are All Social Engineers Now"

I don't know if anyone has actually said, "We are all social engineers now," but someone might as well have. (The variation "We are all Keynesians now" was declared a long time ago, even by Milton Friedman, although see this.)

When I say "all," of course, I don't mean all. If you look hard enough, you'll find a few opponents of social engineering. But if you throw a dart into a crowd—don't try that at home—you'll most likely hit a social engineer. Most people think the government should do more than apprehend, try, and punish real criminals; maintain courts for peaceful dispute resolution; and keep a small defense force in the unlikely event of a military invasion. (The free market would most likely do those things better without coercion.) Today the government, to much public applause, goes far beyond Adam Smith's vision of "peace, easy taxes, and a tolerable administration of justice."

Large constituencies favor government management of Americans' education, trade with each other and the rest of the world, immigration, housing construction, land use, business, occupations and professions, industrial organization, finance, energy, medical services, income and wealth "distribution," product quality and safety, and culture itself, to name just a few. Did you hear a public outcry when the Republican presidential candidate promised to force the taxpayers and insurance companies to pay for in vitro fertilization? Money comes with strings.

What are the taxpayers not on the hook for these days?

Social engineering in recent years has notoriously been extended to matters involving speech and the written word. Disinformation, misinformation, and malinformation are the newest hobgoblins. Expression about climate change, COVID-19, and even elections has been targeted. We can be grateful this has been countered with a rousing defense of free speech, but caution is in order. Most advocates of free speech support social engineering in myriad other matters, ignoring that government managers will always look askance at expression that might undermine the consensus believed necessary to successful social engineering.

If you support social engineering in one area, what grounds do you have to oppose it in others? A politician who ran for high office promising to strip the national or state government of the power to manage society would surely be buried by his opponent on election day. People are addicted to government management.

That's the world we inhabit. What is the cost of living in such a world? I don't mean the dollar cost. It's easy to find the numbers corresponding to the budget, the deficit, the debt, the shrinking of purchasing power because of central-bank money creation, and so on.

I'm thinking of cost in a different way. What must we forgo because politicians and bureaucrats—no matter which major party is in office—manage so much of our lives? Social engineering is government planning. It may not be total central planning, though some may wish for that, but it does entail a significant degree of it. Many people think the president of the United States runs the country, not merely the executive branch of the government. He or she is regarded as the public's commander-in-chief and not merely the commander of the military, theoretically subordinate to Congress's constitutional war-declaration power. (That's not been a real thing since the 1950s.) No, the president is widely thought to be in charge of almost everything. Executive orders are more common than legislation, which is bad enough. The two major parties have a few differences over what the government should manage, but taken together, their programs encompass pretty much the whole kit and kaboodle.

Social engineering is a fancy term for politicians and bureaucrats telling us what we must and must not do. As Ludwig von Mises wrote: "Planning other peoples’ actions means to prevent them from planning for themselves, means to deprive them of their essentially human quality, means enslaving them."

So don't let it be said that our choice is between government planning and chaos. Wrong. It is between would-be dictators pushing us around and individual self-direction coordinated in the free market. It is between coercive bureaucracy and social cooperation—largely but not exclusively among strangers—guided by private property, contract, market prices, and entrepreneurship.

The 19th-century French liberal economists strove to explain how "Paris gets fed." Every day the shops offered meat, bread, eggs, milk, etc., yet no one ran things overall. Many people coordinated freely without commands. Those economists did not ask, "Does undesigned order exist?" They could see it. Rather, they asked, "How does it happen?" And they proceeded to explain the division of labor, enterprise, trade, market prices, and supply and demand.

That's what we lose to the extent the government interferes with social cooperation. Because of that interference, we've lost a lot since 1789. When the draft constitution was announced back then, many thoughtful people warned that it allowed too much power to the central government, which could be expected to grow from that baseline. Who would disagree with them today?

 

Foreign Interference

People are being told to be alarmed about alleged foreign interference in the upcoming presidential election. Maybe they should be understanding rather than alarmed. The U.S. government conducts a wide-ranging interventionist foreign policy, which can substantially affect other countries. That has included frequent interference in elections and other political operations. So why wouldn't the governments there not only take an interest in U.S. elections but also perhaps attempt to exercise some influence over the voters? Much is at stake militarily and economically.

American  politicians used to say, "Politics stops at the water's edge." However, after America had turned into an empire, Felix Morley, the classical liberal critic of U.S. foreign intervention, commented that politics stops at the water's edge only when policy stops at the water's edge, which it no longer did. 

If we want foreign countries to ignore American elections, the U.S. government should go back to ignoring foreign countries. End the foreign entanglements! Americans should be free to trade with anyone, but the government should pull back to the water's edge—and much further.