More Timely Than Ever!

Friday, August 26, 2022

TGIF: Jefferson on Not Trusting the State

Regardless of written constitutions and the laws on the books, individual liberty is always at risk. And as liberty goes, so goes our capacity to live well, to achieve the good life as rational, virtuous social beings.

The danger comes from left and right, both of which aspire to have a body of elders impose narrow cultural and moral norms on everyone, overriding our right to think for ourselves. (Progressives and National Conservatives have a lot in common in that regard, even if they differ on what is to be imposed.)

This point about the fragility of liberty was well understood by the Irish politician, judge, and orator John Philpot Curran (1750-1817), who said: "The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt."

As often happens, variations of this insight have been attributed to other people, most famously Thomas Jefferson, who is widely and apparently erroneously thought to have said more pithily: "The price of liberty is eternal vigilance." Curran has missed out on the credit he deserves.

At any rate, we have a problem. Although liberty is never safe from political ambition or even good intentions, most people are understandably absorbed in raising their families, earning their livelihoods, and just plain living. Thinking about liberty, much less exercising vigilance, has a low priority -- if it is on their agendas at all. I'm not finding fault; it's just a fact.

Hence the need for a degree of specialization. Libertarians to one extent or another specialize in keeping watch over liberty and drawing the public's attention to dangers from governments and nongovernment sources. These aren't entirely two separate categories because if an influential segment of the public comes to believe that liberty must be curtailed, such sentiment could find its way into the halls of power. For example, if enough people decide that offensive words or obscene images are equivalent to violent acts, politicians may take up that cause and prohibit so-called hate speech and the like. This has happened in Great Britain, where citizens can be visited by the police, fined, and compelled to take a sensitivity course for posting something on social media that allegedly made someone feel anxious. So far, thanks to the tradition of free speech and press recognized in the First Amendment, that does not happen in the United States. But we mustn't rest on our laurels. A violation could be just around any corner, and we can't be sure from which direction it will come.

Although Jefferson did not say, "The price of liberty is eternal vigilance." we know he believed it. We know this because of his 1798 Kentucky Resolutions, which he wrote anonymously for the state legislature in opposition to the Alien and Sedition Acts of that year. The Acts were passed by the Federalist party-controlled Congress under Federalist President John Adams. (Jefferson, who was not a Federalist, was the vice president at the time.) As one description of the Acts puts it:

The Resolutions by Jefferson and Madison were provoked by the Alien and Sedition Acts adopted by a Federalist-dominated Congress during the Quasi-War with France; those Acts gave the president the authority to deport any alien whom he thought a threat and made it illegal to criticize the president or the Congress. Dozens of people were prosecuted under the Sedition Act, with prosecutions targeted at newspaper editors who favored the new Democratic-Republican party – Jefferson’s party. Seeing such political prosecutions of free speech as a fundamental threat to the republic, Jefferson referred to this period as a “reign of witches."

Federalist support for the Acts was also fueled by Jeffersonian sympathy for the French Revolution. The government's fears about French influence in the United States had reached a fevered pitch.

In his Kentucky Resolutions -- a second, shorter resolution written by an unknown person passed in 1799 -- Jefferson invoked the principle that the Constitution delegated only certain limited powers to the national government and therefore the states individually could check that government whenever it broke through the limits. Hence, the document declared the Alien and Sedition Acts  "void and of no force" and requested their repeal. (Jefferson's draft called for nullification, but that language did not make the final document. It did make the second version, however.)

In making his case, Jefferson wrote something that more people need to understand, especially politicians and pundits who are sanguine about democracy. His document declared it is resolved:

that it would be a dangerous delusion were a confidence in the men of our choice to silence our fears for the safety of our rights: that confidence is every where the parent of despotism: free government is founded in jealousy and not in confidence; it is jealousy & not confidence which prescribes limited Constitutions to bind down those whom we are obliged to trust with power. [Emphasis added.]

Hammering the point home, Jefferson concluded: "In questions of powers, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution." How interesting that he used the word jealousy!! The dictionaries tell us that one meaning of that word is intense vigilance. Had he read Curran's words?

By the way, those words might have gotten Jefferson kicked off Twitter and Facebook.

For Jefferson, the idea that we can elect rulers and then leave them to the business of governing us was a recipe for tyranny, even if only the "soft tyranny" foreseen by Alexis de Tocqueville. (See my "'What Sort of Despotism Democratic Nations Have to Fear'" for some of Tocqueville's sobering predictions of the harm that democratic governments could do to the people.)

I'll close by noting that, unfortunately, Jefferson was too trusting in the Constitution's capacity to bind those given power. (Remember that the Constitution did not prevent the passage of the Alien and Sedition Acts less than a decade after its ratification. Think of all that's happened since.)

Indeed, no less an authority on the Constitution, James Madison acknowledged that any constitution must delegate implied powers; that is, powers not expressly allowed to the state: "[I]t was impossible to confine a government to the exercise of express powers;" he said, "there must necessarily be admitted powers by implication, unless the constitution descended to recount every minutiae." He said this during a House debate over what would become the beloved Tenth Amendment in the Bill of Rights, which reserves to the states or the people "the powers not delegated" to the national government. Madison, who is famous for saying the national powers were "few and defined," refused to allow the word expressly to be inserted before delegated. Progressivism isn't the root of the problem. (See my article "James Madison: Father of the Implied-Powers Doctrine." For a wider perspective, also see my America's Counter-Revolution: The Constitution Revisited.)

Hence, a constitution, no matter how good it looks, can't help but create a false sense of security about liberty, which is exactly what Jefferson was worried about in his call for jealousy and not confidence toward the state. Particular people will be empowered to interpret any constitution, and they, even if well-intentioned, are likely to see things differently from freedom-loving individuals.

As Lysander Spooner pointed out in an 1870 essay: "But whether the Constitution really be one thing, or another, this much is certain -- that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case it is unfit to exist.”

Tuesday, August 23, 2022

Talking Over the Beefed-Up IRS

Scott Horton and I discussed the ominous changes in store for middle-income taxpayers under the Inflation Reduction Act. Listen here.

Friday, August 19, 2022

TGIF: The Coming New and Improved IRS

The brilliant people in the Biden administration and the U.S. Congress have decided that one thing America really needs is an Internal Revenue Service (!) fortified by 87,000 more employees and 80 billion more dollars so it can help reduce the inflation that currently menaces us.  

You don't believe it? Oh, ye of little faith!

How is that to be accomplished? By auditing rich individuals and corporations, of course, thereby harvesting tons of hitherto uncollected revenue and forcing the shirkers to pay their "fair share." (No one ever says how we know they aren't already paying it.) The law's advocates also say that with its outright tax increase on corporations and cutting of energy and health care costs, inflation will be lowered still more. I wouldn't take that too seriously.

You might suspect that the government's story is not exactly kosher -- and you would be right. Even though the Biden people insist that the IRS provisions of the just-enacted Inflation Reduction Act will leave people making less than $400,000 unscathed, nothing in the law guarantees that, and the defensiveness of the White House and congressional spokesmen seem to confirm that the nonrich are not safe. Last year the Congressional Budget Office said all taxpayers would face higher audit rates under an earlier, larger version of the Inflation Reduction Act. (It was then called Build Back Better.)

This stands to reason that all taxpayers will be at risk. The highest earners have battalions of the best tax lawyers and accountants who surely advise their clients how to (legally) avoid, not evade, taxes. (News flash: the tax code is complicated, even vague, and will become even more so under the new law.) When you combine that fact with the regrettably small number of really, really rich people, you have to figure that the newly beefed-up IRS won't be anywhere near able to squeeze out the expected sums without going after lower hanging fruit. That's the rest of us: additional audits of people of more modest means. (Just for the record: with the exception of any actual thieves, wealthy people also have a right to their money.)

How many times before have presidents and legislators promised to raise badly needed, deficit-shrinking revenue by stepping up IRS enforcement against the rich? It's how progressives lull the middle class into accepting always-increasing spending.

But strangely, the deficits never shrink and stay shrunk. So either the revenue estimates were unalloyed bunk or the government spent the additional revenue on new projects. I'm sure it was a combination of both. Surprise, surprise! Birds gotta fly. Fish gotta swim. Politicians gotta spend.

At any rate, the deficit and debt (monetized by the Federal Reserve, our inflation engine) have grown without relief. Isn't that likely to be the case this time? It's surely the way to bet.

According to Forbes, "Democrats say the legislation will raise close to $740 billion in tax revenue over the next 10 years and devote $300 billion of that money toward reducing the federal deficit." That's 2 percent of the deficits expected over the next 10 years. You should realize that last year's budget deficit was $2.77 trillion, the second highest after the 2020s $3.13 trillion. 

But let's remember that these revenue projections are really predictions about how people will behave -- and how much taxable income they will produce -- in an altered institutional environment. The prognosticators make their predictions with inherently dodgy computer models. Remember how well such models predicted the climate and covid catastrophe? In truth, we don't know how creative, entrepreneurial people will adjust to changing tax and regulatory conditions. Individuals discover things when they face new situations. They are not robots. 

Another thing to keep in mind is that corporations do not pay taxes. They collect them. Only people pay taxes. So which people pay the corporate income tax, which will go up under the new law? Economists have long known that the tax is paid by consumers through higher prices, employees through lower wages, and shareholders, most of whom are not wealthy, through lower returns to their retirement funds. The corporate tax is one of those great political deceptions that seems to be a permanent fixture of the landscape. By the way, taxes on savings and investment invariably constitute double and even triple taxation, stifling innovation and wealth creation. Thus the general welfare, and not only justice, suffers.

Will the Inflation Reduction Act really act to reduce inflation? No bloody way. Inflation is not merely a general price rise. That's only the symptom. The cause is an inflation of the money supply by the government's central bank.

When the government spends more than it collects in taxes, it borrows money to cover the budget deficit. The Federal Reserve will buy the government debt, creating money out of thin air to do so. When the conjured-up money is spent or lent, we have the proverbial more dollars chasing the same amount of goods and -- voila! -- a general rise in prices. The new money also will tend to push interest rates lower than the free-market level, which in turn will distort the calculations of investors -- interest rates are key signals to producers, after all -- resulting in unsustainable malinvestment. (This is one of the monumental theoretical achievements of the Austrian school of economics, featuring Ludwig von Mises's and F. A. Hayek's work on money and banking.)

It's even worse. This century's massive money creation has been accompanied by the depressed production of goods brought about by the economic lockdowns during the covid pandemic. It's not just more money chasing the same supply of goods, but a smaller supply of goods. Thank you, politicians throughout America, for your service.  

A real inflation reduction act would do nothing but slash spending -- assuming we think the government should spend anything at all. After all, it ultimately obtains its money at gunpoint, that is, by theft. Slashing spending means rethinking big government, that is, -- top of the list -- the warfare and welfare state. 

So the touted Biden achievement is the just same old snake oil in new packaging. The government is out of control, and I don't see how that will soon end. Taxation is a blank check for politicians. The income tax is especially bad because it requires all to account to the government for their income-earning activities under threat of penalty. This inquisitorial device ought to be seen as intolerable in a theoretically free country. (For more, see my book Your Money or Your Life: Why We Must Abolish the Income Tax.)

Friday, August 05, 2022

TGIF: About Those January 6 Committee Extravaganzas

I admit it: I watched nearly every moment of the House committee extravaganzas on the January 6 riot at the U.S. Capitol. I did more than that. I was transfixed. I couldn't even multitask.

Were the mislabeled "hearings" beyond all criticism? Of course not. They were choreographed, but only mildly so; the production effort lent an orderliness that I appreciated. I accept the point that the presentations had nothing to say about FBI-informant intrigue if it took place. Such mischief has occurred in the past, and if credible allegations exist, they should be pursued vigorously. Of course, it wouldn't let off the hook anyone who followed the directions of an agent provocateur. The same goes for other government misfeasance and malfeasance apart from Donald Trump's.

Still, even given all that, I see no good grounds for dismissing the presentations as worthless partisanship. The reason ought to be obvious. The presentations enabled us to watch senior White House, Justice Department, and Trump campaign lawyers and other key staff describe Trump's horrifying complacency as he entertained himself before, during, and after the violent outburst. Gruesomely riveting!

One need not be a small-D democrat to be concerned about what took place on January 6, 2021. The source of rational concern is not only the target of the violence. It is the violence itself. We've seen a good deal of domestic political violence in recent years, and I'm confident that no good would come from more. On the contrary, to the extent that violence becomes an acceptable political tactic, we will be in deep trouble. As Leonard E. Read, founding president of the Foundation for Economic Education, wrote in "On that Day Began Lies":

Consider the mob. It is a loose-type association. The mob will tar and feather, burn at the stake, string up by the neck, and otherwise murder. But dissect this association, pull it apart, investigate its individual components. Each person, very often, is a God-fearing, home-loving, wouldn’t-kill-a-fly type of individual.

What happens, then? What makes persons in a mob behave as they do? What accounts for the distinction between these persons acting as responsible individuals and acting in association?

Perhaps it is this: These persons, when in mob association, and maybe at the instigation of a demented leader, remove the self-disciplines which guide them in individual action; thus the evil that is in each person is released, for there is some evil in all of us. In this situation, no one of the mobsters consciously assumes the personal guilt for what is thought to be a collective act but, instead, puts the onus of it on an abstraction which, without persons, is what the mob is.

Apart from the direct threat from the violence, we must also consider the secondary threat: namely, that of the government's inevitable crackdown. If the violence becomes more widespread, average people will understandably demand safety, and the politicians will be only too happy to comply with less-than-discriminate force. A weak state response could prompt the emergence of a "strong leader," a Bonaparte, who promises to restore order forthwith.

This is why the peaceful transfer of power after elections is desirable. To be sure, representative democracy places a distant second to complete and authentic individualist, free-market liberalism, but it beats gangs fighting in the streets.

So think back now to January 6. Trump clearly lost the election. His 60 attempts to persuade judges that the election had been stolen had failed. (Many of the judges were appointed by Trump or other Republican presidents.) He was told repeatedly by senior officials that he had appointed, from the attorney general on down, including expert investigators in election security, that he had no case -- but to no avail. A conspiracy to perpetrate such an election fraud and its coverup would make any other alleged conspiracy look like child's play.

Undeterred, Trump merely brought in a small group of toadies led by the faithful Rudy Giuliani to press his worthless case. Trump insisted he actually won the election by a landslide and set out to gaslight the American people into thinking there was something to that claim. Considering the lack of proof and all the contrary information he had been given, we are entitled to conclude that Trump never actually believed that he had been reelected. This was no delusion; rather I suspect it was merely a grand Trumpian scam that would surely rake in lots of money; it was also a what-the-hell longshot at retaining power. He apparently didn't care about anything else. In other words, he was playing with fire. At best it was gross negligence.

When he got nowhere with his staff and the courts, he encouraged a mob, which he had every reason to think would be unruly, to gather in Washington, D.C., on the day that Congress was to certify the states' electoral counts. Trump and his small circle worked every angle, including encouraging supporters to fraudulently pose as alternative electors in their states and trying to convince Vice President Mike Pence that he could exclude Biden electoral votes or at least delay Congress's certification by sending the matter back to the states -- when no vice president has any such power. Pence deserves credit here. I shudder to think what might have happened in the streets had Pence slavishly done what Trump pushed him to do.

The mob assembled as Trump requested, and he lifted their hopes that they could "stop the steal." Informed that some supporters had weapons and so wouldn't go through metal detectors for Trump's speech, he told security to remove the detectors because "they're not here to harm me." Then he urged the mob to march to the Capitol. Tens of thousands did so, breaking through doors and windows and signaling that they meant to threaten or harm those who stood in their and Trump's way. Thwarted by the Secret Service in his wish to go to the Capitol, Trump went back to the White House and watched the show from his dining room.

Repeated pleas by his staff that he call for an end to the riot fell on deaf ears. On the contrary, he tried to turn up the heat by condemning Pence on Twitter for his lack of courage. When his supporters chanted that Pence should be hanged, he was heard to say that maybe those supporters were onto something. Late in the day, when he finally made a video appeal to the rioters, he couldn't resist telling them: "We love you.... You're very special."

All in all, this was a sad day that capped a sad few months -- again, not because democracy is sacred, but because violence is uncontrollably toxic. Does the record establish Trump's legal liability for incitement to violence? I am not qualified to say. Moreover, we who distrust political power must be wary of vaguely defined offenses that originate in speech.

But Trump does seem to have left himself open to charges related to his failure to secure the Capitol despite repeated desperate pleas and to his obvious attempts to obstruct Congress. It was at least a dereliction of duty. (I highly recommend Walter Olson's "The Jan. 6 Committee’s Findings Have Met the Appropriately High Bar for Prosecuting Trump.")

Mob violence isn't the only thing to be feared in this world, but it ranks pretty high up there.

Thursday, August 04, 2022

How Times Have Changed

It was once regarded as condescending to humor other people by pretending to accept their fictions about themselves. Today it’s regarded as a mandatory form of respect that is breached only by bigots.