 | | The Daily Reckoning | Friday, October 7, 2011 |
- Musings on the best and worst of states...
- A few poignant comments on fascism and the modern American central state...
- Plus, Bill Bonner on the net return on government spending and the anomaly that is French real estate...
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|  | | | The Worst of States | | Goose-stepping Down the Treacherous Road to Fascism | |  | | Joel Bowman |
Reporting from Buenos Aires, Argentina...
Empires...their monies...their militaries and their promises. All these things eventually, invariably, die. It’s what they were born to do. Their death, in other words, is inevitable. Only the number of innocent individuals they take with them varies. At this, we should not be surprised. But we should be prepared.
Ever since statists first cobbled together a collective of ruling people, the “rest” have been living under one form of tyranny or another. From tribal leadership structures to local council hierarchies, from Plato’s philosopher class to medieval monarchies through to the various “isms” of our modern times, there has existed one class of rulers — sometimes called guardians, other times tyrants — who have seen fit to exert their ways and rules on all others, usually, ultimately, on pain of death.
In the end, individual freedoms are surrendered to the precise degree that the state is permitted to exist at all.
It is true, of course, that certain forms of statism are more overtly aggressive than others (though all administer the ultimate punishment for political apostasy, one way or another). Some governments merely bestow on their citizens the “privilege” of carrying an identifying document when said individuals choose to exercise their natural right to travel freely. Some states are so kind as to “allow” their citizens the joy of working for the state...for a fee, of course. Other states allow citizens to rent property from them, charging “owners” a fee to live in their “own” home and heavily regulating what they may or may not do to the property itself.
Most people accept these intrusions on their freedoms as minor grievances. They shrug and mutter something about the “best of a bad bunch” or the “lesser of two evils.” That these apathetic individuals are party to evil at all does, apparently, not seem to bother them too much. Nevertheless, for the vast majority of people, surrendering a little liberty (or a lot!) for a little safety or convenience is a pretty good deal. That, despite Benjamin Franklin’s famous call to caution.
Other regimes, however, are not so subtle in their use of violence and coercion. They stone women to death for baring an inch of skin, force those of a certain race into internment camps, and/or execute political opponents at will...among many other atrocities. And it is toward these states that tax slaves elsewhere — living in houses rented from their own state, watching prescribed entertainment and feasting on state-approved (and taxed) food, drink and drugs — cast dispersions. This variety of the state, according to them, constitutes the worst of all evils.
But what if the state is, as part of its very existence, its nature, always and forever on a path to the most evil manifestation of itself? What if a state that begins its life, nobly, as a constitutionally constrained republic, dedicated to protecting and promoting “life, liberty and justice for all” is really, at all times, at some point on the road to the most evil, militaristic expression possible? What if force can only beget more force, coercion only more and greater coercion?
What if the “best of the states” is always on its way to becoming “the worst of states”? And, more importantly, where does that leave us, goose-stepping down the road to perdition?
In his 1944 book, As We Go Marching, John T. Flynn outlined what he saw as eight marks of fascist policy. Recently, at Doug Casey’s “When Money Dies” conference in Phoenix, AZ, Llewellyn Rockwell presented Flynn’s points, offering some thoughts on each as he went. In today’s edition, we present a snippet from that presentation. Please enjoy...(and stay tuned for Part II, which will follow on Monday.)
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| | The Daily Reckoning Presents | | The Eight Marks of Fascist Policy | |  | | Lew Rockwell |
John T. Flynn, like other members of the Old Right, was disgusted by the irony that what he saw, almost everyone else chose to ignore. In the fight against authoritarian regimes abroad, he noted, the United States had adopted those forms of government at home, complete with price controls, rationing, censorship, executive dictatorship, and even concentration camps for whole groups considered to be unreliable in their loyalties to the state.
After reviewing this long history, John T. Flynn proceeds to sum up with a list of eight points he considers to be the main marks of the fascist state.
As I present them, I will also offer comments on the modern American central state.
Point 1. The government is totalitarian because it acknowledges no restraint on its powers.
This is a very telling mark. It suggests that the US political system can be described as totalitarian. This is a shocking remark that most people would reject. But they can reject this characterization only so long as they happen not to be directly ensnared in the state’s web. If they become so, they will quickly discover that there are indeed no limits to what the state can do. This can happen boarding a flight, driving around in your hometown, or having your business run afoul of some government agency. In the end, you must obey or be caged like an animal or killed. In this way, no matter how much you may believe that you are free, all of us today are but one step away from Guantanamo.
As recently as the 1990s, I can recall that there were moments when Clinton seemed to suggest that there were some things that his administration could not do. Today I’m not so sure that I can recall any government official pleading the constraints of law or the constraints of reality to what can and cannot be done. No aspect of life is untouched by government intervention, and often it takes forms we do not readily see. All of healthcare is regulated, but so is every bit of our food, transportation, clothing, household products, and even private relationships.
Mussolini himself put his principle this way: “All within the State, nothing outside the State, nothing against the State.” He also said: “The keystone of the Fascist doctrine is its conception of the State, of its essence, its functions, and its aims. For Fascism the State is absolute, individuals and groups relative.”
I submit to you that this is the prevailing ideology in the United States today. This nation, conceived in liberty, has been kidnapped by the fascist state.
Point 2. Government is a de facto dictatorship based on the leadership principle.
I wouldn’t say that we truly have a dictatorship of one man in this country, but we do have a form of dictatorship of one sector of government over the entire country. The executive branch has spread so dramatically over the last century that it has become a joke to speak of checks and balances. What the kids learn in civics class has nothing to do with reality.
The executive state is the state as we know it, all flowing from the White House down. The role of the courts is to enforce the will of the executive. The role of the legislature is to ratify the policy of the executive.
Further, this executive is not really about the person who seems to be in charge. The president is only the veneer, and the elections are only the tribal rituals we undergo to confer some legitimacy on the institution. In reality, the nation-state lives and thrives outside any “democratic mandate.” Here we find the power to regulate all aspects of life and the wicked power to create the money necessary to fund this executive rule.
As for the leadership principle, there is no greater lie in American public life than the propaganda we hear every four years about how the new president/messiah is going to usher in the great dispensation of peace, equality, liberty, and global human happiness. The idea here is that the whole of society is really shaped and controlled by a single will — a point that requires a leap of faith so vast that you have to disregard everything you know about reality to believe it.
And yet people do. The hope for a messiah reached a fevered pitch with Obama’s election. The civic religion was in full-scale worship mode — of the greatest human who ever lived or ever shall live. It was a despicable display.
Another lie that the American people believe is that presidential elections bring about regime change. This is sheer nonsense. The Obama state is the Bush state; the Bush state was the Clinton state; the Clinton state was the Bush state; the Bush state was the Reagan state. We can trace this back and back in time and see overlapping appointments, bureaucrats, technicians, diplomats, Fed officials, financial elites, and so on. Rotation in office occurs not because of elections but because of mortality.
Point 3. Government administers a capitalist system with an immense bureaucracy.
The reality of bureaucratic administration has been with us at least since the New Deal, which was modeled on the planning bureaucracy that lived in World War I. The planned economy — whether in Mussolini’s time or ours — requires bureaucracy. Bureaucracy is the heart, lungs, and veins of the planning state. And yet to regulate an economy as thoroughly as this one is today is to kill prosperity with a billion tiny cuts.
This doesn’t necessarily mean economic contraction, at least not right away. But it definitely means killing off growth that would have otherwise occurred in a free market.
So where is our growth? Where is the peace dividend that was supposed to come after the end of the Cold War? Where are the fruits of the amazing gains in efficiency that technology has afforded? It has been eaten by the bureaucracy that manages our every move on this earth. The voracious and insatiable monster here is called the Federal Code that calls on thousands of agencies to exercise the police power to prevent us from living free lives.
It is as Bastiat said: the real cost of the state is the prosperity we do not see, the jobs that don’t exist, the technologies to which we do not have access, the businesses that do not come into existence, and the bright future that is stolen from us. The state has looted us just as surely as a robber who enters our home at night and steals all that we love.
Point 4. Producers are organized into cartels in the way of syndicalism.
Syndicalist is not usually how we think of our current economic structure. But remember that syndicalism means economic control by the producers. Capitalism is different. It places by virtue of market structures all control in the hands of the consumers. The only question for syndicalists, then, is which producers are going to enjoy political privilege. It might be the workers, but it can also be the largest corporations.
In the case of the United States, in the last three years, we’ve seen giant banks, pharmaceutical firms, insurers, car companies, Wall Street banks and brokerage houses, and quasi-private mortgage companies enjoying vast privileges at our expense. They have all joined with the state in living a parasitical existence at our expense.
This is also an expression of the syndicalist idea, and it has cost the US economy untold trillions and sustained an economic depression by preventing the postboom adjustment that markets would otherwise dictate. The government has tightened its syndicalist grip in the name of stimulus.
Regards,
Llewellyn H. Rockwell Jr.,
for The Daily Reckoning
Joel’s Note: Stay tuned for Part II of Mr. Rockwell’s take on the “Eight Marks of Fascist Policy” in Monday’s edition of The Daily Reckoning.
In the meantime...
If, as Mr. Rockwell asserts, the US is much further down that road to fascism than most people think (or indeed, already there), it probably helps to at least have an idea of what’s going on. Earlier today, Agora Financial executive publisher, Addison Wiggin, released a presentation that most people won’t want to view. It contains certain truths they simply don’t want to hear. But ignoring these facts won’t make them go away...and it won’t help people properly prepare for their consequences.Take a look at what Addison has to say here.
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| | | | Bill Bonner | | No Return on Government Investments | |  | | Bill Bonner |
Reckoning from Paris, France...
The news was good yesterday. Investors heard that Europe had its problems under control. Then, Obama told them that he was going to give the economy a jolt.
Investors breathed a little easier. The feds were on the case.
The Dow rose 183 points. Meanwhile, bonds went down, with the yield on the 10-year note rising to almost 2%. Oil rose too, and ended the day trading over $80. Even gold went up — $11.
Here’s The New York Times’ report on Obama’s press conference:
In perhaps his most sober remarks about the economy this year, President Obama on Thursday described the weakening economy as “an emergency” and made the case for his jobs bill as “an insurance policy against a possible double-dip recession.”
“Our economy really needs a jolt right now,” Mr. Obama said...
“This is not the time for the usual political gridlock,” the president added. “The problems Europe is having today could have a very real effect on our economy at a time when it’s already fragile.” Mr. Obama proposes to spend $447 billion to reduce joblessness. He doesn’t have $447 billion, of course. So the money has to come from elsewhere.
Remind us how that works. You take $447 billion from people who are investing and spending...so you can give to other people. Why? So they can invest and spend! We must be missing something.
Wait! Here is it...the NYT continues...
To allay the concerns of Senate Democrats, Mr. Obama said that he could support their proposal to pay for the jobs plan by imposing a 5.6 percent surtax on individual taxpayers’ income above $1 million. Oh...that must be it. The millionaires don’t need the money. They don’t spend it. But don’t they invest it? Of course they do.
The Obama plan is just another redistribution scam. You take money from one group of people and you give it to another group. Corrupt, degenerate and ineffective, right? Wrong. It’s actually worse. Because government is a notoriously bad spender. It takes resources and wastes them. Its wars...its welfare programs...its prisons...its education...its subsidies and boondoggles — more often than not, these investments of capital are not just stupid and larcenous. They also destroy wealth. You put a dollar in. You get 50 cents back, if you’re lucky.
Federal spending on education has soared over the last 40 years. Guess how much higher test scores have gone. Go ahead, take a guess. Well...the answer is zero. Billions and billions invested. No return. Nada. Zilch.
You’re probably thinking...well...it may not pay off overall, but at least it pays for the student, right? Wrong. Guess how much the typical college graduate’s income has gone up in real terms over the last 40 years. Go ahead, take a guess. Zero!
Or how about spending money to fight drugs? Guess how effective that has been. Never mind...you know the answer.
Or take spending on health care. The US spends far more on health care — both in terms of raw numbers and in terms of its GDP — than anywhere else. Compared to a nation such as Chile, for example, it spends more than twice as much. But do Americans live twice as long as Chileans? Nope. The Chileans live longer than Americans. What’s the rate of return on all those extra billions we spend? Zero.
Well, there’s always national defense and police protection. That’s where government knows what it is doing. “Political power comes out of the barrel of a gun,” said Mao. So they must know what they’re doing with guns, right? That’s where we get our money’s worth...a good return on our investment, right?
Are you kidding, dear reader? We spend about as much as the entire rest of the world combined... but are we safer? Not a bit. At home, our crime rates are as high as almost any other country you care to look at — even though we keep a far larger percentage of our population behind bars. As for being protected from terrorism, US military spending probably brings a negative return; terrorists are more likely to target Americans because the Pentagon sticks its nose into everybody’s business all over the planet.
In short, government spending kills capital. It makes a nation poorer. It doesn’t matter whether the money is taxed from the rich...or from the poor, the result is the same. Resources...real things of real value...are destroyed, used up, consumed...with little or no pay back.
You ask...why is the US economy growing so slowly? Why can’t it recover? Why do we seem to lurch from one crisis to another?
Here’s an answer: because more and more of the economy’s resources are controlled — mismanaged...and misallocated — by the government.
Some are directly misallocated — spent by the government itself.
Others are indirectly misallocated — tricked into bad investments by the Fed’s low interest rates, tax policies, regulations and subsidies. (For example, there has been an explosion in student debt since the crisis of ’07-’09 began — up 300%. The government invests in a lot more “education.” What is the return on investment?)
Result: the economy stalls. The middle class is gradually ruined. The empire stumbles toward its eventual collapse.
And more thoughts...
“Five million dollars!?”
We couldn’t believe it.
“No, if this apartment were sold it would probably bring five million euros.”
We share a modest office on the Boulevard Raspail in a nice part of town, not far from Montparnasse station. It is in what used to be an apartment and is now used as offices. About 2,300 square feet in total.
“How is that possible? Who can afford to pay that much?” we wanted to know.
Europe may be on the edge of a nervous breakdown...or a banking collapse. But the restaurants are still full. Prices are still high. And the euro is still at $1.34.
Not only that, while prices of real estate fall in the US, they rise here. Go figure.
“Well, the French don’t trust banks or stocks,” explained our co- locataire. “So they tend to put money into property. People with money...no matter where they are from in France...like to have an apartment in Paris.”
The French know what can happen to paper assets. Many people remember when the ‘old franc’ was replaced by ‘new francs’ at a rate of 100 to 1. Old people still quote prices — occasionally — in terms of old francs, even though it has been gone for half a century.
And almost everyone remembers when the franc gave way to the euro a decade ago. It was supposed to be an even exchange; no one was supposed to lose money on the deal. But shoppers soon realized that prices had risen. Merchants rounded prices upwards...and then added on a few centimes for good measure.
Currencies come. Currencies go. You can’t trust them. So, people buy things they can trust. And an apartment in Paris is something you can trust. It may go up in price. It may go down. But it won’t go away. Not unless there is something much bigger to worry about!
*** We have given up trying to follow the European debt crisis story. There are too many plots and subplots...in too many languages; we can’t keep up with them. So, we turn to The New York Times for an update:
Despite the fact that economists and bank analysts now widely expect that Greece will have to default on its debt, no European leader will say so, at least for the record. Instead, the countries in the euro zone are continuing to act as if measures agreed to in July to shore up Greek finances, and that slow-moving European parliaments have yet to fully approve, are sufficient to contain the crisis...
..European leaders, especially in France and Germany, whose own banks are exposed, are reluctant to broach the inevitable. Why? Because they do not yet have in place a big pool of funds to ensure that an orderly Greek default does not lead markets to assume that the much larger economies of Spain and Italy will soon follow it into insolvency. And partly because they do not have the political will to commit those funds.
Ultimately, only the European Central Bank can intervene with the firepower necessary to set a floor under the price of the region’s sovereign debt. But its departing chairman, Jean-Claude Trichet, has ruled out the idea of the bank’s acting as the lender of last resort, even if it only guarantees the bond purchases of another fund, the European Financial Stability Facility.
Germany, the Dutch and the Finns, too, are against allowing the bank to make unlimited bond purchases from sovereign states.
The reluctance blocks even obvious moves, like marking down the value of Greek debt to something approaching the market price, which is now only 40 percent of its face value. Europe may be on the rim of a volcano...but no one seems to care.
*** We wonder why we bother to rent an office at all. When we are in Paris we spend much of our time working in cafes. Our current favorite is the Café Vavin, just a block from the office. Like Sartre in the Café de Flore, we buy a cup of coffee and sit for hours, happily working...and observing. Sartre didn’t have a laptop computer. He wrote with pen and paper. Someone should have stopped him.
The Café Vavin is a pleasure. It is on a corner. We see people walking by in 4 directions. And then, when things are slow, the bartender opens his mouth and lets go with a baritone line from an Italian opera. But generally, there is a lively crowd at the bar...reading newspapers...chatting...laughing...drinking coffee. Later in the day they switch from coffee to beer and wine. But we are usually on our way home by then.
Regards,
Bill Bonner,
for The Daily Reckoning
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