Liberty vs. Leviathan

Chronicling Liberty's battle against Leviathan

$ugar $henanigans

Time and again Bastiat spoke out against tariffs and subsidies, reminding the public of a third, unseen person – the consumer – who is affected by subsidies and tariffs.  Where the one benefiting from the subsidies or tariffs would tout all the jobs provided by the protection, Bastiat was quick to show that the consumer who funds the subsidy or pays the higher, tariff supported prices has less money to spend on goods in other non-protected or non-subsidized industries.  He demonstrates that at their core subsidies and tariffs are nothing short of theft, they are robbery backed by the force of law.

One such industry that has been robbing consumers for years this way is the sugarcane and sugar beet industry in the U.S.  Dr. Mark J. Perry of CARPE DIEM reports in Annual Cost Per Sugar Farm Job Saved = $826,000 that for every one job “saved” in the sugar growing industry three are lost at a cost of $826,000, totaling $1.9 billion a year.  Echoing Bastiat, Perry concludes in Sugar Tariffs Cost Americans $2.5 Billion in 2009:

Like all protection, sugar tariffs exist to protect an inefficient domestic industry (sugar beet farmers) from more efficient foreign producers (cane sugar farmers), and come at the expense of the U.S. consumers and the American companies using sugar as an input, and make our country worse off, on net.

And don’t forget the interest the corn lobby has in promoting higher sugar prices too.

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Rent-seeking 101

In a sentence, rent-seeking is the economic phenomenon of a small, powerful special interest group using the power of government for its own benefit at the expense of a much larger but less powerful group (consumers, you and me).

Sheldon Richman of The Future of Freedom Foundation, exposes the insurance industry as the rent-seekers of so called Healthcare Reform in “Not So Strange Health-Care Bedfellows“.

Under a mandate the industry would have millions of new captive customers, mostly healthy young people who will pay premiums but make few claims. This will mean huge new politically derived profits.

For a more detailed explanation of rent-seeking, see Sanford Ikeda’s Rent-Seeking : A Primer, published by The Freeman at the Foundation for Economic Education.  Ikeda makes clear the distinction between wealth building and wealth destroying rent.

And last, but by no means least, in The Law (L.27-L.30) Bastiat sounds a warning of suffering to those who fail to oppose the evil of plunder inherent in a rent-seeking society:

Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter—by peaceful or revolutionary means—into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it.

Woe to the nation when this latter purpose prevails among the mass victims of lawful plunder when they, in turn, seize the power to make laws!

Until that happens, the few practice lawful plunder upon the many, a common practice where the right to participate in the making of law is limited to a few persons. But then, participation in the making of law becomes universal. And then, men seek to balance their conflicting interests by universal plunder. Instead of rooting out the injustices found in society, they make these injustices general. As soon as the plundered classes gain political power, they establish a system of reprisals against other classes. They do not abolish legal plunder. (This objective would demand more enlightenment than they possess. ) Instead, they emulate their evil predecessors by participating in this legal plunder, even though it is against their own interests.

It is as if it were necessary, before a reign of justice appears, for everyone to suffer a cruel retribution—some for their evilness, and some for their lack of understanding.

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The Tax Collector

It only takes the innocence of the young to remind us of the evil of the income tax.

Recently, I was helping my son fill out his federal and state payroll tax forms for his first job. A discussion of what his paycheck would look like due to tax withholding led to a discussion on tithing. He was concerned about how much money he would have once taxes were withheld and didn’t want to tithe on the gross as he’s been taught since he would have no use of the withheld money. I explained that what he would eventually choose to do would be his decision but he had to remember that what he was really paid was the gross not the net; pointing out that his labor cost his employer the gross (and then some) not the net; and reminding him that it wasn’t God’s fault that the government took money away from him.

Obviously, this was not what he wanted to hear and he was quite upset, letting loose with a rant about the unfairness of it all.  It went along the lines of, “That’s my money! It’s my time and my work! It’s not fair for them to take it. I don’t get to keep it so I’m not tithing on it!”

Initially his anger was directed at me. Eventually though, with a little patience and an empathetic explanation (he was preaching to choir after all), he was able to see that his real beef was with the government. For it’s the government that inserts itself between him and the agreement he made with his employer. It’s the government that takes his money. And, it’s the government that puts itself first in line, cutting in front of God in opposition to His admonition for believers to give the the first fruits of their labor to Him.

With my son’s righteous anger now properly directed, I’m happy to report that the story doesn’t end there. The emotions of his anger have subsided, but his curiosity and concern have not. With the first paycheck came questions about each deduction. “What is it? How is it used?”  Now that tax season is here (isn’t it always tax season?), there are still more questions.  “Will I owe more?  Will I get any back?  What if I have to pay?”  Yet another opportunity to explain the welfare state and the government’s illegitimate role in our lives.

Confronted for the first time with the first hand experience of payroll withholding of taxes and Leviathan’s looting of his labor, my son’s instinct was to see the process as theft. To make matters worse, it was a theft that he could not defend himself against. And he’s right, for if he were to resist and be persistent in his resistance he would eventually be confronted with the business end of a gun.

This instinct, born from the innocence of youth, gives all Liberty loving parents a golden opportunity. An opportunity to clearly explain to our children the power of the State and it’s propensity to engage in plunder.

Oh, and on the matter of tithing, he decided to tithe on the gross. Well done, son.

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Legislators for Liberty

Frédéric Bastiat wrote a lifetime of work during the last few years of his too short life.  He’s probably most well known for “The Broken Window” chapter of  What is Seen and What Is Not Seen, an essay in which he explains and demonstrates the overlooked moral hazards that occur when economic policy is based on economic fallacy.

His other essays are worthy of attention too.  In particular today, “Property and Law“, in which Bastiat addresses the fundamental questions regarding the origin of property and law and the role of legislators (he was one) in making laws concerning property.  Regarding the origin of property and law, he reasons that “Property does not exist because there are laws, but laws exist because there is property…The function of the law, then, is to safeguard the right to property.”  He further reasons regarding the role of legislators that their “…jurisdiction is limited to guaranteeing and safeguarding property rights.”

On both of these points, Michigan legislators failed miserably this week with their vote on HB 4377, a bill that will now (with a few special interest exceptions) prohibit private businesses from allowing patrons to smoke on their property.  Especially disappointing, but not surprising, were the  Republican votes.  In the House, 20 of 43 Republicans voted for more, not less, government.  Even worse, in the Republican controlled Senate, nine Republicans enabled passage of the bill, casting their lot with the socialists of Bastiat’s day, apparently seeing their role as one to “…organize, modify, and even eliminate property if [they deem] it good to do so.”

Among the Republicans voting for Property, State Representative Justin Amash has been clear and consistent in his principled stand.  In online discussions on his Facebook page he stated that “To dismiss the [property] rights issue is to cede all power to the government, and I will never do that.”

In 1848, Bastiat could say to his countrymen that:

In a country like the United States, where the right to property is placed above the law, where the sole function of the public police force is to safeguard this natural right, each person can in full confidence dedicate his capital and his labor to production. He does not have to fear that his plans and calculations will be upset from one instant to another by the legislature.

While no longer true in Michigan or the United States, maybe that day will come again with more legislators like Amash and those who joined him in the vote for Property and Liberty.

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Extortion with a badge

I’m convinced more than ever that we live in a lawless land.  The only law being that of the whims and power of those in positions of authority.

In 1850 Frédéric Bastiat wrote The Law to warn of the detrimental effects of perverting the law and using it to plunder your neighbor, that is use the law to do to your neighbor what you yourself could not legitimately do.  Although written in the context of 19th century French socialism it still applies today.  Here’s a bit of what Bastiat had to say:

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

What are the consequences of such a perversion? It would require volumes to describe them all. Thus we must content ourselves with pointing out the most striking.

In the first place, it erases from everyone’s conscience the distinction between justice and injustice.

No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them.

The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are “just” because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it.

I’m convinced of another thing too.  Our acceptance of  this idea of plunder has opened the way for the law to be used, not only against our neighbor to redistribute his wealth, but also against our neighbor and ourselves to fund the state in ever more unjust and evil ways.

This past week the Detroit News ran a three part series on the increase use of asset forfeiture laws by local jurisdictions (Part 1, Part 2, Part 3).  Apparently, these laws are becoming an effective way to replace lost tax revenue in a down economy.  Despicable on many levels, one of the worst is that officials are preying on the very people they claim to serve and protect.

The way Krista Vaughn sees it, Wayne County fined her $1,400 even though police and prosecutors admit she broke no laws.

Vaughn, who has no criminal record, was required to pay for the return of her car, which was seized by police after they mistook Vaughn’s co-worker for a prostitute. Even though prosecutors later dropped the case, Vaughn still had to pay.

Vaughn, who works in an American Red Cross supply warehouse, dropped off her co-worker, Amanda Odom, at a Detroit bank the afternoon of Feb. 11, 2004. Both women were still wearing their Red Cross badges.

Officers from the Wayne County Sheriff’s Morality Unit accused Odom of solicitation after they saw her make eye contact with passing motorists while waiting for Vaughn to pick her up from the bank. On the strength of that observation, officers ticketed Odom and seized Vaughn’s 2002 Chrysler Sebring.

“We obviously weren’t doing anything wrong, but the cops wouldn’t listen,” Vaughn said.

The charges against Odom were eventually dropped, but Vaughn still was out $900, the usual fee prosecutors require to return seized vehicles. She also had to pay another $500 in towing and storage fees, because it was several days before she could raise the money to get her car back — plus another $400 to repair an oil pan she said was damaged when her car was towed.

In the report some officials spoke against the practice.  Now a defense attorney, former Macomb County Prosecutor Carl Marlinga said, “Forfeiture laws are being abused by police and prosecutors who see only dollar signs.  It’s a money grab, pure and simple; a sneaky way of getting a penalty on something prosecutors can’t prove. It’s like shooting fish in a barrel.”   Fraser Public Safety Director George Rouhib likened it to “legalized extortion.”

Other officials were unrepentant:

“We’re trying to fight crime,” said Police Chief Mike Pachla of Roseville, where the money raised from forfeitures jumped more than tenfold, from $33,890 to $393,014.  “We would be just as aggressive even if there wasn’t any money involved.”

And another:

When Romulus saw a 118 percent jump in forfeiture revenues from 2003-07, the increase was not the result of more criminal activity, Chief Michael St. Andre said.  “It’s because our forfeiture efforts have ramped up in the past few years,” he said.

This is what happens when you criminalize immoral behavior and legalize criminal behavior.  Lord, have mercy!

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Frédéric Bastiat

Sophism is not a word often read or heard by the eyes and ears of the twenty-first century. It is a word, however, we would do well to become more familiar with. At its root lies wisdom, but the Sophists of the fifth century BC damaged that root for all time; so that rather than relating to wisdom, it is now used to indicate a “plausible but fallacious argument”. It is this fallacious meaning that Frédéric Bastiat had in mind when he titled his collection of essays Economic Sophisms (pdf version here). And while the term in modern use can also indicate an intention to deceive, Bastiat mostly thought the best of his intellectual opponents and assumed that they were not the authors, but rather, the victims and unwitting propagators of the deceit inherent in economic fallacies.

Sophisms, praised as the “…best literary defense of free trade available…” is a collection of two different series of essays defending free trade against the economic fallacies of mid nineteenth century France. In the First Series, a collection of twenty-three essays first published together in 1845, Bastiat examines free trade from many different perspectives employing a variety of writing styles. Most of the essays are written in a conversational prose with an occasional one being satire or story. The Second Series of seventeen essays was originally published in 1848. In terms of style this series differs from the first in that over half of the essays are stories, dialogues or satire with only a few being written in prose.

On the first read, the essays in Sophisms may appear to be repetitious. Even Bastiat admits as much when he says that repetition, “…the inherent defect of this little work…” is also “…its principal utility.” There is, in fact, much repetition, but it is intentional.  Bastiat is following the advice of Jean-Baptiste Say, who was a major influence on his economic formation. In his Introduction to A Treatise on Political Economy, Say states:

To obtain a knowledge of the truth, it is not then so necessary to be acquainted with a great number of facts, as with such as are essential, and have a direct and immediate influence; and, above all, to examine them under all their aspects, to be enabled to deduce from them just conclusions, and be assured that the consequences ascribed to them do not in reality proceed from other causes. [Emphasis added]

And indeed, Bastiat does examine the facts under all aspects. In every case, whether the satirical petition to the king to have the right hand of all his subjects cut off or the passionate warning of the perversion of the meaning of words, Bastiat examines the facts of protectionist economic policies and exposes the fallacies upon which the policies are built. In each case he follows more of Say’s advice to “…discover the chain which binds them [facts] together, and always, from observation, establish the existence of the two links at their point of connexion (sic).” In his own Introduction Bastiat echoes Say with an explanation of the complexities of mounting a defense against the simple half-truths of his opponents:

… we cannot limit ourselves to the consideration of a single cause and its immediate effect. We know that this effect itself becomes in its turn a cause. In order to pass judgment on a measure, we must, then, trace it through the whole chain of its effects to its final result. In other words, we are reduced, quite frankly, to an appeal to reason.

Thus his reasons for repetition.

Free trade is the obvious theme of the Sophisms, but it’s addressed through many different fallacies. Some of the fallacies include, imports destroy the country’s wealth; high prices increase the country’s wealth; a favorable balance of trade increases wealth; general welfare is incompatible with justice and peace; economics is based on theory, not real life, and more. His most famous essay in Sophisms, “A Petition”, is a fictitious request for a law to forbid sunlight indoors. To do so would increase jobs and industry including whaling, shipping, agriculture, manufacturing and more. Not a Frenchman would miss out on the prosperity. Of course, the request is absurd, but, as in many of the essays, he uses the absurdity to point out the harm brought to consumers in order to create or protect jobs and industry.

And it is the role of the consumer that is Bastiat’s main point through and through. His mission is to show the reader the many and varied ways that the sophisms bring him harm:

In regard to the question that I have been dealing with, each sophism doubtless has its own phraseology and its particular meaning, but all have a common root: the disregard of men’s interests in their capacity as consumers. To show that this sophism is the starting point for a thousand roads to error is to teach the public to recognize it, to understand it, and to mistrust it under all circumstances.

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Christian libertarian Blog Carnival

The Holy Cause has just released the September edition of the Christian libertarian Blog Carnival.  Be sure to stroll the midway and consider the thoughts and reasoning of each contributor as issues of the day are examined from a Christian libertarian perspective.  As always, they’re excellent.

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Bastiat’s Rebuttal

Besides being a prolific writer on economics, Frédéric Bastiat was also a nineteenth century legislator in France and had experience dealing with situations similar to our own current state of affairs.  From The Law (L.216 – 220)

The claims of these organizers of humanity raise another question which I have often asked them and which, so far as I know, they have never answered: If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? The organizers maintain that society, when left undirected, rushes headlong to its inevitable destruction because the instincts of the people are so perverse. The legislators claim to stop this suicidal course and to give it a saner direction. Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority.

They would be the shepherds over us, their sheep. Certainly such an arrangement presupposes that they are naturally superior to the rest of us. And certainly we are fully justified in demanding from the legislators and organizers proof of this natural superiority.

Please understand that I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law—by force—and to compel us to pay for them with our taxes.

I do not insist that the supporters of these various social schools of thought—the Proudhonists, the Cabetists, the Fourierists, the Universitarists, and the Protectionists—renounce their various ideas. I insist only that they renounce this one idea that they have in common: They need only to give up the idea of forcing us to acquiesce to their groups and series, their socialized projects, their free-credit banks, their Graeco-Roman concept of morality, and their commercial regulations. I ask only that we be permitted to decide upon these plans for ourselves; that we not be forced to accept them, directly or indirectly, if we find them to be contrary to our best interests or repugnant to our consciences.

But these organizers desire access to the tax funds and to the power of the law in order to carry out their plans. In addition to being oppressive and unjust, this desire also implies the fatal supposition that the organizer is infallible and mankind is incompetent. But, again, if persons are incompetent to judge for themselves, then why all this talk about universal suffrage?

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Man (Bastiat) on the Street

From a recent Wall Street Journal article, “Is ‘Friending in Your Future?’ Better Pay Your Taxes First”, we learn that tax authorities are starting to use MySpace, Facebook and other social networks to track down those who have managed to hide some of their income from authorities.  No surprise really.  What caught my attention was in the comments.  Michael Yu seems to think like Vice President Joe “we want to take money” Biden, that paying taxes is some sort of patriotic duty.  Echoing the principles found in Frédéric Bastiat‘s The Law, Brian Drake counters, seeing today’s tax system for what it is – theft:

How is that [paying taxes is] any different than me and a friend mugging you on the street, and then when you protest, we take a vote among the 3 of us to determine by democratic principles whether we can rob you or not?

If it’s wrong for one person to steal from another, then it’s wrong for 2 men to steal. It’s also wrong for 10 men to steal from one. It’s also wrong for 299,999,999 men to steal from one man. Democracy doesn’t change truth. Taxation is theft and theft is wrong.

Here’s a straightforward passage from The Law (L64 – L67):

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law—which may be an isolated case—is not abolished immediately, it will spread, multiply, and develop into a system.

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.

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Spleen Vent

Arrrggghhh!  Where do we get these people?!

I read tonight in a local weekly paper this economic nugget about Cash for Clunkers from Candice Miller, a local Republican representative in Congress, “I think that, by anybody’s standards, this has been the best economic stimulus program that the government has enacted.”  Later on she continues, “This is going to be a critical component of how we get out of this recession, especially in Michigan.  Throughout our nation’s history, it has been auto sales that have pulled our country out of the recessions.  Talk to any economist.” [emphasis added]

The article further states without quoting that she sees another upside – a goose to the state revenues through new license and registration fees and increased sales taxes.  Now I feel better.

Perusing her Issues and Endorsements pages one sees that her policies and associations smack of modern day mercantilism and are similar to those of the socialists Bastiat warned against in The Law.

I repeat.  Arrrggghhh!  Where do we get these people?!

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