July 8, 2008

Farrell: The Kings of Investment Fraud

By Steve Farrell

The Liberty Letters, July 2008, Letter 4

In his national bestseller, “The Revolution: A Manifesto,” Congressman Ron Paul addressed with precision and frankness a number of “forbidden issues” in American politics, one of them: the ability of the Federal Reserve to expand the money supply (the very definition ron paulof inflation) at will, a power that swiftly brings about a devaluing of every dollar in the marketplace or that great hidden tax of rising prices amidst stagnant wages.

A tax we all pay, though our President, Congressmen, and media, do a bang up job of hiding this truth from us.

Another unmentionable: economic bubbles that by and by burst, reducing vast fortunes, business empires, and ordinary investors to ruin, overnight, again, courtesy, not of the ‘evil’ free market capitalism, but of that hidden hand of the federal government that uses the Fed to tinker with the money supply, controlling and distorting free market forces.

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July 6, 2008

Mises: Diminishing the Influence of Consumers

We must realize that every governmental measure that lowers the amount of profit successful enterprises can make or which taxes away their profits is a measure that weakens the influence of the consumers over producers. For example, the great industrial fortunes of the nineteenth century were acquired by successful innovators in their business. Henry Ford [1863–1947] started with almost nothing; he made Ludwig Von Misesenormous profits which were plowed back in his enterprise; in this way over a comparatively short time he developed one of the biggest fortunes of the United States. The result was that something quite new happened, mass production of automobiles for the masses. At the beginning of the twentieth century there were some successful motor cars. The French Renault cost about $10,000 in gold; it was a luxury car for a few very rich men. The activities of Ford and of some other people made the motor car something for everybody. In this way great fortunes were developed. The great department stores and the great factories developed in this way. But now this cannot happen. If a man starts a small enterprise and makes huge profits, the greater part of this profit is absorbed by taxes. However, there are still some loopholes. If you have a good accountant you may avoid being expropriated 90 percent and may be expropriated only 70 percent. But the greater part of the profits which would have been reinvested are taken by the government and spent for current expenses.

In the case of department stores, formerly an old store had to compete for potential new consumers with new competitors. Today this is no longer the case. The small man will never develop into a big store because his profits are taken away by the government. It is true that the old and new stores operate under the same laws; the large old store also has to pay high income taxes. But the old store has already accumulated the capital needed for a big business, while the new man is prevented from accumulating the capital needed to expand into a big-scale enterprise. The consequence, therefore, is that the competitive spirit could easily disappear from the management of the big store. Without any danger to the old store in the conduct of its affairs, the old store may sometimes become “lazy.”

There are people who say capitalism is dying because the spirit of competition no longer exists as it used to and because great enterprises become bureaucratic. But capitalism is not dying; people are murdering it. There is a difference between dying by a disease that finally results in death and dying as a result of assault and assassination. It is fantastic to use as an argument against capitalism the fact that the competitive spirit in business is weakening and that businesses sometimes become bureaucratic. This is precisely due to the fact that people are fighting against the capitalistic system and don’t want to tolerate the institutions that are essential for its existence.

Ludwig Von Mises, Marxism Unmasked: From Delusion to Destruction, 8th Lecture, Profit and Loss, Private Property, and the Achievements of Capitalism

July 5, 2008

Acton: Liberty Defined

Lord Acton

Liberty is not the power of doing what we like, but the right of being able to do what we ought.

Lord Acton

July 3, 2008

Madison: Pure Motives of America’s Founding

Of the ability & intelligence of those who composed the Convention, the debates & proceedings may be a test; as the character of the work which was the offspring of their deliberations must be tested by the constitutional conventionexperience of the future, added to that of the nearly half century which has passed.

But whatever may be the judgment pronounced on the competency of the architects of the Constitution, or whatever may be the destiny, of the edifice prepared by them, I feel it a duty to express my profound & solemn conviction, derived from my intimate opportunity of observing & appreciating the views of the Convention, collectively & individually, that there never was an assembly of men, charged with a great & arduous trust, who were more pure in their motives, or more exclusively or anxiously devoted to the object committed to them, than were the members of the Federal Convention of 1787, to the object of devising and proposing a constitutional system which would best supply the defects of that which it was to replace, and best secure the permanent liberty and happiness of their country.

James Madison, Debates in the Convention of 1787, from its Preface

June 30, 2008

Chesterton: A Case for Gridlock

by Steve Farrell

G. K. Chesterton writes, “In the case of the laws of our American friends it may be said that they break them too easily because they make them too easily.”

G. K. ChestertonThis is true wisdom. It is also a reminder, by way of contrast, as to what the Founders stood for v. the current generation of demagogues and fast track legislation men. It was a republic, with a written Constitution (that could only be amended through a difficult process), limited powers outlined in that Constitution to those we elect, of those men elected, subject to recall, impeachment, misdemeanors and high crimes, and frequent elections if they disappoint, mixed forms of representation (rather than strict majority rule) that balanced the whims of the people, with the senior statesmanship of a Senate elected by state legislatures (only the most respected among them, in a contest that would be free of media involvement, would likely be elected), inalienable rights that none of these forms could or should over-ride, and freedom of religion, speech, press, and assembly, to help foster a moral, educated, informed, and independent thinking people as but another check, and as to the first item on that list, with the character necessary to, by and large, would be freely willing to obey the laws created, and moral enough, not to clamor for laws that would harm their neighbor.

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June 30, 2008

Chesterton: Enjoyment and Courage

G. K. Chesterton

Men will not enjoy what they dare not defend.

G. K. Chesterton

June 27, 2008

Farrell: Time to relearn, reconvert to the freedom foundations and faith of our forefathers

by Steve Farrell

Each generation has its challenges. Defender of the sanctity of human life, the late Alphonso Cardinal Lopez Trujillo, writing in Faith and Reason: The Journal of Christendom College, in the Fall 2006, says of the alphonso cardinal lopez trujillochallenge of our generation:

Unless we learn anew the foundations of life - unless we discover in a new way the certainty of faith - it will be less and less possible for us to entrust to other the gift of life and the task of an unknown future.

He’s right. This is the great test of our time. So much has for so long been taken for granted as givens: Marriage between a man and wife; the life of the unborn as sacred; the taking of that life out of selfishness, a grave sin; theft, in all its forms, as wrong as it was on Mt Sinai when God thundered ‘thou shalt not steal,’ and ‘thou shalt not covet;’ the obligation to “earn thy bread by the sweat of thy brow,” the stretching duty and obligation of man; offensive war, an affront to God as grave as murder, destined to produce unhappy national consequences; the necessity that a citizenry must be educated and moral for free government to self-govern itself to anything other than a swift and sure self-destruction. It was all commonly believed, upheld by both faith and reason. And for a time, a given, that needed no debate to prove.

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June 18, 2008

Paul: Economic Bubbles

by Ron Paul

Many Americans today are understandably concerned about the state of the economy. The current recession is likely to be one of the worst in recent memory, and comes at a particularly difficult time for many Americans, ron pauljust as many of the Baby Boom generation are planning to retire. American workers have come to expect stocks, mutual funds, bonds, and other investment opportunities to increase year after year, yet the stock market’s marginal performance over the past few years and the recent instability in the banking sector have made many wonder whether their retirement and savings accounts are safe.

Unfortunately, politicians still fail to understand both the origins of economic instability and the proper solution. Rather than getting government off people’s backs, their reflexive reaction is to get government more involved, creating new programs and bureaucracies, implementing new regulations, and spending billions more of the taxpayers’ hard-earned money. Only a sea change in congressional thinking will bring most members around to understanding that the proper way to deal with an economic crisis is to lower taxes, loosen regulation, and keep the government’s hands off the economy.

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Ron Paul, a 10-term congressman from Texas, serves on the House Financial Services, International Relations, and Joint Economic Committees. He is the author of The Revolution: A Manifesto, which is currently on the New York Times’ best-seller list.

Liberty Letters Responds: Follow the link and read along. Ron Paul talks about a host of interventionist measures by the state to solve “private sector failures” which were, in fact, caused by government intervention in the first place.

He also offers a message of hope about the growing number of young people who are informed about economics thanks to the miracle of the Internet. Things can get better. I agree.

June 18, 2008

Adams: Republic Defined

John Adams, Defence of the Constitutions of Government of the United States
1787

But of all the words in all languages, perhaps there has been none so much abused in this way as the words republic, commonwealth, and popular state. In the Rerum-Publicarum Collectio, of which there are fifty and odd volumes, and many of them very incorrect, France, Spain, and Portugal, the four great empires, the john adamsBabylonian, Persian, Greek, and Roman, and even the Ottoman, are all denominated republics. If, indeed, a republic signifies nothing but public affairs, it is equally applicable to all nations; and every kind of government, despotisms, monarchies, aristocracies, democracies, and every possible or imaginable composition of them are all republics. There is, no doubt, a public good and evil, a commonwealth and a common impoverishment in all of them. Others define a republic to be a government of more than one. This will exclude only the despotisms; for a monarchy administered by laws, requires at least magistrates to register them, and consequently more than one person in the government. Some comprehend under the term only aristocracies and democracies, and mixtures of these, without any distinct executive power. Others, again, more rationally, define a republic to signify only a government, in which all men, rich and poor, magistrates and subjects, officers and people, masters and servants, the first citizen and the last, are equally subject to the laws. This, indeed, appears to be the true and only true definition of a republic. The word res, every one knows, signified in the Roman language wealth, riches, property; the word publicus, quasi populicus, and per syncope pôplicus, signified public, common, belonging to the people; res publica, therefore, was publica res, the wealth, riches, or property of the people. Res populi, and the original meaning of the word republic could be no other than a government in which the property of the people predominated and governed; and it had more relation to property than liberty. It signified a government, in which the property of the public, or people, and of every one of them, was secured and protected by law. This idea, indeed, implies liberty; because property cannot be secure unless the man be at liberty to acquire, use, or part with it, at his discretion, and unless he have his personal liberty of life and limb, motion and rest, for that purpose. It implies, moreover, that the property and liberty of all men, not merely of a majority, should be safe; for the people, or public, comprehends more than a majority, it comprehends all and every individual; and the property of every citizen is a part of the public property, as each citizen is a part of the public, people, or community. The property, therefore, of every man has a share in government, and is more powerful than any citizen, or party of citizens; it is governed only by the law. There is, however, a peculiar sense in which the words republic, commonwealth, popular state, are used by English and French writers; who mean by them a democracy, or rather a representative democracy; a “government in one centre, and that centre the nation;” that is to say, that centre a single assembly, chosen at stated periods by the people, and invested with the whole sovereignty; the whole legislative, executive, and judicial power, to be exercised in a body, or by committees, as they shall think proper. This is the sense in which it was used by Marchamont Nedham, and in this sense it has been constantly used from his time to ours, even by writers of the most mathematical precision, the most classical purity, and extensive learning. What other authority there may be for this use of those words is not known; none has been found, except in the following observations of Portenari, in which there are several other inaccuracies; but they are here inserted, chiefly because they employ the words republic, commonwealth, and popular state, in the same sense with the English and French writers.

“We may say with the philosopher [Aristotle, in the Politics], that six things are so necessary to a city, that without them it cannot stand. 1. The first is provisions, without which its inhabitants cannot live. 2. The second is clothes, habitations, houses, and other things, which depend upon the arts, without which civil and political life cannot subsist. 3. The third is arms, which are necessary to defend the city from its enemies, and to repress the boldness of those who rebel against the laws. 4. The fourth is money, most necessary to a city in peace and in war. 5. The fifth is the care of divine worship. 6. The sixth is the administration of justice, and the government of the people. For the first are necessary, cultivators of the land; for the second, artificers; for the third, soldiers; for the fourth, merchants and capitalists; for the fifth, priests; for the sixth, judges and magistrates. Seven sorts of men, therefore, are necessary to a city: husbandmen, artificers, soldiers, merchants, rich men, priests, and judges.

“But, according to the same philosopher, as in the body natural not all those things, without which it is never found, are parts of it, but only instruments subservient to some uses, as in animals, the horns, the nails, the hair, so not all those seven sorts of men are parts of the city; but some of them, namely, the husbandmen, the artificers, and the merchants, are only instruments useful to civil life, as is thus demonstrated. A city is constituted for felicity, as to its ultimate end; and human felicity, here below, is reposed, according to the same philosopher, in the operations of virtue, and chiefly in the exertions of wisdom and prudence; those men, therefore, are not parts of a city, the operations of whom are not directed to those virtues; such are the husbandmen who are occupied, not in wisdom and prudence, but in laboring the earth; such are the artisans, who fatigue themselves night and day to gain a livelihood for themselves and their poor families; such, finally, are the merchants, who watch and labor continually, not in wisdom and prudence, but in the acquisition of gold. It is therefore clear, that neither husbandmen, artificers, nor merchants, are parts of a city, nor ought to be numbered among the citizens, but only as instruments which subserve certain uses and conveniences of the city.”

We must pause here and admire! The foregoing are not only the grave sentiments of Portenari and of Aristotle, but form the doctrine almost of the whole earth, and of all mankind; not only every despotism, empire, and monarchy, in Asia, Africa, and Europe, but every aristocratical republic, has adopted it in all its latitude. There are only two or three of the smallest cantons in Switzerland, besides England, who allow husbandmen, artificers, and merchants, to be citizens, or to have any voice or share in the government of the state, or in the choice or appointment of any who have. There is no doctrine, and no fact, which goes so far as this towards forfeiting to the human species the character of rational creatures. Is it not amazing, that nations should have thus tamely surrendered themselves, like so many flocks of sheep, into the hands of shepherds, whose great solicitude to devour the lambs, the wool, and the flesh, scarcely leave them time to provide water or pasture for the animals, or even shelter against the weather and the wolves?

It is, indeed, impossible that the several descriptions of men, last enumerated, should, in a great nation and extensive territory, ever assemble in a body to act in concert; and the ancient method of taking the sense of an assembly of citizens in the capital, as in Rome for example, for the sense of all the citizens of a whole republic, or a large empire, was very imperfect, and extremely exposed to corruption; but, since the invention of representative assemblies, much of that objection is removed, though even that was no sufficient reason for excluding farmers, merchants, and artificers, from the rights of citizens. At present a husbandman, merchant, or artificer, provided he has any small property, by which he may be supposed to have a judgment and will of his own, instead of depending for his daily bread on some patron or master, is a sufficient judge of the qualifications of a person to represent him in the legislature. A representative assembly, fairly constituted, and made an integral part of the sovereignty, has power forever to control the rich and illustrious in another assembly, and a court and king, where there is a king. This, too, is the only instrument by which the body of the people can act; the only way in which their opinions can be known and collected; the only means by which their wills can be united, and their strength exerted, according to any principle or continued system.

It is sometimes said, that mobs are a good mode of expressing the sense, the resentments, and feelings of the people. Whig mobs to be sure are meant! But if the principle is once admitted, liberty and the rights of mankind will infallibly be betrayed; for it is giving liberty to tories and courtiers to excite mobs as well as to patriots; and all history and experience shows, that mobs are more easily excited by courtiers and princes, than by more virtuous men, and more honest friends of liberty.

It is often said, too, that farmers, merchants, and mechanics, are too inattentive to public affairs, and too patient under oppression. This is undoubtedly true, and will forever be so; and, what is worse, the most sober, industrious, and peaceable of them, will forever be the least attentive, and the least disposed to exert themselves in hazardous and disagreeable efforts of resistance. The only practicable method, therefore, of giving to farmers, &c. the equal right of citizens, and their proper weight and influence in society, is by elections, frequently repeated, of a house of commons, an assembly which shall be an essential part of the sovereignty. The meanest understanding is equal to the duty of saying who is the man in his neighborhood whom he most esteems, and loves best, for his knowledge, integrity, and benevolence. The understandings, however, of husbandmen, merchants, and mechanics, are not always the meanest; there arise, in the course of human life, many among them of the most splendid geniuses, the most active and benevolent dispositions, and most undaunted bravery. The moral equality that nature has unalterably established among men, gives these an undoubted right to have every road opened to them for advancement in life and in power that is open to any others. These are the characters which will be discovered in popular elections, and brought forward upon the stage, where they may exert all their faculties, and enjoy all the honors, offices, and commands, both in peace and war, of which they are capable. The dogma of Aristotle, and the practice of the world, is the most unphilosophical, the most inhuman and cruel that can be conceived. Until this wicked position, which is worse than the slavery of the ancient republics, or modern West Indies, shall be held up to the derision and contempt, the execration and horror, of mankind, it will be to little purpose to talk or write about liberty. This doctrine of Aristotle is the more extraordinary, as it seems to be inconsistent with his great and common principles, “that a happy life must arise from a course of virtue; that virtue consists in a medium; and that the middle life is the happiest.

“In every city the people are divided into three sorts, the very rich, the very poor, and the middle sort. If it is admitted that the medium is the best, it follows that, even in point of fortune, a mediocrity is preferable. The middle state is most compliant to reason. Those who are very beautiful, or strong, or noble, or rich, or, on the contrary, those who are very poor, weak, or mean, with difficulty obey reason. The former are capricious and flagitious; the latter, rascally and mean; the crimes of each arising from their different excesses. Those who excel in riches, friends, and influence, are not willing to submit to command or law; this begins at home, where they are brought up too delicately, when boys, to obey their preceptors. The constant want of what the rich enjoy makes the poor too mean; the poor know not how to command, but are in the habit of being commanded, too often as slaves. The rich know not how to submit to any command; nor do they know how to rule over freemen, or to command others, but despotically. A city composed only of the rich and the poor, consists but of masters and slaves, not freemen; where one party despise, and the other hate; where there is no possibility of friendship, or political community, which supposes affection. It is the genius of a free city to be composed, as much as possible, of equals; and equality will be best preserved when the greatest part of the inhabitants are in the middle state. These will be best assured of safety as well as equality; they will not covet nor steal, as the poor do, what belongs to the rich; nor will what they have be coveted or stolen; without plotting against any one, or having any one plot against them, they will live free from danger. For which reason, Phocylides wisely wishes for the middle state, as being most productive of happiness. It is plain then that the most perfect community must be among those who are in the middle rank; and those states are best instituted, wherein these are a larger and more respectable part, if possible, than both the other; or, if that cannot be, at least than either of them separate; so that, being thrown into the balance, it may prevent either scale from preponderating. It is, therefore, the greatest happiness which the citizen can enjoy, to possess a moderate and convenient fortune. When some possess too much, and others nothing at all, the government must either be in the hands of the meanest rabble, or else a pure oligarchy. The middle state is best, as being least liable to those seditions and insurrections which disturb the community; and for the same reason extensive governments are least liable to these inconveniences; for there those in the middle state are very numerous; whereas, in small ones, it is easy to pass to the two extremes, so as hardly to have any medium remaining, but the one half rich, and the other poor. We ought to consider, as a proof of this, that the best lawgivers were those in the middle rank of life, among whom was Solon, as is evident from his poems, and Lycurgus, for he was not a king; and Charondas, and, indeed, most others. Hence, so many free states have changed either to democracies or oligarchies; for whenever the number of those in the middle state has been too small, those who were the more numerous, whether the rich or the poor, always overpowered them, and assumed to themselves the administration. When, in consequence of their disputes and quarrels with each other, either the rich get the better of the poor, or the poor of the rich, neither of them will establish a free state, but, as a record of their victory, will form one which inclines to their own principles, either a democracy or an oligarchy. It is, indeed, an established custom of cities, not to desire an equality, but either to aspire to govern, or, when they are conquered, to submit.”

These are some of the wisest sentiments of Aristotle; but can you reconcile them with his other arbitrary doctrine, and tyrannical exclusion of husbandmen, merchants, and tradesmen, from the rank and rights of citizens? These, or at least, those of them who have acquired property enough to be exempt from daily dependence on others, are the real middling people, and generally as honest and independent as any; these, however, it must be confessed, are too inattentive to public and national affairs, and too apt to submit to oppression. When they have been provoked beyond all bearing, they have aimed at demolishing the government, and when they have done that, they have sunk into their usual inattention, and left others to erect a new one as rude and ill-modelled as the former. A representative assembly, elected by them, is the only way in which they can act in concert; but they have always allowed themselves to be cheated by false, imperfect, partial, and inadequate representations of themselves, and have never had their full and proper share of power in a state.

The Works of John Adams. Edited by Charles Francis Adams. 10 vols. Boston: Little, Brown & Co., 1850–56. See also: Butterfield; Cappon; Warren-Adams Letters

June 17, 2008

James Madison on Property

March 1792

This term in its particular application means “that dominion which one man claims and exercises over the external things of the world, in exclusion of every other individual.”

james madisonIn its larger and juster meaning, it embraces every thing to which a man may attach a value and have a right; and which leaves to every one else the like advantage.

In the former sense, a man’s land, or merchandize, or money is called his property.

In the latter sense, a man has a property in his opinions and the free communication of them.

He has a property of peculiar value in his religious opinions, and in the profession and practice dictated by them.

He has a property very dear to him in the safety and liberty of his person.

He has an equal property in the free use of his faculties and free choice of the objects on which to employ them.

In a word, as a man is said to have a right to his property, he may be equally said to have a property in his rights.

Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.

Where there is an excess of liberty, the effect is the same, tho’ from an opposite cause.

Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.

According to this standard of merit, the praise of affording a just securing to property, should be sparingly bestowed on a government which, however scrupulously guarding the possessions of individuals, does not protect them in the enjoyment and communication of their opinions, in which they have an equal, and in the estimation of some, a more valuable property.

More sparingly should this praise be allowed to a government, where a man’s religious rights are violated by penalties, or fettered by tests, or taxed by a hierarchy. Conscience is the most sacred of all property; other property depending in part on positive law, the exercise of that, being a natural and unalienable right. To guard a man’s house as his castle, to pay public and enforce private debts with the most exact faith, can give no title to invade a man’s conscience which is more sacred than his castle, or to withhold from it that debt of protection, for which the public faith is pledged, by the very nature and original conditions of the social pact.

That is not a just government, nor is property secure under it, where the property which a man has in his personal safety and personal liberty, is violated by arbitrary seizures of one class of citizens for the service of the rest. A magistrate issuing his warrants to a press gang, would be in his proper functions in Turkey or Indostan, under appellations proverbial of the most compleat despotism.

That is not a just government, nor is property secure under it, where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations, which not only constitute their property in the general sense of the word; but are the means of acquiring property strictly so called. What must be the spirit of legislation where a manufacturer of linen cloth is forbidden to bury his own child in a linen shroud, in order to favour his neighbour who manufactures woolen cloth; where the manufacturer and wearer of woolen cloth are again forbidden the economical [Volume 1, Page 599] use of buttons of that material, in favor of the manufacturer of buttons of other materials!

A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species: where arbitrary taxes invade the domestic sanctuaries of the rich, and excessive taxes grind the faces of the poor; where the keenness and competitions of want are deemed an insufficient spur to labor, and taxes are again applied, by an unfeeling policy, as another spur; in violation of that sacred property, which Heaven, in decreeing man to earn his bread by the sweat of his brow, kindly reserved to him, in the small repose that could be spared from the supply of his necessities.

If there be a government then which prides itself in maintaining the inviolability of property; which provides that none shall be taken directly even for public use without indemnification to the owner, and yet directly violates the property which individuals have in their opinions, their religion, their persons, and their faculties; nay more, which indirectly violates their property, in their actual possessions, in the labor that acquires their daily subsistence, and in the hallowed remnant of time which ought to relieve their fatigues and soothe their cares, the influence [inference?] will have been anticipated, that such a government is not a pattern for the United States.

If the United States mean to obtain or deserve the full praise due to wise and just governments, they will equally respect the rights of property, and the property in rights: they will rival the government that most sacredly guards the former; and by repelling its example in violating the latter, will make themselves a pattern to that and all other governments.

The Papers of James Madison. Charlottesville: University Press of Virginia, 1977–(vols. 11–).