Henry Louis
Mencken, 1880—1956, known as either the “Bad Boy of Baltimore” or
the “Sage of Baltimore,” was christened by Murray Rothbard as “The
Joyous Libertarian.” In an article so entitled in the New Individualist
Review in 1962, Rothbard hit the wide public impression that
Mencken was but a cynic and nihilist

Yet Rothbard,
in his brilliant way, saw Mencken as a libertarian and individualist,
acing his point by giving insights to Mencken doctrine and quotations
from Mencken’s sharp pen, la these:

“The extortions
and oppressions of government will go on so long as such bare fraudulence
deceives and disarms the victims — so long as they are ready to
swallow the immemorial official theory that protesting against the
stealings of the archbishop’s secretary’s nephew’s mistress’ illegitimate
son is a sin against the Holy Ghost.”

“Democracy
is the theory that the common people know what they want, and deserve
to get it good and hard.”

“The mob is
competent to rule the rest of us — but it must be rigorously policed
itself.”

“Puritanism
is the haunting fear that someone, somewhere, may be happy.”

The Mencken
knack of getting to the heart of the dark matter of widely embraced
if not exalted political democracy is seen in his treatment of Abraham
Lincoln. Said Lincoln himself then a Congressman in a speech to
the House of Representatives on January 12, 1848 when he saw secession
as “a most valuable right, a most sacred right, a right which I
hope and believe we can liberate the world.” Hail Lincoln, if the
Forgotten Man of 1848.

That was then,
before the Presidential Bug evidently bit the Congressman, before
Confederate batteries fired on the Union’s Fort Sumter in Charleston’s
harbor. For by the time of the Civil War such secession sacredness
had somehow become a dead letter, the more so when Lincoln went
to Gettysburg to dedicate its battlefield as a national monument.

Mencken writing
in the May 1920 issue of his Smart Set Magazine extolled
the Gettysburg Address as “genuinely stupendous,” however adding
that “it is poetry, not logic, beauty, not sense.” Mencken asked
us to see through the strained Lincoln argument — “that government
of the people, by the people, for the people,” shall not perish
from the earth. Sure!

For while Mencken
embraced self-determination la that of Congressman
Lincoln in 1848, he was struck by the fact that the Union soldiers
were actually fighting against it — against the right of
the Confederates to fight for “the right of their people to govern
themselves.” So Mencken asked his readers:

“What is the
practical effect of the battle of Gettysburg? What else than the
destruction of the old sovereignty of the states, i.e., but of the
people of the States? The Confederates went into battle but to fall
under the supervision and veto of the rest of the country — and
for nearly 20 years that veto was so effective that they enjoyed
scarcely more liberty, in the political sense, than so many convicts
in the penitentiary.”

Yes, Mencken
critics tout Lincoln’s Emancipation Proclamation that freed the
slaves. Freed? Not quite. For what about the slaves in Union slave-holding
states such as Maryland, West Virginia, and Kentucky? Slaves there
were passed over — clearly for political reasons. So let’s hear
the Union side: Damn the Torpedoes! Democracy Forever — on Our Terms!

Woefully not
the peaceful terms of the British Parliament led by its M.P. William
Wilberforce. His bill and law (1807) reimbursed British slaveowners,
so enabling Britain to buy freedom for its slaves by cash, not war
— with our Civil War costing, aside from vast debt, more than 600,00
lives in a much smaller population.

No wonder Mencken,
Upstairs, is tantalized by Democracy, by its incongruancy, by its
politically unrightful, unsacred, and most unsafe goings-on.

April
14, 2009

William
Peterson [send him mail],
a longtime contributor to the Wall Street Journal, won the
2005 Schlarbaum Prize for Lifetime Achievement in the Study of Liberty
given by the Ludwig von Mises Institute of Auburn, Alabama.

William
H. Peterson Archives

DIGG THIS

From
each according to his abilities, to each according to his needs.
~ Karl Marx, 1875

Our
basic freedoms are disappearing.
~ Ron Paul, 2008

In 1958, as
a young American associate professor of economics on a grant-supported
research mission on communism (or total state socialism), I flew
into the Soviet Union during the Cold War. At the Moscow airport
I was unceremoniously met and presumably properly brainwashed with
a gratis English-translation copy of “Manifesto of the Communist
Party” by Karl Marx and Frederick Engels (benefactor Engels later
said he was but a figurehead in actual coauthorship), published
in German in 1848.

I have that
very 120-page work (Foreign Languages Publishing House, Moscow,
1955) as I copy and italicize some telling excerpts. Rereading the
copy, I am struck again by its odd cant and odder rationale — having
had such earlier reactions as: Is This Really a True Pro Forma Manifesto?
Or, Is It But an Illusory Tract of Political Pamphleteering?

My reply: Tract.
Yet the Communist Manifesto made a big splash in socialist
countries like the Soviet Union, Red China, and North Vietnam (against
which we warred and quit after 58,000 casualties) and in socialist
parties and circles across the world. The Manifesto betrays much
political spinning — e.g., a paradigm of a Benign Savior State,
hardly the grotesque dictatorship that I saw firsthand (in the vein
of Nobelist Solzhenitsyn) apart from noting similar communist states
such as East Germany and throughout Eastern Europe.

The daring
Communist Manifesto starts with a bang that never lets up, a bang
which, incidentally, is echoed in much of the heated campaign dialogue
in the Obama-McCain election race. For hear Marx on how the bourgeoisie
in his day dominates and exploits the supposedly downtrodden proletariat,
and presumably still does today, per the Manifesto’s opening lines
and beyond ….

A spectre
is haunting Europe — the spectre of Communism. All the powers
of old Europe have entered into a holy alliance to exorcise this
spectre: Pope and Czar, Metternich and Guizot, French Radicals
and German police-spies …. It is high time that Communists should
openly, in the face of the whole world, publish their views, their
aims, their tendencies, and meet this nursery tale of the spectre
of Communism with a Manifesto of the party itself ….

So the Manifesto
rewrites world history, saying it boils down to an endless class
struggle (a central communist idea) ….

The history
of all hitherto existing society is the history of class struggles.
Freeman and slave, patrician and plebeian, lord and serf, guild-master
and journeyman, in a word, oppressor and oppressed, stood in constant
opposition to one another, carried on an uninterrupted, now hidden,
now open fight, a fight that each time ended, either in a revolutionary
reconstitution of society at large, or in the common ruin of contending
classes ….

Our epoch,
the epoch of the bourgeoisie, possesses, however, this distinctive
feature: It has simplified the class antagonisms. Society as a
whole is more and more splitting up into two great hostile camps,
into two great classes directly facing each other: Bourgeoisie
and Proletariat ….

The bourgeoisie,
wherever it has got the upper hand, has put an end to all feudal,
patriarchal, idyllic relations. It has pitilessly torn asunder
the mostly feudal ties that has bound man to his “natural superiors,”
and has left remaining no other nexus between man and man than
naked self-interest, than callous “cash payment.” It has drowned
the most heavenly ecstasies of religious fervour, of chivalrous
enthusiasm, of philistine sentimentalism, in the icy water of
egotistical calculation. It has resolved personal worth into exchange
value, and in place of the numberless indefeasible chartered freedoms,
has set up that single, unconscionable freedom — Free Trade. In
one word, for exploitation, veiled by religious and political
illusions, it has substituted naked, shameless, direct, brutal
exploitation.

Brutal exploitation
is bad enough but Marx compounds mistruth in reading history both
correctly and incorrectly. Correctly, by conceding that giant leaps
in productivity and technology were indeed wrought by the bourgeois
system. Incorrectly, by charging the bourgeoisie with theft of the
capitalist order from its true owners, not the saving-investing
risk-taking entrepreneurs and capitalists but — careful, comes a
Marxist whopper — from the proletariat itself, per the underlined
words in the next two excerpts ….

The bourgeoisie,
during the rule of scarce one hundred years, has created more
massive and more colossal productive forces than have all preceding
generations put together. Subjection of Nature’s forces to man,
machinery, application of chemistry to industry and agriculture,
steam-navigation, railways, electric telegraphs, clearing of whole
continents for cultivation, canalisation of rivers, whole populations
conjured out of the ground — what earlier century had even
a presentiment that such productive forces slumbered in the lap
of social labour? ….

But does
wage labour create any property for the labourer? Not a bit. It
creates capital, i.e., that kind of capital which exploits wage
labour, and which cannot increase except upon condition of
begetting a new supply of wage labour for fresh exploitation ….

Exploitation?
Granted, early factories were no picnics and hours were long. But
Marx and the Communists miss the fact that their so-called proletariat
is a prime beneficiary of capital formation which tends to cause
productivity gain and ensuing wage improvement as entrepreneurs
bid up the real wages of available labor — and so cause national
living standards to rise. Marx tagged this vital process “capitalism,”
and the tag caught on. But to the Communists the process was still
too slow and too sinning via bourgeois theft. So the Communists
declare war on the West ….

The Communists
disdain to conceal their views and aims. They openly declare that
their ends can be attained only by the forcible overthrow of all
existing social conditions. Let the ruling classes tremble at
a Communistic revolution. The proletarians have nothing to lose
but their chains. They have a world to win.

WORKING
MEN OF ALL COUNTRIES, UNITE!

The Communist
Revolution or total socialism did come to pass in the 20th century,
notably in the Soviet Union, Red China, and North Vietnam (a land
we hit and quit in a long devastating war, costing some 58,000 U.S.
casualties). Predictably, all three nations were grotesque dictatorships,
devoid of liberty.

Now in 2008
comes another manifesto, another revolution, but one that is the
very antithesis of communism, a fervent case for a return to peace
and prosperity, per a new book entitled The
Revolution: A Manifesto (Grand Central Publishing, 184 pages,
$21), an American salvation spellbinder by Ron Paul, a true GOP
originalist, an obstetrician turned political visionary with 4,000
deliveries to his credit, an ex-presidential candidate who raised
some $35 million dollars and sparked a big swing of mostly young
supporters in putting forth his amazing cause of Constitutionalism
and freedom. As he dedicates his book ….

“To my supporters:
I have never been more humbled and honored than by your selfless
devotion to freedom and the Constitution. The American Revolutionaries
did the impossible. So can we.”

So meet Ron
Paul, a ten-term Republican representative from Texas, a solid advocate
of individual liberty, of a live-and-let-live foreign policy, of
the US no longer serving as the “the policeman of the world” with
troops in 130 countries, of returning to sound money via returning
to the gold standard, of returning to our limited-republic roots
by returning to our original Constitution and Bill of Rights. Judge
Andrew Napolitano calls Congressman Paul “the Thomas Jefferson of
our day.” Critics call him “Dr. No.”

Well, why not
say No to a near-Orwellian world in early Century 21, as US government
at all levels loom larger, as inflation and rising taxes serve to
smother production and employment, a phenomenon called “stagflation”
as business stagnation links to rising prices, with the makings
of a perfect storm of far deeper economic disarray as the presidential
campaign with debates casts not light but confusing clouding as
partisan charges and counter-charges befuddle national and individual
thinking. Yet clearer and wider individual thinking is at hand,
as this welcome Ron Paul book points the way to a moral and economic
recrudescence in America and abroad.

Dr. Paul makes
his case for a US peace and prosperity comeback by marshaling facts
and figures. He castigates the growing use and abuse of presidential
executive orders which circumvent Congress and render President
Bush No. 43 a government unto himself.

Too, Ron Paul
vaunts the Austrian School of Economics and Ludwig von Mises who
propounded a theory on communism unworkability for its denial or
nonavailability of “economic calculation,” as spelled out in a Mises
article in a European professional journal in 1920 and expanded
into a book, Socialism
in 1922, with an English translation published by the Yale University
Press in 1951. Mises held that without widespread daily market price
fluctuations relevant supply and demand signals were blurred, that
communist production bureaucrats were flying blind, that mistakes
were inevitable sans sound economic calculation. Indeed, the giant
U.S.S.R. & Co. imploded in 1989—1991. Mises was right again

Dr. Paul sees
our Constitution designed to restrain government, not the people.
But power-corrupting government is ever lured to undermine or overturn
restraints to gain power and influence. Volatile power, pernicious
influence. Hailing George Washington as the Father of our Country,
Ron Paul recalls his pertinent idea: “Government is not reason;
it is force. Like fire, it is a dangerous master and a fearful servant.”

Dr. Paul also
purposely pairs himself with the great 19th century legislator and
philosopher, Frederic Bastiat, renowned opponent of “legal plunder.”
Bastiat marked three ways that citizens could deal with plunder:

1. The few
   plunder the many.
2. Everybody
   plunders everybody else.
3. Nobody
   plunders anybody.

Dr. Paul says
we Westerners pretty much follow option No. Two using such devices
as import tariffs and non-flat income taxes so to live at our neighbor’s
expense. Thus Bastiat defined the modern state as “the great fiction
through which everybody endeavors to live at the expense of everybody
else.”

Bravo, Congressman
Ron Paul. You are a unique moral leader in stormy times. You point
up the seamy side of the modern welfare state, prod us on the urgency
to stop squandering resources on useless wars, stop rotting the
value of our currency, stop the immorality of resorting to a corrupt
legislator-voter system of interventionism so as to lure us into
stealing from each other via much misunderstood government.

Ron Paul’s
brave and yet, I trust, realistic last line in the book says it
all:

“Let the revolution
begin.”

August
5, 2008

William
Peterson [send him mail],
a longtime contributor to the Wall Street Journal, won the
2005 Schlarbaum Prize for Lifetime Achievement in the Study of Liberty
given by the Ludwig von Mises Institute of Auburn, Alabama.

William
H. Peterson Archives

DIGG THIS

Does America
one-sidedly worship a political demigod in our media, legislatures,
and textbooks — i.e., a narrowly-viewed Democracy, one somewhat
silent on its widespread special-interests power, yet far more silent
on its vast market democratization from Main Street to Wall Street,
from Wal-Mart to Tiffany’s? Imagine, an endless 24/7 market plebiscite
on the supply side, the workhorse for the bulk of our Gross Domestic
Product (GDP). Still, our market democracy is but dimly seen, dimly
grasped, dimly admired. Why?

Partly because
American democracy is in a sense dichotomous: Ours is both a public
and a private society, both a political democracy and a market democracy.
Yet we are still the one and the same people whose market democracy
votes are very often crossed by political democracy. Again, why?

For perspective,
read the prescient speech on political democracy by Benjamin Disraeli,
young novelist, thinker, and back-bench Tory M.P. (later twice British
Prime Minister) in the House of Commons, March 31, 1850:

"If
you establish a democracy, you must in due time reap the fruits
of democracy. You will in due season have great impatience of
the public burdens, combined in due season with great increase
of public expenditure. You will in due season have wars entered
into from passion and not from reason; and you will in due season
submit to peace ignominiously sought and ignominiously obtained,
which will diminish your authority and perhaps endanger your independence."

Or note the
related ageless editorial on democratic and other politics in
The London Times, February 7, 1852: "Concealment, evasion,
factious combinations, the surrender of convictions to party objects,
and the systematic pursuit of expediency are things of daily occurrence
among men of the highest character, once embarked in the contentions
of political life."

Thus does our
political democracy tend to give way to what Milton Friedman called
the tyranny of the status quo (or what I call the statist
quo). This quo is geared to exploit the exploitable — you and your
fellow citizens caught in a fix of today’s winner-takes-all majoritarianism,
of heavy taxation, of currently a crisis of economic slowdown and
possible recession.

Time then seems
ripe for a tax cut la those of the 1960s and 1980s. President
John F. Kennedy sold the case to nation and Congress for a near
20 percent across-the-board tax cut, getting off the memorable line,
“A rising tide lifts all boats.” President Lyndon B. Johnson signed
the cut into law, following the Kennedy assassination. The cut worked.
Output advanced, unemployment fell from close to 6 percent to under
4 percent.

In the 1980s
came the Supply-Siders, led by Paul Craig Roberts and Arthur Laffer
(of Laffer Curve fame). Their point was to augment the Fed’s move
to end the recession. They would cut marginal tax rates so to expand
aggregate supply. They drew inspiration from 19th-century French
economist Jean Baptiste Say whose Say’s Law held that supply creates
aggregate demand. The theory worked as Congress cut 14 marginal
tax brackets to but three — 15, 28, and 33 percent. So during the
two terms of President Ronald Reagan the top marginal U.S. rate
was cut by more than half, from 70 percent to 33 percent.

More history.
Plainly our Framers were no friends of political democracy. Note
the very word "democracy" is nowhere to be found in the
Declaration of Independence, Constitution, and Bill of Rights. And
notice how sternly anti-democratic are the first five words
of the First Amendment on bills abridging religion, speech, press,
assembly, and petition: "Congress shall pass no law …. "
Repeat, "no law."

Hence Ben Franklin,
asked outside Independence Hall what kind of state the Framers had
provided, replied with a famous proviso: "A republic — if you
can keep it." Big if. I think Old Ben was warning us: As political
democracy ensues — as it has — the individual shrinks and our workhorse
becomes at times wan and wobbly. I agree with Old Ben: A limited
— repeat, limited — republic is the way to go.

So Austrian
economist Ludwig von Mises sought to light up a practically unseen
if not unrealized, yet highly effective direct daily democracy.
In 1922 in his Socialism
he saw it in around-the-clock market action. I.e., such ensues as
Americans today vote their after-tax money over and over, as they
buy or reject goods and services in today’s supermarket, healthcare
center, shopping mall, order by phone, trade stocks and bonds online,
get colas at vending machines, cash at ATMs, fill up at gas pump
by credit-or-debit cards, or, importantly, as American business
in their own consumer capacity order bank credit, supplies, equipment,
manpower, brainpower, and land-office-factory space for their operations.

Thus consumers
vote not but every other year as in federal elections but again
and again every day, a democracy featuring a 100 percent daily turnout
compared to but something in the 50 percent range in federal elections.
Recall President Calvin Coolidge sensing the vastness of what goes
on in the market process when he told the American Society of Newspaper
Editors in 1925: “The chief business of the American people is business.”

So Mises sought
to give market democracy a political edge via popular and intellectual
perception, public recognition, or as he put it in Socialism:
“When we call a capitalist society a consumers’ democracy we mean
that the power to dispose of the means of production, which belongs
to the entrepreneurs and capitalists, can only be acquired by means
of the consumers’ ballot, held daily in the marketplace.” Mises
thus promoted this system of voluntary daily market democracy as
a victory of “consumer sovereignty,” of broad-based “social cooperation.”

Note vital
legal underpinnings of such market democracy in our Founding Fathers
heritage of habeas corpus, the rule of law, a bill of rights, and
other checks-and-balances limits on political democracy. But these
limits have since broken down, in large part due to the 16th (income
tax) and 17th (direct election of U. S. senators) constitutional
amendments, both passed in 1913, both tilting toward political democracy,
both further centralizing political power in Washington.

Democracy?
Check its Greek roots: rule or “kratia,” by the people or “demos.”
But ask today in Washington or your state capital if not your city
hall: Who rules whom? How come politics gets to advance one intervention
after another? Why ever-mounting government hegemony: interventionism
(including the Fed’s bailout of Bear Sterns), deficit finance, welfare-warfare,
bureaucracy, regulationism, special interests, and high progressive
income taxation persisting in America, while flat income tax systems
bloom in the world including Ireland — the new Switzerland of Europe
— and even, of all countries, Russia, with a flat income tax at
but 13 percent?

Meanwhile,
the world veers toward more globalization and relatively less international
tension via freer trade and international investment, judging from
the well subtitled 2008
Index of Economic Freedom: The Link Between Economic Opportunity
and Prosperity just published by the Heritage Foundation
and the Wall Street Journal, with one of its editors, Edwin J. Feulner,
head of the Heritage Foundation, saying in the preface that economic
freedom — read market democracy — gives birth to “a virtuous cycle
of entrepreneurship, innovation, and sustained economic growth.”

That growth
is, again, under the watchful eye — and control — of consumers.
Entrepreneurs and capitalists may think they control production,
that they are at the helm and steer the ship. Wrote Mises in his
Human
Action, 1949: “A superficial observer would believe that
[entrepreneurs and capitalists] are supreme. But they are not. They
are bound to obey unconditionally the captain’s orders. The captain
is the consumer.” So the Mises idea of consumer sovereignty. By
buying this, rejecting that, consumers become, if not absolute,
king-and-queen of market democracy. They in effect run the show,
have the last word.

So I trust
— in the heat of current debate on economic policy and in the throes
of what could be oncoming recession — that the actuality of market
democracy, of free markets, free minds, free trade, and private
property rights in action can be reborn, rethought, and reinforced.
Market democracy — i.e., again, economic freedom here and abroad,
not economic isolationism and protectionism — is the key to prosperity
and peace. Or as Thomas J. Watson, founder and head of IBM, long
put it: “World Peace Through World Trade.”

It follows
that protectionism boomerangs on the otherwise sovereign consumer,
denying the consumer full freedom to trade. Witness the Clinton-Obama
verbal assault on the North American Free Trade Agreement causing
roiling reaction in Canada and Mexico. So doesn’t protectionism
and Big Government spell loss of economic rights, in a way disenfranchising
more and more people from their giant other democracy, the free
market?

Free trade
and free investment here and abroad are key parts of the global
marketplace in action, a vast positive-sum game in which you, Mr./Ms.
Consumer, are broadly a daily player and winner. See then our giant
marketplace whose renewal and reinvigoration via popular education
and a supply-side tax cut could pave a way back to economic regrowth
and resurgence, a way to beat back a recession which seems to be
closing in.

The trick then
is to spot this pressing problem of widespread imperception vs.
perception. The idea is to broadly comprehend, publicly recognize,
and hail loud and clear this vast consumer-dominated market democracy
— so that it is no longer neither widely understood nor much appreciated.

April
3, 2008

William
Peterson [send him mail],
a longtime contributor to the Wall Street Journal, won the
2005 Schlarbaum Prize for Lifetime Achievement in the Study of Liberty
given by the Ludwig von Mises Institute of Auburn, Alabama.

William
H. Peterson Archives

DIGG THIS

"Funny
money," commented a visitor in our earshot at the Chase Manhattan
Bank Museum of Moneys of the World in New York Rockefeller Center.
The visitor, a Texan we surmised from his drawl, height, and wide-brim
Stetson, was referring to a display of Yap stone money. One Yap
specimen measures some thirty inches in diameter and weighs about
175 pounds. It is worth ten thousand coconuts or one wife, or so
the sign read.

Funny money
is right, we mused, but not for the reason that seemed to catch
the eye of most of the sightseers and what we guessed were a few
stray numismatists. They were fascinated by the bizarre in money:
the tiny gold coin, little bigger than a pinhead, from India; the
large copper coin weighing 31 pounds from Sweden; the Joachimsthaler
coin minted about 1520 in Bohemia, the ancestor of the American
"thaler" or, later, dollar; the "genuine" American
wooden nickels; money old and new, money in big denominations and
small, money in assorted shapes and materials, money
made of metal and paper of course but also made of salt, of grain,
of fishhooks, of musket balls, of cacao seeds, of brick tea, even
of woodpecker scalps.

Still, what
intrigued us was the evidence of inflation demonstrated by the museum’s
better than 75,000 specimens of ancient and modern money. Some fifty
centuries of inflation, we’d say. The progressive and quite unrelenting
disappearance of silver in the content of the denarius coin of Rome
(the penny of the New Testament) for example. (Thinning out the
silver content leads inexorably, we figured, to the multiplication
of volume of money and its loss of value. This is the way with inflation
— multiplication is what is sought under the theory that money
is wealth but it is division that, unintentionally, results.)

At any rate,
according to a reference work we found in the museum, the denarius
issued by Augustus was, save for a bit of hardening alloy, pure
silver — i.e., its silver content was practically 100 per cent.
Yet by Nero, in 54 A.D., the silver content of the denarius had
slipped to 94 per cent; by Vitellius, in 68 A.D, to 81 per cent.
By Domitian, in 81 A.D., it had climbed to 92 per cent; by Trajan,
98 A.D., up another notch to 93 per cent; but by Hadrian, 117 A.D.,
it had again wended its way down, to 87 per cent; by Antoninus Pius,
138 A.D., to 75 per cent; by Marcus Aurelius, 161 A.D., to 88 per
cent; by Septimius Severus, 193 A.D., to 50 per cent; by Elagabalus,
218 A.D., to 43 per cent; by Alexander Severus, 222 A.D., to 35
per cent; by Gordian, 238 A.D., to 28 per cent; by Philip, 244 A.D.,
to 0.5 per cent; and by Claudius Victorinus, 268 A.D., to 0.02 per
cent. Then came Diocletian’s famous answer to inflation, his price-fixing
edict of 301 A.D., replete with very sharp teeth for price-breakers.
It didn’t work; inflation persisted. And anyway, Rome was out of
business before long.

Not So Sterling

So much for
the Roman penny. What of the English penny, originally struck of
sterling silver? It is the same sad tale. Another reference work
at the museum bespoke of the same trend of decline of silver content.
For King John, of Magna Carta fame, the English penny (for which
the British today still use the symbol "d," referring
to the time Britain was under Rome when "d" stood for
denarius) contained 22.5 grains troy of silver. But by Edward I,
1275 A.D., silver content was down to 22 grains; by Edward III,
to eighteen grains; by Henry IV, 1412 A.D., to fifteen grains; by
Edward IV, 1464 A.D., to twelve grains; by Henry VIII, 1526 A.D.,
to eleven grains; in 1544, still under Henry VIII, to ten grains;
by Elizabeth I, 1560 A.D., to eight grains; in 1601 A.D., still
under Elizabeth I, to 7.8 grains; and by George III, 1790 A.D.,
to 7.3 grains. To sum up English inflation, it might be pointed
out that the London price of gold from 1250 A.D. to 1950 A.D. rose
from seventeen shillings per fine ounce to 250 shillings per fine
ounce. The persistent shrinkage of silver content in the English
pound sterling, from literally a pound of silver to but a fraction
of a pound today, we also noted.

Blame Herr
Gutenberg

But the museum
bespeaks a dichotomy of inflation: metal and paper. The split harks
back to the invention of movable type (circa 1440 AD.), Herr Johann
Gutenberg’s gift to money-making machines, legal and illegal, which
made previous inflation techniques — alloying, clipping, sweating,
over-stamping, and so on — appear crude and amateurish. After Gutenberg
a simple order in the dead of night, in any tongue, "Psst.
Roll ‘em!" to the fellow at the mint, and a beautiful stream
of newly printed currency would issue forth, endlessly, or so it
seemed.

Plenty of
evidence of paper money inflation is on display at the museum. John
Law’s "Mississippi Bubble" money. American Continentals
of the American Revolution ("Not worth a Continental").
Assignats and mandats of the French Revolution. A Chinese 500,000
yuan note (1947 A.D.), quite irredeemable. A German 100 billion
mark Reichsbanknote (1924 A.D.), which some Germans used for wallpaper.
A Greek one-trillion drachma note (1944 A.D.). A Hungarian one hundred
quintillion pengo note (1946 A.D.) — that’s twenty ciphers or 100,000,000,000,000,000,000
pengoes, worth at the time less than one U.S. cent. It’s all a bit
embarrassing, this bearing witness to monetary hanky-panky in glass
cases.

The Shrinking
Franc

The Texan
circled our way again. "Get a load of the figure on this money,"
he said to his companion as they stood before the Hungarian note.
"Just like the prices I paid in Paris." He mentioned six
hundred francs for a shave and haircut, fifty-five hundred francs
for a room and bath, and "ten grand for a night on the town."
He pushed his Stetson to the back of his head. "You need one
of those IBM machines to figure out where you stand after a week
in Paris," he said. He also mentioned that the "spenders"
in Washington could learn something from their Parisian counterparts;
in Paris, he explained, public budgets are not measured in billions
but in trillions.

The talk jibed
with the French francs on exhibit. The 1914 franc officially exchanged
at five to the dollar. The 1945 franc, however, could be had at
fifty to the dollar. Between the two World Wars, in other words,
the franc shrank from twenty cents in worth to two cents, a 90 per
cent loss in purchasing power for French citizens. But today’s franc
exchanges for just under five hundred to the dollar, a 90 per cent
loss compounded on a 90 per cent loss. The franc has sunk to a worth
of one-fifth of a U.S. cent (and the U.S. cent, too, is no longer
what it used to be). But the descent of the French franc will be
reversed — voil — by fiat effective January 1, 1960.
On and after that date only "heavy" francs will circulate.
A new "heavy" franc is equal to one hundred "old"
francs. "Heavy" francs ease calculation and presumably
return some prestige to the franc. Some "heavy" francs
are already in circulation, and we asked a museum official if Chase
Manhattan had one we could see. It did, a one thousand franc note
issued by the Banque de France, with the usual fine engraving, heroic
pictures, and multi-colors of French currency but over stamped in
red ink CONTRE-VALEUR DE 10 NOUVEAUX FRANC. We wondered when a heavy
"heavy" franc would go on display.

For a theory
of inflation hit us as we poked around the museum, the theory that
inflation is more than a peculiar way of life — it’s a law of life.
The ancient Babylonians and Greeks inflated; the modern Brazilians
and Soviets inflate. Inflation, like sin, is always with us. Every
money in every age, we reflected, inevitably undergoes inflation — a
multiplication of volume and a division in value — sometimes at a
crawl, sometimes at a gallop, but progressive inflation nonetheless.

The Evaporating
Dollar

In retrospect,
the French franc has been galloping, and relatively, the American
dollar has been crawling. Yet the crawl has been fast enough. We
looked at a glass-enclosed Federal Reserve note in the amount of
ten thousand dollars, Series 1934. In 1934 that note bought ten
thousand dollars worth of goods and services. But now that same
note buys just about four thousand dollars of goods and services.
Poof! It’s gone — six thousand dollars of lost purchasing power.
So that’s our new-found law of money; money multiplies in volume
and divides in value over the years. Money, like water, evaporates
over the hot sands of time.

But why inflation?
We scanned the exhibits once more for clues to the why of what was
plainly becoming Peterson’s Law of Inflation. Perhaps we found one.
Whether paper or metal, on each currency unit we confronted symbols
of government.

A royal picture,
a crown, a flag, a national emblem, a finance minister’s signature,
and on the paper money the frequent phrase, "The Government
of . . . will pay to the bearer on demand…" But pay what?
Not gold — that went out with rumble seats. Pay only less and
less, according to Peterson’s Law. But could governments be at the
root of the problem? If so, what is it in the nature of government
that makes it partner to inflation? Historically, we thought, governments
have been the big spenders and debtors. And it’s well known that
debtors are not usually averse to borrowing dear and repaying cheap.
For example, a couple of millennia ago Dionysius of debt-ridden
Syracuse astutely called in all drachma coins of Syracusean issue,
doubled their face value by over-stamp, and used half of the new
coins to discharge the public debt with a handsome 50 per cent profit.

It’s plain
the record of governments and their trusteeship over money gives
one no great feeling of trust. As Harry Sherman, board chairman
of the Book-of-the-Month Club, sums up his study of promises by
governments to pay up their debts honestly and of government monetary
management in general (The Promises Men Live By, p. 362):
"Government, it might be said, is the one area of human activity
that constitutes the last stronghold of scoundrelism in human nature."

But still,
would governments consciously inflate against their own citizens?
The thought was too dismal, the theory too disconcerting. We never
got to check out the connection, if any, between inflation and public
debts, for we left the Museum of Moneys of the World — that
monetary graveyard — for the purer air and traffic of New York’s
Sixth Avenue and fished in our pockets for a fifteen cent subway
token to take a ride that had cost a nickel not so long ago.*

*Current 2007
price of New York City subway ride is $2.

This article
was originally published in National Review, December 19,
1959.

August
28, 2007

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives

DIGG THIS

In
a recent Wall Street Journal op-ed, ex-Congressman and former
Buffalo Bills quarterback Jack Kemp comes out four-square against
protectionism and economic nationalism. He opts instead for globalization
and free trade, citing as defenders of the faith Milton Friedman
and Ronald Reagan.

Mr. Kemp also
takes the GOP to task for harboring protectionists in high places,
naming names, if overlooking the Bush White House itself, which
imposed steel and lumber import restrictions for a time and still
has in place other trade and investment restrictions across the
world. So the outright protectionist Dems and less protectionist
Republicans in effect tell American consumers: Go hang!

With an eye
on already heating-up politics in the 2008 presidential race —
such as ranting over “Two Americas” (the rich and the unrich) and
its alleged market income disparity (and so seeking to further
justify protectionism — Mr. Kemp says America could beat back
attacks on its premier economic standing in the world with sound
money, lower taxes on capital and labor, less regulation, and more
mutually advantageous international trade and investment with nations
like Japan. Bully for Mr. Kemp.

Still, what
Mr. Kemp does not do is to plumb the anti-democracy edge in GOP
and Democrat protectionist plays. Anti-democracy? In America? To
borrow a line from CNBC TV host Lawrence Kudlow, this is the greatest
story that has never been told.

For I ask:
Does America worship a demigod via our media, legislatures, and
textbooks — a narrow one-sided message of “Democracy,” silent on
its seamy side of patronage-peddling, often in the guise of “campaign
donations”? Yet the stilted message goes out to a vast but not always
perceptive audience of young and old.

Read then
the prescient pitch on political democracy by Benjamin Disraeli,
young novelist, thinker, and back-bench Tory M.P. (later twice becoming
British Prime Minister) in the House of Commons, March 31, 1850:

“If you establish
a democracy, you must in due time reap the fruits of democracy.
You will in due season have great impatience of the public burdens,
combined in due season with great increase of public expenditure.
You will in due season have wars entered into from passion and not
from reason; and you will in due season submit to peace ignominiously
sought and ignominiously obtained, which will diminish your authority
and perhaps endanger your independence.”

Look here
in 2007 and see how the prescient Benjamin Disraeli hit the bull’s
eye 157 years later. Or note the corroborative editorial on democratic
and other politics in the London Times, February 7, 1852:
“Concealment, evasion, factious combinations, the surrender of convictions
to party objects, and the systematic pursuit of expediency are things
of daily occurrence among men of the highest character, once embarked
in the contentions of political life.”

Thus does
political democracy tend to give way to the tyranny of the statist
quo that gets to exploit the exploitable — you and your fellow citizens.
Isn’t this the portent of Disraeli’s foresight and that London
Times editorial on the individual’s fix under winner-takes-all
majoritarianism?

Note too how
similar on political democracy were earlier thinkers. Plato, for
example, charged it in his The Republic (c. 370 B.C.), as “a charming
form of government, full of variety and disorder, and dispensing
a kind of equality to equals and unequals alike.” As did Aristotle
in his Rhetoric (c. 322 B.C.), saying democracy “when put to the
strain, grows weak, and is supplanted by oligarchy.”

Or check later
thinkers like George Bernard Shaw who faulted political democracy
in his 1903 Maxims for Revolutionists for switching to “election
by the incompetent many for appointment by the corrupt few.” Or
hear H. L. Mencken put down the broad citizenry in do-in-the-other-guy-prone
democracy as “booboisie” or an election as “an advanced auction
of stolen goods.”

Or check on
how America’s Framers themselves saw self-ruin in political democracy
for the way many voters embrace “factions” or special interests,
inadvertently undercutting their own liberty. James Madison led
his peers in No. 10 of The
Federalist Papers, seeing democracies as “spectacles of
turbulence and contention [which] have ever been found incompatible
with personal security or the rights of property; and have in general
been as short in their lives as they have been violent in their
deaths.” So wasn’t James Madison also prescient, saying there is
no there there in political democracy?

No wonder
the very word “democracy” is nowhere to be found in the Declaration
of Independence, Constitution, and Bill of Rights. And notice how
sternly anti-democratic are the first five words of the First Amendment
on bills abridging freedom of religion, speech, press, assembly,
and petition: “Congress shall pass no law …. Repeat, “no law.”
So Ben Franklin, asked outside Independence Hall what kind of state
the Framers had provided, replied with a famous proviso: “A republic,
if you can keep it.” Big if. I think Old Ben was warning us: As
political democracy swells the individual shrinks. I agree
with Old Ben: A limited — tightly limited — republic
is the thing.

Yet — voil
— see Austrian economist Ludwig von Mises light up a practically
unknown yet highly effective daily democracy. In 1922 in his book
Socialism he saw it in ’round-the-clock market action. See
it yourself from voting in today’s supermarket to the shopping mall,
to ordering merchandise by telephone, to online stock trading, to
getting colas at vending machines, to getting cash at an ATM, to
filling up at the gas pump by credit card, to business consumers
ordering manpower, supplies, equipment, and office/factory space
to meet perceived consumer demand.

So consumers
vote not but every other year as in federal elections but again
and again every day in an endless mindboggling 24/7 plebiscite,
one featuring a 100 percent daily turnout compared to but something
in the 50 percent range in quadrennial presidential elections. President
Calvin Coolidge sensed the daily explosion of what is going on when
he told the American Society of Newspaper Editors in 1925: “The
chief business of the American people is business.”

Mises thus
sought to give market/pocketbook democracy a political edge via
popular and intellectual perception, or as he put it in Socialism:
“When we call a capitalist society a consumers’ democracy we mean
that the power to dispose of the means of production, which belongs
to the entrepreneurs and capitalists, can only be acquired by means
of the consumers’ ballot, held daily in the marketplace.” Mises
hailed this system of daily voluntary market democracy as a victory
of “consumer sovereignty” and broad-based “social cooperation.”
E.g., cooperation via actively trading goods and services which
peacefully and productively cross and recross international borders
here and abroad, so knitting nations together.

Thus Mises
was on the mark as was his student, Nobel laureate F. A. Hayek,
author of the 1944 hit book The
Road to Serfdom with his profound chapter on “Why the Worst
Get on Top.” Hayek hailed the integrated domestic and international
market for its “spontaneous order” and high productivity. Hayek
flayed state planning and protectionism as unworkable, while he
saw market competition as most workable, as “decentralized planning
by many separate [private] persons.” Separate and private like yourself.

Yet note vital
underpinnings to market democracy in the Founding Fathers’ implementations
of habeas corpus, the rule of law, a bill of rights, and other checks-and-balances
limits on political democracy — limits which since have broken down,
partly due to constitutional amendments such as the 14th prohibiting
states from not upholding due process, the 16th federal income tax,
and the 17th direct election of senators, all three further centralizing
power in Washington, all three passed in the noble name of democracy.
Standard defined democracy as noble? Oh sure.

For check
the Greek roots of democracy: Rule or “kratia,” by the people or
“demos.” And ask today in Washington and your state capital: Who
really rules whom? How does politics get to advance one intervention
after another? Why do government hegemony, intervention, bureaucracy,
regulationism, special interests, deficit finance, and progressive
— not even flat — income taxation persist in America today and across,
with variations, the democratic West.

Still,
mirabile dictu, the West overall — thanks mainly, I say, to
competition for foreign and domestic capital investment — perceptively
shifts toward more globalization via freer trade and greater international
investment, judging from the 2007 Index of Economic Freedom published
by the Heritage Foundation and the Wall Street Journal. As
Wall Street Journal editorial page director Paul Gigot says
in its foreword: “The pace of world trade continued to accelerate,
and millions more of the world’s poor entered the middle class.”

Three cheers
then for the Mises perception of workhorse market democracy reflecting
free markets, free minds, free trade, a moral code, and private
property rights in glorious action — all, it seems to me, neither
widely understood nor much appreciated today. Yet all still serve
as a somewhat battered fount of our wellbeing, all hit by heavy
government intervention including heavy government spending and
resulting heavy taxation. Also not helping matters are fallible
businessmen such as those at now defunct Enron.

So I trust
in the heat of current debate on economic policy that market/pocketbook
democracy as a viable concept can be reborn, rethought, and reinforced.
It could happen with, among other things, the run of Mises Institute
board member Congressman Ron Paul (R-TX) in the Republican presidential
primary. Mr. Paul loves the concept and reality of our giant
other democracy.

I conclude:
Jack Kemp is on to something big seeing how economic freedom here
and abroad — and not economic isolationism and protectionism — ties
into prosperity, productivity and peace itself. (Thomas J.
Watson, the founder, head, and thinker of IBM, put it best, coining
and long promoting the motto of “World Peace Through World Trade.”)

Remember then
that market democracy is the economy of the individual such as yourself,
free to choose, to vote your pocketbook every day over and over
in market democracy. It follows, as night does day, that protectionism
and other interventions spell a loss of civil rights — disenfranchising
We The People more and more from our giant other democracy, the
free market.

So free trade
and free investment here and abroad play key parts in the global
marketplace at eager work, a vast positive-sum game in which you
are a daily player — and winner. See then this giant marketplace
as a never-closing highly dynamic 24/7 market polling place — America’s
virtually unknown, unrealized, yet its freest and most moral knowing
democracy.

March
29, 2007

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives

DIGG THIS

A
Century of War: Lincoln, Wilson, Roosevelt
By
John V. Denson
Ludwig von Mises Institute, Auburn, AL

War or peace?
Article 1, Section 8, of the U.S. Constitution is firm about Congress
alone having the power to declare war. Yet Article 2, Section 2,
says the President, along with his other duties, also serves as
Commander in Chief of the armed forces. Could this knotty condition
get a President, say Abraham Lincoln, Woodrow Wilson or Franklin
Roosevelt, into maneuvering a real or imagined enemy, such as the
Confederate South or World War I Germany or Modern Japan or Nazi
Germany, into firing — if perhaps with the best of intentions —
the first shot, and so forcing the hand of Congress?

Our author
answers — boldly, incisively — Yes. For this is the neat if politically
incorrect thesis of Alabama Circuit Judge John Denson, a history
buff, in this, his third well-documented work and one that could
or should make waves in the current tension on our War on Iraq and
War on Terrorism as well as on supposedly settled historical scenarios
on just how the Civil War and U.S. entry into World Wars I and II,
both already well underway, got started.

At first the
Civil War had little to do with the slavery question. In the North
the big issue was Preserve The Union, which the South rejected.
In the South, the main issue was States Rights, including
the right to secede, which the North rejected. But at the time of
the Mexican War (1846—1848), precipitated by U.S. annexation
of Mexican-designated if secessionist Texas in 1845, then Congressman
Abraham Lincoln hailed the right of secession in 1847, as cited
by Judge Denson, in these ringing and profound, if later antithetical
and embarrassing words:

“Any people,
anywhere, being inclined and having the power, have the right to
rise up and shake off the existing government, and form a new one
that suits them better. This is a most valuable, a most sacred right,
a right which we hope and believe is to liberate the world.”

The way by
which President Lincoln got the South to fire the first shot on
Fort Sumter on April 15, 1861, and launch the Civil War (which the
South called “the War Between the States”) was shrewd. What Lincoln
did was to order a Union fleet to relieve and reinforce Fort Sumter
in the middle in Charleston harbor and other nearby forts — but
to do so by having a lead vessel merely supply food to hungry soldiers
at Fort Sumter. The move worked. Confederate President Jefferson
Davis, holding that the Union fleet invading Confederate waters
amounted to a declaration of war, ordered the Charleston shore batteries
to fire on Fort Sumter. Our author quotes historian Bruce Catton
that thus Lincoln neatly got South Carolina standing “before the
civilized world as having fired upon bread.”

Our author
notes how President Woodrow Wilson, No. 2 in the Denson trilogy,
ran on a strict neutrality plank in the 1916 Presidential campaign,
as the Great War raged on. One Democratic Party motto was “He Kept
Us Out of War.” But Wilson was meanwhile playing footsie with the
British, whose troops had gotten badly mauled on the Western Front.
In fact, on October 17, 1915 Wilson wrote a secret letter to British
Government leaders offering to bring America into the war on the
side of the Allies so as to enable them to win decisively.

Working all
along on the insatiable ego of Wilson was his primary adviser, Colonel
Edward House, who several times visited Britain in 1914 and 1915
to discuss possible U.S. entry into the war. Meanwhile, Svengali-like
Colonel House privately told Wilson he would become the “Savior
of the World,” the new “Prince of Peace.” By April 1917 the U.S.
was in “The War to End Wars” and would “Make the World Safe for
Democracy.” Yeah, sure.

But Wilson,
the new if vain and outfoxed Savior of the World, didn’t fare well
in the Treaty of Versailles secret parleying. There Germany wound
up saddled with the war guilt clause, which Hitler later exploited.
And, moreover, the U.S. Senate rejected both the Versailles Treaty
and the U.S. joining the League of Nations, “wisely” so adds Judge
Denson.

Not that a
tired and discouraged President Wilson hadn’t tried in a national
tour to mobilize public opinion against such action, even to the
point of foregoing his previous lofty sentiments on the nature of
the war and discovering an altogether new enemy: foul international
economics. Or as he put it in a speech in St. Louis on September
5, 1919:

“Why, my fellow
citizens, is there any man here, or any woman — let me say, is there
any child here, who does not know that the seed of war in the modern
world is industrial and commercial rivalry? …. This war, in its
inception, was a commercial and industrial war. It was not a political
war.”

Our author
tracks similar moves by Franklin Roosevelt to maneuver the Germans
to fire the first shot on Americans. One provocative act was the
Lend-Lease Act of March 1941, which had the U.S. sending 50 destroyers
to Britain to aid the British war effort and provoke the Germans.
Another provocative act was the U.S. claim that its warship, the
USS Greer, has been suddenly attacked off Iceland on September 4,
1941, by a torpedo-firing German sub while the Greer had been merely
carrying U.S. mail to Iceland. But Admiral Harold Stark, chief of
U.S. naval operations, soon admitted that the Greer had in fact
first given three hours chase to the sub which then fired off torpedoes
at the Greer. In any event, Hitler was not taking the bait; he was
avoiding war with America.

But Roosevelt
had what one critic tagged a “back door to war”: Japan, a key ally
of Nazi Germany. The back-door worked (hush-hush, everybody), even
if it did lead to Pearl Harbor. Judge Denson cites work by historian
Robert Stinnett on how Roosevelt adopted the so-called McCollum
Plan, dated October 7, 1940, step by step, eight agent provocateur
steps in all:

• Arranging
  with Britain for the use of British bases in the Pacific, particularly
  Singapore;
• Sending
  two divisions of submarines to the Orient;
• Sending
  one division of long-range heavy cruisers to the Orient, the Philippines,
  or Singapore;
• Keeping
  the main strength of the U.S. Pacific fleet in the Hawaiian Islands;
• Giving all
  possible aid to the Chinese Government of Chiang-Kai-Shek;
• Arranging
  with the Dutch for the use of facilities and acquisition of supplies
  in the Dutch East Indies;
• Insisting
  that the Dutch refuse to grant Japanese undue economic concessions,
  especially oil;
• And completely
  embargoing U.S. trade with Japan, in collaboration with a similar
  embargo imposed by the British.

Judge Denson
claims that both Admiral Husband Kimmel and Lieutenant General Walter
Short, the military commanders of U.S. forces in Hawaii, were denied
much critical intelligence on Japanese military strategy and tactics,
even though American cryptographers had broken the Japanese naval
or military code by October 1940.

Our author
reports that former CIA Director William Casey in his book, The
Secret War Against Hitler, said that even the British sent
word to Washington “that a Japanese fleet was steaming east toward
Hawaii.” But somehow that word never got to Admiral Kimmel or General
Short.

War or peace.
One recalls the campaign speech in Boston on October 30, 1940, when
Candidate Franklin Roosevelt, up for a third presidential term,
declared:

“And while
I am talking to you, mothers and fathers, I give one more assurance.
I have said this before, but I shall say it again and again and
again: Your boys are not going to be sent into any foreign wars.”

I suppose the
saving word in the above statement is “foreign.” Or is it?

For have we
forgotten the wisdom of President George Washington in his Farewell
Message of September 17, 1796, in which he urged us to utilize and
enjoy foreign commerce but added on the matter of foreign policy:

“Observe good
faith and justice toward all nations. Cultivate peace and harmony
with all … ‘Tis our true policy to steer clear of permanent alliances,
with any portion of the foreign world … There can be no greater
error than to expect or calculate upon real favors from nation to
nation.”

Amen.

January
11, 2007

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives

DIGG THIS

Originally
published in Challenge, November 1959

Textbooks on
economics usually define money in terms of four functions: medium
of exchange, unit of account, store of value, and standard for credit
transactions. Now, because of an economic law to be presented to
the public for the first time, such a definition must be dismissed
as ivory tower thinking — in the same vein as the business cycle
theory that the raising and lowering of ladies’ hemlines govern
increases and decreases in economic activity.

What textbooks
ought to say is: money is a medium of exchange if used in increasing
amounts, a diminishing unit of account, a shrinking
store of value and a declining standard for credit transactions.
This definition is much the superior, for it ties money and inflation
together, organically, as it were, and realistically, as it is.
Money is, after all, what money does.

Yet, most textbook
writers treat inflation, if they treat it at all, as an afterthought
in a separate chapter or perhaps in an appendix. To them it is a
special condition, a phenomenon of the times, something which if
condemned roundly and often enough will pass on and leave us be.

Perhaps the
textbook writers have not been doing their history lesson as they
should; or maybe they believe this is a dawn of a new day and human
nature can be changed, and so-called “monetary stability” can be
achieved. But history bespeaks of no such millennium in human affairs.
History tells us money, i.e. the monetary unit, in the long run,
must increasingly be worth less, buy less, store less, and beget
less credit.

Regardless
of what finance ministers, central bankers and heads of state may
say to the contrary, prices and the public debt will rise. Moreover,
experience shows that the currency gymnastics of multiplication
(more money) and division (less value) accelerate in direct proportion
to the agitation against inflation, which in turn increases in direct
proportion to the size of the public debt.

The new scientific
law at hand should prove of inestimable value in monetary and fiscal
management, corporate accounting, and economic calculation in general.
With some deference to Sir Thomas Gresham (Gresham’s Law: bad money
drives good money out of circulation) and Prof. C. Northcote Parkinson
(Parkinson’s Law: bureaucracy tends to expand), this law is hereby
launched, however immodestly, as Peterson’s Law. To restate the
law:

History shows
that money will multiply in volume and divide in value over the
long run. Or expressed differently, the purchasing power of currency
will vary inversely with the magnitude of the public debt.

The reason
for the law is quite simple. Wealth is money, it is reasoned; so
multiply money and, presto, you multiply wealth. This reasoning
is most likely to manifest itself when complaints about a “shortage”
of money — or of liquidity, to use the presently more sophisticated
term — persists, and when national debts are at high levels. Peterson’s
law, then, has its roots in psychology, ergo, in human nature.

Empirical proof
of the law is abundant. Take any currency of any era
in the ancient, medieval and modern worlds, regardless of the political
economy involved, and observe the inexorable monetary multiplication
of volume and division of value over the years. Note, too, that
the higher the public debt, the louder the condemnation of the process,
the more persistently do price levels rise.

Examine the
case of the English penny, originally struck of sterling silver.
From 1275 to 1816, the weight of this coin dropped from 22 grains
troy to 7.27 grains. Lest the reader suspect that silver is so inherently
constricted in supply that its price would naturally rise with population
growth, it should be noted that the London price of gold, from 1250
to 1950, rose from 17 shillings per fine ounce to 250 shillings
per fine ounce.

Or look at
the modern French franc. Between World War I and World War II it
lost approximately 90 per cent of its value, and between World War
II and the present it lost another 90 per cent. (That is 10 per
cent figured one way but 99 per cent figured another.)

Devaluations
multiply not only currency but ciphers as well, which strain human
calculations (e.g., 6,500 francs for a double room and bath at a
good Parisian hotel; 14,000 francs for a night on the town). To
ease the problem of astronomical arithmetic, the French government
has thoughtfully issued a currency edict that, effective January
1, 1960, the last two zeros will be dropped from the stated value
of all paper money in France, so the 100-franc note officially becomes
— voil — a “heavy” one-franc note, although it had been
that in effect for quite some time.

Eroded by
time

By now you
may be getting the idea that public debts were made to be increased
and currencies made to be devalued, and this is precisely the point
of the law at hand. Consider: Originally the pound, lira and peso
referred to certain monetary weights; now all have been eroded by
time, their original meanings lost in the dustbin of history.

Of course,
there are some sustained periods of history when remarkable currency
stability existed — for example, the French franc stayed put for
100 years, from 1814 to 1914; the Dutch guilder did almost as well,
surviving from 1816 to 1914; and the pound sterling persisted undisturbed
from 1821 to 1914.

Such phenomena
of currency stability are not to be construed as a flouting of Peterson’s
law. The 19th century was the century of the gold standard and witnessed
little public debt and, therefore, precious little agitation and
practically no countermeasures against inflation. Besides, the franc,
guilder and pound eventually did come to a sorry pass. Peterson’s
law held all right.

Lost time
made up

Moreover, since
World War I and especially since World War II, monetary multiplication
and division have made up for lost time. Dr. Franz Pick, the New
York currency authority, finds that but 14 years after the end of
World War II, only seven of the 85 currency units of the world have
lasted more than 20 years without a legal devaluation. The average
age of all currencies is a little more than seven years. The year
1957, for example, saw the official multiplication and division
of the U.S.S.R. ruble, the Polish zloty, the Spanish peseta and
the Ghana pound; in 1958 the East German mark, the Egyptian pound,
the Chilean peso, the New Taiwan dollar and, or course, that hardy
perennial, the French franc (now happily hardening under the fiscal
sanity of De Gaulle). These, bear in mind, are the occasional
de jure devaluations; the de facto devaluations go on
continuously.

This, then,
is an age of inflation. But what age wasn’t? What age hasn’t witnessed
its currencies clipped on the Procrustean bed of Peterson’s law?
What is interesting about the moment of this age is the din of agitation
and talk of countermeasures against inflation in the land of that
supposed Gibraltar of currencies — the U.S. dollar. The din bodes
of ill for the monetary status quo.

Consider the
Niagara of papers, pamphlets, books, public addresses, and newspaper
and magazine articles and editorials on the subject of inflation-inflation-inflation,
reiterated and reiterated until one’s head begins to swim. Too,
rarely has inflation been called by so many different names. But
would not inflation under any other name be just as thorny?

Flight from
the dollar

Meanwhile,
with the deficit for the 1959 federal budget at roughly $12 billion,
the flight from the U.S. dollar is on. Gold outflow is at a record
level since World War II — $2.2 billion during 1958, with $492,200,000
more through June 30, 1959. In 1958, for the first time in history,
Congress twice raised the statutory debt limit in one year.
Still another raise was requested and granted in 1959. Increasingly
the Treasury finds the public too wary to buy government long-term
securities and is thus predisposed to dispose of them at the commercial
banks, which Chairman William McChesney Martin of the Federal Reserve
Board declares to be “the high road of monetary inflation.”

Hedging against
inflation is rampant. Workers and unions secure escalator clauses.
Dow-Jones stock averages have hit new records. Farm acreage commands
the richest prices in history. Some knowing buyers hedge with rare
books and French Impressionist paintings. Saving atrophies, and
the stock market and race track hustle, which probably account for
Treasury Secretary Anderson’s statement earlier this year, “If we
ever reach the point where people believe that to speculate is safe
but to save is to gamble, then we are indeed in trouble.” A Toronto
investment firm offers to hold gold bars for Americans as an inflation
hedge (possession of gold, except in teeth, jewelry, etc., is illegal
in the U.S.). Inflation has even hit crime. The Michigan legislature
has raised from $50 to $100 the amount of money you must steal to
commit a felony rather than a misdemeanor in that state.

Learned investigations
and conferences on inflation mushroom, and money is being studied
as never before (presaging greater monetary multiplication and division,
you may be sure).

It is the Temporary
National Economic Committee of the late 1930s all over again, and
then some. Mountains of hearings, papers, findings and reports roll
from the presses. Labor blames management. Management blames labor.
Democrats blame Republicans. Republicans blame Democrats. The people
blame government. Government blames the people.

How investigations
churn! Public tears are shed for inflation’s “innocent victims.”
But as the late Prof. Sumner Slichter of Harvard, a student of inflation,
noted in a Japanese publication, the Nihon Keizai Shimbun
of Tokyo:

Conspicuous
by its absence is any protest against creeping inflation by the
alleged victims. The people who are supposed to suffer from creeping
inflation do not indulge in any of the customary methods of protest
— they do not march on Washington, they do not picket the White
House or the halls of Congress or the headquarters of trade unions.
Their most conspicuous action is to vote for candidates whom President
Eisenhower describes as u2018spenders.’

Still, Prof.
Slichter’s “alleged” victims may well have been victimized, as trillions
of dollars in monetary claims — bonds, savings accounts, insurance
policies, pensions, and so on, have gone down the drain of Peterson’s
law during the past 20 years the world over.

Many Congressmen
ask for stand-by price and wage controls, and admonish the people
with “moral suasion” to exercise spending restraint.

But Peterson’s
law, like the tide that wetted King Canute’s feet, will prevail
in the end. The investigations will go around in circles. The people
will exercise no restraint. The government will exercise no restraint.
The public debt, handmaiden to inflation, will wing onward and upward;
prices and wages, with or without federal review, will continue
to rise; money continues to multiply in volume and divide in value.
And as for the stand-by controls, if tried — well, no government
with all its quite persuasive machinery of coercion, before or since
Diocletian, has been able to fix the price of a loaf of bread.

Peterson’s
law is a purely scientific discovery — a fact of history, a part
of human nature. Lorelei may be on the rocks, and our sailors are
human. The law makes no moral judgments. It stands removed from
politics. It poses no solutions. After all, it is not the business
of the scientist to shut off the tap water. Enough for him to tell
us the tub is overflowing.

January
2, 2007

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives

DIGG THIS

Think of a
still green high-school graduate from Jersey City, me, arriving
on his first day as a mail clerk in 1938 at 590 Madison Ave., N.Y.,
IBM headquarters. There I — then also a new after-hours undergraduate
studying economics at New York University — got a lesson not just
on free trade’s raising productivity in participating countries
nor its power to thereby lift living standards, including those
of the poor, but on its power to wage peace. Peace. Peace.

For on an
outside wall at the entrance was a huge 40-foot-high vertical sign,
painted in black and gold, reading …

World
Peace
Through
World
Trade.

That thought
was the brainstorm of Thomas J. Watson, founder and head of IBM,
who also served as president of the Paris-based International Chamber
of Commerce. He had apparently worried about the dubious outcome
of World War I, the League of Nations, and the vicious rise of Adolph
Hitler in Nazi Germany and of Joseph Stalin in the Soviet Union.
Yet he also saw how voluntary peaceful trade lifts living standards
and so directly benefits people. So he prodded the world to see
the folly of war as armed forces unknowingly shoot or bomb customers
and investors, actual or potential — so denying the peace underlying
what Ludwig Mises called “social cooperation.”

Yes, Mr. Watson
was not an economist but surely his case for world trade spurring
world peace makes sense. Think of rising interdependency as trading
nations rely more and more on each other for selling or buying or
both. Or think of the spontaneity or social cooperation involved
— friendly relations amid rising international commerce. Or think
how international division of labor leads to greater economic growth
— to more profits and higher wages. Or think how lessening or eliminating
trade protectionism cuts back corruption and special interests in
the halls of government — corruption that often conflicts with peaceful
relations among nations.

Yes, such
reasoning may be well and good but by 1939 Hitler from the west
and Stalin from the east in a strange alliance invaded and in a
few weeks time divvied up Poland. World War II was on.

Yet wars later
we still find ourselves once again locked in combat, bleeding, this
time in Afghanistan and Iraq — but not just against armed insurgents
a la Vietnam but also against “jihadists” or suicide bombers. For
jihadists in our so-called War on Terrorism intend to not only destroy
themselves but — and this is critical — others, usually innocents
in an “enemy” state. Look. They’ve already so hit Madrid and London
but got foiled in near-by Toronto.

Well, can
jihadists be stopped here in America, free of terrorist attacks
for more than five years after 9/11? Maybe. Yet much more so if
we practice truly free trade. (Not so-called “fair” or bilateralized
trade but, if need be, unilateral free trade — and why not?) For
then we’d not only fight poverty here and in places like Africa
but enjoy a likely growing realization among the jihadists themselves,
along with their intelligensia, that their chosen “enemy,” including
you and me, is in fact the friend and helpmate of their very own
people.

Yet the rub
with the current situation is the Democrat takeover of Congress
on November 7th by protectionists galore, seemingly masterminded
by Lou Dobbs of CNN. He and they, full of economic venom for China,
should be reminded that protectionism inadvertently courts further
jihadism and a lost War on Terrorism.

In any event,
I thank you, Thomas J. Watson, upstairs, for pointing out the pleasant
fact of life of “World Peace Through World Trade.” That fact may
save our neck in a race against time, in a race for free trade.

November
20, 2006

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives

DIGG THIS

First published
in National
Review, December 19, 1959.

Money! For
some it’s a woodpecker’s scalp, for others a gold doubloon. But,
says the author, this is common to all money. As it multiplies in
volume, it decreases in value.

"Funny
money," commented a visitor in our earshot at the Chase Manhattan
Bank Museum of Moneys of the World in New York’s Rockefeller Center.
The visitor, a Texan we surmised from his drawl, height, and wide-brim
Stetson, was referring to a display of Yap stone money. One Yap
specimen measures some thirty inches in diameter and weighs about
175 pounds. It is worth ten thousand coconuts or one wife, or so
the sign read.

Funny money
is right, we mused, but not for the reason that seemed to catch
the eye of most of the sightseers and what we guessed were a few
stray numismatists. They were fascinated by the bizarre in money:
the tiny gold coin, little bigger than a pinhead, from India; the
large copper coin weighing 31 pounds from Sweden; the Joachimsthaler
coin minted about 1520 in Bohemia, the ancestor of the American
"thaler" or, later, dollar; the "genuine" American
wooden nickels; money old and new, money in big denominations and
small, money in assorted shapes and materials — money made of metal
and paper of course but also made of salt, of grain, of fish hooks,
of musket balls, of cacao seeds, of brick tea, even of woodpecker
scalps.

Still, what
intrigued us was the evidence of inflation demonstrated by the museum’s
better than 75,000 specimens of ancient and modern money. Some fifty
centuries of inflation, we’d say. The progressive and quite unrelenting
disappearance of silver in the content of the denarius coin of Rome
(the penny of the New Testament) for example. (Thinning out the
silver content leads inexorably, we figured, to the multiplication
of volume of money and its loss of value. This is the way with Inflation
— multiplication is what is sought under the theory that money is
wealth but it is division that, unintentionally, results.)

At any rate,
according to a reference work we found in the museum, the denarius
issued by Augustus was, save for a bit of hardening alloy, pure
silver — i.e., its silver content was practically 100 per
cent. Yet by Nero, in 54 A.D., the silver content of the denarius
had slipped to 94 per cent; by Vitellius, in 68 A.D., to 81 per
cent. By Domitian, in 81 A.D., it had climbed to 92 per cent; by
Trajan, 98 A.D., up another notch to 93 per cent; but by Hadrian,
117 AD., it had again wended its way down, to 87 per cent; by Antoninus
Pius, 138 A.D., to 75 per cent; by Marcus Aurelius, 161 A.D., to
68 per cent; by Septimius Severus, 193 A.D., to 50 per cent; by
Elagabalus, 218 A.D., to 43 per cent; by Alexander Severus, 222
A.D., to 35 per cent; by Gordian, 238 A.D., to 28 per cent; by Philip,
244 A.D., to 0.5 per cent; and by Claudius Victorinus, 268 A.D.,
to 0.02 per cent. Then came Diocletian’s famous answer to inflation,
his price-fixing edict of 301 A.D., replete with very sharp teeth
for price-breakers. It didn’t work; Inflation persisted. And anyway
Rome was out of business before long.

Not So Sterling

So much for
the Roman penny. What of the English penny, originally struck of
sterling silver? It is the same sad tale. Another reference work
at the museum bespoke of the same trend of decline of silver content.
For King John, of Magna Carta fame, the English penny (for which
the British today still use the symbol "d," referring
to the time Britain was under Rome when "d" stood for
denarius) contained 22 grains troy of silver. But by Edward I,
1275 A.D., silver content was down to 22 grains; by Edward III,
to eighteen grains; by Henry IV, 1412 A.D., to fifteen grains; by
Edward IV, 1464 A.D., to twelve grains; by Henry VIII, 1526 A.D.,
to eleven grains; in 1544, still under Henry VIII, to ten grains;
by Elizabeth I, 1560 A.D., to eight grains; in 1601 A.D., still
under Elizabeth I, to 7.8 grains; and by George m, 1790 A.D., to
7.3 grains. To sum up English inflation, it might be pointed out
that the London price of gold from 1250 A.D. to 1950 A.D. rose from
seventeen shillings per fine ounce to 250 shillings per fine ounce.
The persistent shrinkage of silver content in the English pound
sterling, from literally a pound of silver to but a fraction of
a pound today, we also noted.

Blame Herr
Gutenberg

But the museum
bespeaks a dichotomy of inflation: metal and paper. The split harks
back to the invention of movable type (circa 1440 ~A.D.), Herr Johann
Gutenberg’s gift to money-making machines, legal and illegal, which
made previous inflation techniques — alloying, clipping, sweating,
over-stamping, and so on — appear crude and amateurish. After Gutenberg
a simple order in the dead of night, in any tongue, "Psst.
Roll ‘em!" to the fellow at the mint, and a beautiful stream
of newly-printed currency would issue forth, endlessly, or so it
seemed.

Plenty of evidence
of paper money inflation is on display at the museum. John Law’s
"Mississippi Bubble" money. American Continentals of the
American Revolution ("Not worth a Continental"). Assignats
and mandats of the French Revolution. A Chinese 500,000 yuan note
(1947 A.D.), quite irredeemable. A German 100 billion mark Reichsbanknote
(1924 A.D.), which some Germans used for wallpaper. A Greek one-trillion
drachma note (1944 A.D.). A Hungarian one-hundred quintillion pengo
note (1946 A.D.) — that’s twenty ciphers or 100,000,000,000,000,000,000
pengoes, worth at the time less than one U.S. cent. It’s all a bit
embarrassing, this bearing witness to monetary hanky-panky in glass
cases.

The Shrinking
Franc

The Texan circled
our way again. "Get a load of the figure on this money,"
he said to his companion as they stood before the Hungarian note.
"Just like the prices I paid in Paris." He mentioned six
hundred francs for a shave and haircut, fifty-five hundred francs
for a room and bath, and "ten grand for a night on the town."
He pushed his Stetson to the back of his head. "You need one
of those IBM machines to figure out where you stand after a week
in Paris," he said. He also mentioned that the "spenders"
in Washington could learn something from their Parisian counterparts;
in Paris, he explained, public budgets are not measured in billions
but in trillions.

The talk jibed
with the French francs on exhibit. The 1914 franc officially exchanged
at five to the dollar. The 1945 franc, however, could be had at
fifty to the dollar. Between the two World Wars, in other words,
the franc shrank from twenty cents in worth to two cents, a 90 per
cent loss in purchasing power for French citizens. But today’s franc
exchanges for just under five hundred to the dollar, a 90 per cent
loss compounded on a 90 per cent loss. The franc has sunk to a worth
of one-fifth of a U.S. cent (and the U.S. cent, too, is no longer
what it used to be). But the descent of the French franc will be
reversed — voil — by fiat effective January 1, 1960. On and after
that date only "heavy" francs will circulate. A new "heavy"
franc is equal to one-hundred "old" francs. "Heavy"
francs ease calculation and presumably return some prestige to the
franc. Some "heavy" francs are already in circulation,
and we asked a museum official if Chase Manhattan had one we could
see. It did, a one thousand franc note issued by the Banque de France,
with the usual fine engraving, heroic pictures, and multi-colors
of French currency but overstamped in red ink CONTRE-VALEUR DE 10
NOUVEAUX FRANCS. We wondered when a heavy-"heavy" franc
would go on display.

For a theory
of inflation hit us as we poked around the museum, the theory that
inflation is more than a peculiar way of life — it’s a law of life.
The ancient Babylonians and Greeks inflated; the modern Brazilians
and Soviets inflate. Inflation, like sin, is always with us. Every
money in every age, we reflected, inevitably undergoes inflation
— a multiplication of volume and a division in value — sometimes
at a crawl, sometimes at a gallop, but progressive inflation nonetheless.

The Evaporating
Dollar

In retrospect,
the French franc has been galloping, and relatively, the American
dollar has been crawling. Yet the crawl has been fast enough. We
looked at a glass-enclosed Federal Reserve note in the amount of
ten thousand dollars, Series 1934. In 1934 that note bought ten
thousand dollars worth of goods and services. But now that same
note buys just about four thousand dollars of goods and services.
Poof! It’s gone — six thousand dollars of lost purchasing power.
So that’s our new-found law of money; money multiplies in volume
and divides in value over the years. Money, like water, evaporates
over the hot sands of time.

But why inflation?
We scanned the exhibits once more for clues to the Why of what was
plainly becoming Peterson’s Law of Inflation. Perhaps we found one.
Whether paper or metal, on each currency unit we confronted symbols
of government. A royal picture, a crown, a flag, a national emblem,
a finance minister’s signature, and on the paper money the frequent
phrase, "The Government of… will pay to the bearer on demand…"
But pay what? Not gold — that went out with rumble seats. Pay only
less and less, according to Peterson’s Law. But could governments
be at the root of the problem? If so, what is it in the nature of
government that makes it partner to inflation? Historically, we
thought, governments have been the big spenders and debtors. And
it’s well known that debtors are not usually averse to borrowing
dear and repaying cheap. For example, a couple of millennia ago
Dionysius of debt-ridden Syracuse astutely called in all drachma
coins of Syracusean issue, doubled their face value by over-stamp,
and used half of the new coins to discharge the public debt with
a handsome 50 per cent profit.

It’s plain
the record of governments and their trusteeship over money gives
one no great feeling of trust. As Harry Scherman, board chairman
of the Book-of-the-Month Club, sums up his study of promises by
governments to pay up their debts honestly and of government monetary
management in general (The
Promises Men Live By, p. 362): "Government, it
might be said, is the one area of human activity that constitutes
the last stronghold of scoundrelism in human nature."

But still,
would governments consciously inflate against their own citizens?
The thought was too dismal, the theory too disconcerting. We never
got to check out the connection, if any, between inflation and public
debts, for we left the Museum of Moneys of the World — that monetary
graveyard — for the purer air and traffic of New York’s Sixth Avenue
and fished in our pockets for a fifteen-cent subway token to take
a ride that had cost a nickel not so long ago.

November
4, 2006

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute.

William
H. Peterson Archives

DIGG THIS

This address, given to the British Society For Individual Freedom
on September 14, 1959, was first published in Freedom First,
Autumn 1959.

Let the dead
rest in peace. But would that the dead let us rest in peace!
Today's case in point is John Maynard Keynes, who died in 1946,
but whose ideas and troops go marching on, now openly, now insidiously,
ever capturing new citadels of intellectual opinion.

It is these
ideas, alive and virulent, sold so effectively by disciples of Keynes
in the marketplace of ideas, that plague us today. Ideas have consequences,
and it is these consequences — Keynes' legacy — that we examine
now.

I need hardly
remind you of the magnitude of Keynes' ideas or their far-reaching
consequences into every crook and cranny of our existence. In America,
Keynes has sparked the Keynesian Revolution, a "new economics."
Professor Paul Samuelson of the Massachusetts Institute of Technology
has hailed Keynes as a "genius." The London Times
in its obituary called him not great, but "Very Great."
In America, Congress passed the Full Employment Act of 1946, in
effect a tribute to Keynes.

Keynes made
his mark in history — as Marx made his. I do not mean this comparison
to be odious, though of course it is. Marx, to be sure, wanted to
destroy capitalism; Keynes wanted, merely, to reform it. But, while
differing in degree, both wanted to enlist, and really to unleash,
the power of the state. Both disdained individual freedom. Both
were callous towards the rights of property. Both based their cases
on the supposedly inherent tendency of free enterprise to veer into
depression. Both were enemies of private ownership of the tools
of production. Marx spoke of "the liquidation of the capitalists";
Keynes spoke of the "liquidation of the rentiers."

These similarities
in philosophy differ — I repeat — in degree. Marx wanted total socialism,
i.e., communism, or, as he himself called it, "scientific socialism."
Keynes wanted some "socialization of demand," and "a
somewhat comprehensive socialization of investment." Keynes,
in brief, chose the middle way, forgetting that the middle has a
strong and constant tendency to drift toward the left.

Clearly, then,
Keynes was no friend of laissez faire capitalism. In an article
in the Yale Review in 1933, he wrote:

"The
decadent international but individualistic capitalism, in the
hands of which we found ourselves after the war, is not a success.
It is not intelligent, it is not beautiful, it is not just, it
is not virtuous — and it doesn't deliver the goods. In short we
dislike it, and we are beginning to despise it. But when we wonder
what to put in its place, we are extremely perplexed."

Well, unfortunately,
Keynes' perplexity didn't last long. He did indeed spin out a "new
economics," a whole new set of momentous ideas. Capitalism
betrays, he told us in 1935 when his General Theory appeared,
long-run tendencies toward stagnation and an equilibrium "between
workers and the economy at less than full employment." Underconsumption,
he pontificated, stems in great measure from a mal-distribution
of income. Money is but credit, and gold is but a "barbarous
relic." Saving and investment are non-related, and saving amounts
to hoarding and is, in effect, anti-social. There are also assorted
ideas distributed among such semantic labels as "the multipliers,"
"the accelerator principle," "liquidity preference,"
"propensity to consume," "inducement to invest,"
and so on.

And in practice,
what has this bundle of warmed-over mercantilism meant? I wish to
look into the Keynes legacy in three ways. First, on the matter
of inflation, then on the method of macro-economics and aggregate
thinking, finally on the Keynesian treatment of the state.

Now, what of
Keynes' penchant for inflation? Of course, Keynes did not openly
embrace inflation, but certainly he was having quite an affair with
it, and rather an illicit one. For behind Keynes' open sesame formula
of Y = C + I lay Keynes' earth-shaking — to him, anyway — discovery.
Keynes argued depression — more specifically, unemployment — was
the offspring of the failure of consumption demand and the failure
of investment demand.

Hence, underconsumption
— i.e., underspending — was the economic culprit. Well, if too little
private spending causes unemployment, then more public "compensatory"
spending will create employment. Hence Keynes' banner in effect
became "Let us spend ourselves into prosperity" and, "Lead
us not into temptation of saving." Saving was thought virtuous
in the days of Poor Richards Almanac — a penny saved is a penny
earned, and all that — but in the modern 20th century,
saving is downright sinful, cutting off as it does the flow of spending.

Ah, and how
would the gentlemen of Whitehall and Washington spend that which
was not available from taxes and that which they didn't already
have? Well, that really is a small problem — they go into debt,
beautiful, virtuous, just intelligent debt — and with an eye to
the Radcliffe Report, may I add "indispensable" debt.

But debt, deficit
spending, involves, almost invariably, inflation, and Keynes knew
it. How callous Keynes was to inflation can be seen in his fanciful
suggestion that burying banknotes is one way of giving people work
— digging them up.

Inflation then,
that's Keynes' big idea. Jail the counterfeiter, yes, but when the
State counterfeits, when it inflates and cheats Society — the pensioned
railroad worker, the saver who had bought an insurance policy or
put money in a bank, the people locked in on salaries and wages
— well these are, after all, personal matters. The great evil don't
you see, is unemployment, and if you don't see it, you just don't
understand Keynesian economics.

Keynes' method
of macro-economics and aggregate thinking, his propensity to amass
and then carve up astronomical G.N.P.'s — Gross National Products
— into "public sectors" and "private sectors"
and all sorts of little sectors and so on, you, as an individual
are lumped in one of those sectors — labor, farm, capital, etc.,
and these sectors like pieces on a chess board, are moved about
in a super-colossal national economic budget. And what did Lord
Keynes use as his building block for these grandiose figures — bags
of cement, tons of steel, baskets of wheat? No, much worse. He used
currency units — pounds, dollars, francs, or anything else — money,
the same battered creature we discussed under inflation. So the
G.N.P. is a money sum, and as money is inflated, so are G.N.P.'s
inflated and distorted.

And the G.N.P.
is a statistical sum, too, based on assumed sellers' prices. But
statistics and past prices record only the history that was, never
the history that will be. Keynesian economists, understandably,
who have boldly called the tune of economic times have, as you know,
a woeful record. They assume constants in economic activity when
there are only variables. They assume men are numbers with no independent
will of their own. Little wonder, then, that the economists' predictions
go astray.

Lastly, let
us examine Keynesian legacy on "the new look" of the State.
There is, permit me to say so — an enormous naïveté
on the part of Keynes and the Keynesians on the nature of man and
the State. In a typical statement Keynes declared in his General
Theory:

"I expect
to see the State, which is in a position to calculate the marginal
efficiency of capital-goods on long views and on the basis of
the general social advantage, taking an even greater responsibility
for directly organizing investment."

I read this
statement for I believe it shows the most rosy view of politicians
possible. Keynes seems not to have understood that politicians generally
stress short views — upcoming election views – and not long
views. He himself said "In the long run, we're all dead."
And, as for "the general social advantage," Keynes either
never heard of Lord Acton or totally ignored that Actonian advice,
"Power tends to corrupt, and absolute power corrupts absolutely."
Keynes, in short, never realized that Government, like the Tucker
car in my country a decade ago — it could go only forward and could
not reverse. Yes, government can "compensate" private
spending, and hence, eventually, it must over-compensate. Again,
Government can invest, but, inherently, it can't disinvest. In other
words, power does not, cannot, will not dissolve itself. Power,
unless checked, can move, but in one direction — more power.

Perhaps Keynes
knew all this, knew what he was playing with, that he was, to say
the least, immoral about the whole business, for in a posthumous
essay "Two Memoirs" published by Augustus Kelly of New
York (1949), he wrote:

"We
repudiated entirely customary morals, conventions and traditional
wisdom. We were, that is to say, in the strict sense of the term,
immoralists. The consequences of being found out had, of course,
to be considered for what they were worth. But we recognized no
moral obligation on us, no inner sanction, to conform or to obey.
Before heaven we claimed to be our own judge in our own case.
I have to think this is, perhaps, rather a Russian characteristic.
It is certainly not an English one. It resulted in a general,
widespread, though partly covert, suspicion affecting ourselves,
our motives, and our behavior. This suspicion still persists to
a certain extent, and it always will. It has deeply coloured the
course of our lives in relation to the outside world. It is, I
now think, a justifiable suspicion. Yet so far as I am concerned,
it is too late to change. I remain, and always will remain, an
immoralist."

I ask this
question for you to decide: Is the essence of Keynesian economics
taken all in all, social immorality?

In the long
run, we're all dead, Keynes was fond of reminding us. Yes, Keynes
is dead. But the devil of it is that we, the living must live out
the terribly loaded short runs of John Maynard Keynes.

October
25, 2006

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute.

DIGG THIS

A talk to
the Shaftesbury Conference at the John Locke Foundation, August
28, 2006.

Welcome Shaftesburyites
to the Dismal Science that doesn't have to be dismal. And hear a
probably apocryphal story on what makes man tick. And when I say
man, I of course embrace woman. Why? Because women are, ahem, so
embraceable.

For think:
Where would we men be without women? Would we men not become scarce,
very scarce? In that case, where then would women be? Ah, also very
scarce. For today we meet and talk of the root cause of economic
science in the first place, i.e. scarcity — on how to think about
it, and cope with it.

Cope? That
story I mentioned above tells of dazzling Hollywood film star Za
Za Gabor. Za Za had six marriages in which she learned good housekeeping,
thanks to each ex-husband. How so? Well, think, in each divorce
she got to keep the house.

So Ticker No.
1 in our one lesson in economics is the law of self-interest, how
it copes with scarcity, such as keeping the houses in Za Za's case.
Yet many people wrongly tie such interest to greed or materialism,
if such excesses may, yes, get into play.

So, Shaftesburyites,
see how self-interest drives the entire economy, and gets each of
us to tick, behave — or, heaven forbid, misbehave — as each of us
call the shots on ourself, as each of us privately wields our individual
and very powerful free will. Free as long as you don’t violate the
equal freedom of others.

So interest
covers the full moral-immoral spectrum: Selfishness and evil, yes,
but also charity, altruism, religion, kindness, goodness, honesty,
love, compassion, civility, etc. Nobody is without it. So you run
you, with a near-absolute monopoly over yourself, with a DNA — that
double-helix thing — unlike anybody else in the world before or
since.

So it follows
that you are a most unique individual — no one like you before or
since — that you define yourself, that you are in charge, that you
set or reset your disposition, along with your insight-outlook on
life, with your very own ongoing raison d’tre. For doesn’t this
sweeping self-interest good-to-evil spectrum explain the maybe divinely-sparked
yet still self-directed ways of Mother Teresa as it does your own
unique ways?

For, Shaftesburyites,
bear in mind that society can’t think, feel, choose, or act. Only
the individual can think, feel, choose, act, though he/she can act
in concert with others. For consider: Due to scarcity, is not his
or her every action, without exception, based on gain, as that person
perceives gain? Yet many people frown on gain, even on self-interest
itself. Yet think: Isn’t a selfless act an oxymoron? An impossibility?
Oh, yes!

Take a homely
example: Your nose itches, yet you alone get to scratch it and gain
relief. So gain, broadly viewed, rules human behavior. Which makes
incongruous the rife animus against profit, including personal and,
more so, corporate profit.

For ask, relatedly,
what does being a dentist mean? It means, right? Drilling, filling
and, ah-ha, billing.

So in my book
self-interest and true self-government are one. Per the answers
to three queries: 1. Are you not a sort of one-person state? 2.
Don’t you fully govern yourself? And 3. Don’t you apply self-control,
self-management, self-care, self-direction, and even self-creation
in terms of philosophy and personality?

To all three
questions, Shaftesburyites, I say, Yes, adding that deep-down in
every mind, if often untapped, is self-help. Or as Ben Franklin
put the matter in his Poor Richard’s Almanac: “God helps them that
help themselves.” Yes, if I still add: Caveat emptor.

All while each
of you follow Thomas Jefferson’s "pursuit of happiness"
— happiness more often nonmonetary than monetary. Yet hear Adam
Smith on self-interest in 1776 in his The
Wealth of Nations: "It is not from the benevolence
of the butcher, the brewer, or the baker that we expect our dinner,
but from their regard to their own interest."

So Ticker No.
1 is self-interest — or maybe self-enlightenment is a better term.
So interest serves as each individual's driving directive force,
so it serves as our central social driving force. Force against
what? What else but scarcity. Ticker No. 2 then in our one lesson
in economics is the law of scarcity itself.

Recall the
parable of how the Lord Jehovah thundered down on terrified Adam
and Eve fleeing the timeless scarcity-free Garden of Eden, with
an angry Lord proclaiming, per Genesis: “In the sweat of thy face
shalt thou eat bread.”

Recall why
the miscreant couple and their myriad untold generations of offspring,
including you and me, got banished to a world of scarcity: They
had partaken of the Forbidden Fruit. Alas for Adam and Eve, if less
alas for you and me. We Shaftesburyites never knew any Garden of
Eden. Nor, safe to say, will we.

For aside from
inhaling free life-saving oxygen, as you are doing right now, or
watching beautiful sunsets, don’t you see that virtually every thing
you need to stay alive is scarce, as often measured by price — that
key economic rate of exchange?

So water is
very cheap, diamonds very dear. Think of scarce food, clothing and
shelter — those three basics of existence. Think of scarce communications
such as email or a telephone. Note scarce transport such as a car/bus,
train/plane. Note scarce medicine from an aspirin to a heart transplant.

Or see a bank
then for your financial scarcity, a beauty salon or barbershop for
your hair style scarcity, a law firm for your legal scarcity, and
so on. Or see farmers raising scarce potatoes, cucumbers and lettuce
for your potato salad. Scarcity, scarcity everywhere, even including
precious life itself, yours and mine. Sorry about that.

Yet watch your
peers in our market society trade daily, if not avidly. See them
practice division of labor or specialization not only to ease scarcity
but to advance what my great mentor at New York University, Ludwig
Mises, called "social cooperation."

Mises — who
was he? He was a Jewish escapee from Nazi Europe, a champion of
limited government, an author of a truly transcendental economics
book entitled Human
Action (1949), a giant who professionally predicted in 1920
the implosion of socialism la the Soviet Union for its lack of
“economic calculation.” Bull’s eye prediction, as you know.

And social
cooperation was his name for society — a voluntary social order
in which each of you plays a key role. Indeed, Mises hailed you
as the "sovereign consumer." Together with other sovereign
consumers, all holding the lethal economic power of the purse, you
run our big free enterprise show — if imperfectly, given some business
wrongdoers.

Yet entrepreneurs
still work for you — and your dollar — and ease your scarcity by
cutting cost, improving quality, building variety, and inventing
amazing things like, say, a cell phone with TV, radio, internet,
movie, and photo transmission power. Wow.

Entrepreneur
Thomas Alva Edison is a case-in-point. So are John D. Rockefeller,
Andrew Carnegie, and inventive Sam Walton, founder of Wal-Mart.
But scarcity presses on, as seen by Pres. Harry Truman on scarce
friends. Said shrewd Pres. Truman: "If you ever need a friend
in Washington, ah-ha, buy a dog."

Ticker No.
3 in this economics in one lesson is the law of opportunity cost,
also known as the law of trade-offs. This is the idea that no matter
what you do, for business or pleasure, Shaftesburyites, it is ever
at the expense of something else.

It's the idea
that whenever you choose one thing/person, you must give up the
benefit of whatever or whoever was your second-ranked option. It’s
the idea that you can't have your cake and eat it too. It’s the
idea that the National Organization of Women put its case artlessly,
saying “Have It All” — an impossibility in our scarce, scarce world.

So opportunity
cost gets down to three words: No Free Lunch, a law cutting the
lure of state largesse: the lure that the state can somehow give
anything without taking something away — e.g., forcing up taxes
and making mistakes la Hurricane Katrina-hit FEMA and the inept
levee-building Corps of Engineers in New Orleans last year.

Meanwhile,
government bloats as seen in our federal red-ink $2.7 trillion 2007
budget, a national debt veering toward the $9 trillion mark, both
overlarded with pork per a record 15,000-plus budget earmarks in
2005 — or an annual average of 30 bring-home-the-bacon pet projects
per member of Congress. No wonder incumbents win elections. Oink,
oink.

Government
bloat bespeaks of the wit and wisdom of English poet Robert Browning
and Dutch architect Mies van der Rohe, each saying, “Less is more.”
Less bloat means less taxes, less waste, more self-government —
more liberty.

So this opportunity
cost ticker casts the Welfare State system of transfer payments
as a coercive zero-sum game, but our market democracy of willing
buyers and sellers as a voluntary positive-sum game, as both parties
in any trade see profit — or no deal.

Doesn’t this
situation make a case for capitalism, our inherent meritocracy,
as free individuals help each other in the market or out, as voluntary
forward-looking private charities beat coercive “entitlement” government
welfare? Or hear wit George Bernard Shaw on the contrasting welfare
scheme: "When the state robs Peter to pay Paul, it can always
count on the support of Paul."

Ticker No.
4 is business, Main Street–Wall Street, i.e. the law of trade
mutuality, of two-way gainful trade. Such gain spurs buying and
selling, supply and demand, competition and entrepreneurship, all
reflecting a market democracy promoting trade to ease scarcity here
and abroad. Free trade means no regulation, no controls, no protection.

So see world
trade today accelerate, spread, globalize, as you can gather from
the title of N.Y. Times writer Thomas Friedman's best-seller,

The World Is Flat. So, Mr./Ms. Shaftesburyite, is globalization
good or bad, a boon or bane in easing scarcity?

Well, did you
catch my phrase earlier, "market democracy"? F. A. Hayek,
a student of Mises and a Nobel Prize economist, thought highly of
scarcity-easing trade, of market democracy, domestic and foreign.
He said the market not only tends to make people better off by easing
scarcity, but tends to makes them more socially responsible.

How so? Well,
take savers: individuals and firms building national capital creation
and so helping others, including the poor, inadvertently — as if
by an “invisible hand” in Adam Smith’s keen phrase. That was the
idea of Pres. John F. Kennedy in 1962 in proposing a tax cut and
saying: “A rising tide lifts all boats,” Including those of the
poor.

Or take today’s
high-priced gasoline as a case of rising scarcity. At once the invisible
hand spurs oil firms to explore and discover new oil sources, while
spurring consumers to slow down purchases of gasoline.

So the market
presses both producers and consumers to do the right thing, the
socially responsible thing. So market democracy — producers and
consumers daily voting their pocketbook — becomes a self-adjusting-self-directing
economy without the state or anybody else lifting a finger.

So private
everyday market democracy is most unlike those public every-other-year
political elections. Market democracy runs an endless plebiscite
24 hours a day, 7 days a week, as you and many others seek to impede
scarcity. Market spontaneity amazed Hayek, who called it a "marvel."
I do too.

Thus does trade
mutuality support if not, as I think, create society. It made sense
to Robinson Crusoe and Friday on their desert island to trade with
each other, each thinking smart, after checking comparative cost
and division of labor between them.

Mutuality makes
sense to us to ease scarcity by trading daily — using division of
labor, checking out comparative costs, buying freely from producers
sharper than ourselves such as Google, Verizon, Merrill Lynch, General
Electric, Macy’s, Metropolitan Life — as trading parties get ahead
via mutual gain.

Gain? So Robinson
Crusoe gave us the 5-day work-week, for didn't he get his work done
by Friday? Hey!

Or think of
a green high-school graduate from Jersey City, me, arriving as a
mail clerk in 1939 at 590 Madison Ave., N.Y., IBM headquarters,
and getting a lesson not on trade's scarcity-easing productivity
but on its power to wage peace. For on an outside wall was a huge
30-foot-high sign, painted in black and gold, reading "World
Peace Through World Trade."

That thought
was the idea of Thomas J. Watson, founder and head of IBM, who wondered
about the dubious outcome of World War I and the League of Nations,
who saw how trade lifts living standards and benefits people directly,
who prodded them to see the folly of war when armed forces shoot/bomb
customers and investors, actual or potential.

And last but
not least in this one economic lesson, Shaftesburyites, is the gross
Ticker No. 5, Gresham’s law on inflation. It is named after Sir
Thomas Gresham, 16th century English financier and advisor to Queen
Elizabeth I. Gresham saw that in money circulation "bad money
drives out good," as people unload their bad money and hoard
the good.

Thus does debased
coinage or irredeemable paper currency or unrestrained bank credit
swell and replace money of higher value in terms of gold or silver.
To put Gresham’s Law into modern lingo, inflation stems from too
much money chasing too few goods. As our hardly good-as-gold U.S.
dollar falls and falls.

I attest personally
to how far the dollar has fallen since I was a boy. In 1930, when
I was 9 years old, the price of a 1st-class stamp was 2 cents; today
it is soon 42 cents, or 21 times more. In 1930 a doctor charged
$2 for an office visit and $3 for a home visit; today he’s up around
$80 for an office visit, or 40 times more, and home visits are as
dead as a do-do. In 1930 a ride on a New York City subway cost a
nickle; today it’s $2 — again 40 times more.

So inflation
goes, so money rots. Rotting is bad enough but it also causes rotten
recessions as well. I leave it to you on just when the next recession
strikes, as it most certainly will.

No surprise:
The root of monetary rot is politics: a power-corrupting statist
anything-goes majoritarian amorality, as government counterfeits
money legally. Note Roman Emperor Diocletian in 301 A.D. blaming
inflation not on his debasing Roman coinage but on “the greed of
merchants.” Thus did Diocletian pass the buck in his day and set
wage and price controls, which soon failed. As they always do.

I close listing
those five scarcity-coping tickers in my one lesson in economics
as: 1. the law of self-interest, 2. the law of scarcity, 3. the
law of opportunity cost, 4. the law of trade mutuality, and that
miscoping 5. Gresham’s law on inflation.

So there, dear
Shaftesburyites. And I can too chew gum and walk at the same time.

October
6, 2006

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute.

DIGG THIS

First published
in Time & Tide, August 11, 1956.

Part One:
The Hucksters' Chorus

It is a
privilege and a pleasure, fellow Americans, to be here with you
today. Meeting you will be my everlasting inspiration for the next
four years.

The Greatest
Show on Earth, Circusman John Ringling North to the contrary, is
upon us. Posters and billboards hawk the word. The political drummer,
the political huckster are working the hustings. Political campaign
committees are polishing their performers — the candidates for the
offices of alderman up to President. An all-star show. And, make
no mistake about it, this is show business.

For, to campaign
committees, candidates are u2018products', who are canned and taped
in one-minute u2018spots,' five-minute and fifteen-minute shows, and
are then shipped throughout the country for radio and TV from now
until the first Tuesday after the first Monday in November. Campaign
u2018news' releases will swamp editorial desks. Postmen will groan under
their extra bagsfull of u2018junk' mail. Candidates will be out u2018meeting
the people', shaking hands and eating pink spun sugar. Richard J.
Stengel Democratic candidate for the US Senate from Illinois for
example, has shaken more than 212,000 hands since last March and
is cut to make it a million by November. A clocking device in his
left hand records every shake. u2018In election years,' said the former
President Truman on his British tour, u2018we behave somewhat as primitive
people do at the time of the full moon.'

These quadrennial
proceedings have not been taken too kindly by historians. Wrote
James Harvey Robinson:

u2018Political
campaigns are designedly made into emotional orgies which endeavour
to distract attention from the real issues involved, and they
paralyse what slight powers of cerebration man can normally muster.'

And historian
Henry Adams:

u2018Power is
poison. Its effects on Presidents had always been tragic, chiefly
as an almost insane excitement at first, and a worse reaction
afterwards; but also because no mind is so well balanced as to
bear the strain of seizing unlimited force without habit or knowledge
of it; and finding it disputed with him by hungry packs of wolves
and hounds whose lives depend on snatching the carrion.'

Recently, fellow
Americans, a reporter asked me if I were a conservative. I told
him what Josh Billings said: u2018If a man is right, he can't be too
radical. And if he is wrong, he can't be too conservative.'

Like Broadway
productions, campaigns have their critics. During the u2018try-out'
stages of the '52 campaign, publisher Roy Howard accused the Republican
effort of u2018running like a dry creek.' Doctoring took place and so
did better reviews. In fact, the Eisenhower campaign was a smash
hit, judged by the box-office count: votes.

Question is,
how do you get votes? A long-discovered secret in the political
trade seems to have been promises. Indeed, promises constitute an
occupational illness in politicking. Symptoms of the illness become
far more noticeable around election-time. And, if the political
promisers take some licence with facts; and fulfillments, don't
be alarmed. Such has been the advice to politicians through the
ages.

Football, fellow
Americans of South Bend, is my favorite sport, too.

u2018One has great
need,' wrote Quintus Cicero in his Handbook of Politics toward
the end of the Roman Republic, u2018of a flattering manner, which, wrong
and discreditable though it may be in other walks of life, is indispensable
in seeking office.' Again from the Handbook: u2018Human nature
being what it is, all men prefer a false promise to a flat refusal.'

u2018The prince
must be a lion,' said Machiavelli, u2018but he must also know how to
play the fox.'

Disraeli: u2018Lay
it on with a trowel.'

British playwright
John Galsworthy: u2018Don't say in power what you say in Opposition.
If you do, you only have to carry out what the other fellows have
found impossible.'

Fellow Americans
of San Antonio, nothing thrills me more than rodeos.

Mencken also
noted how promises spice politicians' lives. In his A Mencken
Chrestomathy (Alfred A. Knopf, NY) he writes of the occasion
when he accompanied a presidential candidate on tour:

u2018He was,
like all such rascals, an amusing fellow and I came to like him
very much. His speeches at the start were full of fire. He was
going to save the country from all the stupendous frauds and false
pretences of his rival.

Every time
that rival offered to rescue another million of poor fish from
the neglects and oversights of God, he howled his derision from
the back platform of the train.

I noticed
at once that these blasts of common-sense got very little applause
and after a while the Candidate began to notice it too. Worse,
he began to get word from his spies on the train of his rival
that the rival was wowing them…

This had
some effect on him… He lost his intelligent manner… Instead of
mocking, he began to promise and in a little while he was promising
everything that his rival was promising and a good deal more.'

Barley country
has always had a strong appeal to me, fellow Americans, and I tell
you barley growers that it's a shame the way barley prices are falling.
When I’m elected I'll see that the Agriculture Department will increase
its support-buying of barley four-fold.

This year,
with the largest US voting population ever and the – continuing
upsurge of electronic communications, will be the biggest angelled
extravaganza of them all. Candidates will Teach, electronically
if not physically, every nook and corner of the Forty-Eight. There
will be no escape. Political jingles will leap out at you from your
auto radio. Canned TV movies of the candidates and their families
will usurp you of u2018I Love Lucy' and u2018Sargeant Bilko.' Kiddies will
yield up u2018Mousketeers Club' and u2018Howdy-Doody' to the National Conventions.
Plane crashes, murders, marriages, divorces will be crowded off
the front pages and may not get in the papers at all; political
u2018news' — endorsements, switches, speeches, platforms, etc. — takes
over. And from where will the political u2018news' come?

From the national
committees, the State committees, the county committees and the
city committees; from political clubs and political wards; from
speech-writers and public relations men from chairladies and chairmen
of thousands of organizations and groups; from the politicians themselves
and their wives. The rhetorical assault will come through all the
mass media.

For the citizen
— the man with the vote — it will be brain-washing on an assembly-line
basis morning, noon and night; political jingles will dance in his
head.

My party
and I, fellow Americans, stand for the three E’s. You know the three
E's by now; ENDEAVOUR! EFFORT! ENTERPRISE!

Yes, on so
nebulous a thing as a slogan, phrase or jingle may hang the fate
of the Party. The Federalists hit with u2018Those Who Own the Country
Ought to Govern It.' u2018Tippecanoe and Tyler Too' caught the fancy
in the Harrison-Tyler campaign. The first nominee of the Republican
Party John C. Frémont tried with u2018Free Soil, Free Men, Free
Speech, Fré-mont.' McKinley won with u2018The Full Dinner Pail.'
u2018He Kept Us Out of War' paid off for Wilson. Coolidge clicked with
u2018Keep Cool with Coolidge.' Al Smith went to town with u2018Let's Look
at the Record' but Hoover went to the White House with u2018A Chicken
in Every Pot, A Car in Every Garage.' F.D.R. worked wonders with
u2018Don't Switch Horses in the Middle of the Stream,' while the Republicans
could only play the broken records of, u2018Land on Prosperity with
Landon' and u2018Clear It
with Sidney.' u2018It's Time for a Change' finally ended a twenty-year
Republican drought.

Like other
types of political barrage, election slogans are not necessarily
coincidental with truth. u2018What we need today,' said railroader Robert
Young recently, u2018is a Truth in Politics Act to match the Truth in
Securities Act, clause by clause.' Said the late, and perhaps more
realistic, Senator John Ingalls, u2018The purification of politics is
an iridescent dream.'

Part Two:
Hitting the Road

I tell you,
fellow Americans of Illinois, there was only one Honest Abe.

Hoopla and
hokum, charges and counter-charges start about January of the election
year. In the months prior to conventions, politicians engage in
political horse-trading, voter-wooing and delegate-hunting. At this
point, delegates are the main consideration. This accounts for the
more immodest politicians whistle-stopping those States having presidential
preference primaries — shaking hands, kissing babies, looking over
hogs, judging beauty contests and tossing their hats into dozens
and dozens of rings. These political hopefuls are forever pointing
with pride and would rather be President than right. Conventions
arrive as the heat, weather-wise and political, rises. From all
over the nation, representing more than 2,500 local political organizations,
men and women delegates converge on the Convention city, most of
them already pledged or half-pledged to their u2018favourite sons' or
other candidates.

First, the
National Anthem; the delegates stand and hoarsely sing, u2018The Star
Spangled Banner.' Then the Credentials Committee decides who gets
in; the Rules Committee fixes the rules; and the Resolutions Committee
ceremoniously builds the party platform, plank by plank. Platforms
are as solid as clouds, as beautiful and as transient. Here the
politicians promise to rid the country of gambling, the boll weevil,
political corruption, the sins of the Opposition Party and sin in
general.

I tell you,
my fellow Americans of the South, there was only one Jeff Davis.

During the
platform proceedings of the 1932 Democrat convention, Lone Star
Lawyer Maury Hughes took the rostrum to state Texas' position in
support of the dry plank sponsored by the then Senator Cordell Hull
of Tennessee. Hughes stormed against u2018unbridled liquor traffic'
and reminded the convention of its u2018solemn obligation' to protect
the hearths and children of the nation. The Chairman interrupted
to call for order. Strangely, the disorder was in the Texas delegation,
where a caucus was under way. Just as Hughes again began to berate
alcohol, a Texas delegate called out from the floor:

u2018Wait a minute,
Maury, we've switched; don't do it, Maury. We've gone wet by one
vote.'

Maury Hughes
was equal to the occasion and, with no loss of rhythm or enthusiasm
in his speech, he too switched unblinkingly, and made a stirring
appeal for individual freedom — and the wet plank!

Balloting is
the raison d'être of conventions and stunts on, or about,
this point would do justice to Olsen and Johnson. u2018We Want Wilson,
We Want Wilson' — the chant for the college President who became
US President came from cheerleader-led college boys at the Baltimore
convention of the Democrats in 1912. u2018We Want Willkie,' shouted
the galleries in deafening unison at the Republican convention in
Philadelphia in 1940, after Willkie managers had indiscreetly distributed
tickets by the basketful to pro-Willkie supporters.

Also in 1940,
at the Chicago convention of the Democrats a Roosevelt draft was
sparked by the famous Voice from the Sewer, a thunderous loud speaker
planted in the basement of the hail and manned by Mayor Kelly's
Commissioner of Sanitation. u2018Missouri Wants Roosevelt,' blared the
Voice, and the Missouri delegates dutifully started a floor demonstration.
u2018Nebraska Wants Roosevelt,' pontificated the Voice, and the Nebraska
delegates fell in line.

Blue grass
country has always charmed me. And let me say that my favourite
animal is the horse, God's noblest steed.

After the conventions,
four whirlwinds sweep the country — two major whirlwinds for the
Presidential candidates, two minor for the Vice-Presidential. This
is campaigning in earnest — arena speeches, motorcades, torchlight
parades, giant rallies, campaign trains.

The Candidate's
campaign train is a good example of the art of political show business.
Elaborate preparations long precede the train's departure. Each
town, city and hamlet along the route must be alerted; local Chambers
of Commerce, farm, labour, social and political groups are buttonholed
to participate; signs must be printed and painted, hung in shop
windows and hammered on poles; uniforms have to be cleaned and pressed;
welcoming speeches have to be written.

Grazing
land is perhaps this country's most picturesque scenery. And the
steer, God’s most beloved creature!

On board the
train are strictly professionals — politicians and the Press. The
Press includes reporters, newsreel men, photographers, TV people,
radio people and commentators. Main politician is of course the
Candidate but almost equally important, for the women's vote, is
the Candidate's wife. If the Candidate has been blessed with children,
they too should be trundled out on to the rear platform. Also in
the Candidate's entourage are Secret Service men, speech-writers,
public relations experts, secretaries and occasionally bureaucrats,
from Cabinet or ex-Cabinet Members on down. Then, getting on board
for part or all the way through a State will be aldermen and freeholders,
mayors and judges, county agents, State Senators and Congressional
Senators, State representatives and Congressional representatives,
Governors and, of course, the party Chairmen (sometimes ingloriously
dubbed u2018bosses') — city chairmen, county chairmen, and State chairmen.
In this way, local interests and local colour, local issues and
local promises get play.

My fellow
Americans, I understand many of you or your parents hail from the
great country of Ruritania. I say we must do something for Ruritania.
Ruritania is menaced from within and without by the communists.
We must liberate the Ruritanians.

As many as
forty times a day, then, the candidate, his family, local politicians,
the governor and Senators (if in the same party, of course) march
to the rear platform and orate. Each time the Candidate is to greet
the local officials. And at some point a union president, an Elk,
a beauty queen, a Chamber of Commerce man, a Minister, or a Granger
presents the Candidate with a few choice ears of corn, a basket
of apples, a miner's helmet, a bouquet of flowers, an Indian headdress
or just the key to the town or city and says some carefully memorized
u2018appropriate words'; the High School band plays the National Anthem;
somebody signals the Engineer. Of goes the candidate to the next
stop and the same business all over again.

What a wonderful
sight is this mile after mile of walnut groves. The walnut is of
course queen of the nut family and I'm sorry to learn that the Army
Quartermaster Corps has cut down its walnut purchases. This means
our boys in uniform are being denied the nourishment and enjoyment
of walnuts. This has got to stop. It is going to stop.

Occasionally
a critical city off the main line is reached by a motorcade. So
politicians and the Press are obligingly supplied by local car dealers
with the latest model cars (cheap advertising when the Candidate
is viewed and photographed) — about thirty new cars in all. Motorcades
fit nicely in parades — and parades it usually is. In the line of
march are the, local (and inevitable) High School band, the American
Legion Post, the firemen, the policemen, Boy Scouts, Girl Scouts,
political organizations, maybe nurses and, if close by, the regional
National Guard unit. American flags line the streets and political
signs are everywhere. The crowd lets go with cheers and whistles
as the Candidate passes by.

This is
a sight for sore eyes, fellow Americans: the American flag unfurled
in the breeze; our soldiers on parade. You know I saw service in
World War I. And speaking to my buddies of that war and to you vets
of World War II, I say you deserve higher pensions than you’re now
getting: And when I’m elected…

Then there
are the big speeches — u2018major addresses' as they're called — in
the big cities. The occasion calls for an arena or stadium — Madison
Square Garden in NY, the Public Auditorium in Cleveland, Wrigley
Field in Chicago (Soldier's Field, if the Party can fill it), the
Cow Palace in San Francisco, the Hollywood Bowl in Los Angeles —
each brimming with thousands of the faithful, in good voice and
wildly enthusiastic.

This is a ballyhooed,
search-lighted, televised rally and an off-the-cuff talk of the
campaign train or motorcade variety won't do. Television time on
a nation-wide hook-up is extremely expensive and always takes a
healthy whack out of the campaign funds. Accordingly, the u2018major
address' is a carefully prepared statement, closely timed to the
thirty minutes allotted television time. The rub, is that a modem
political Party must appeal to so many diverse groups that the resulting
speech, ducks many issues and often amounts to but a series of jeweled
platitudes.

A dazzling
ribbon of light picks out the Candidate in the darkened stadium.

Our Founding
Fathers offered us no panaceas, no nostrums But they did offer us
opportunities

— the
golden opportunities of hard work and common sense. (Applause.)
So let us eradicate fear, fellow Americans. Let us combine security
with progress. Let us close the gap between our advanced technology
and the inadequacies of our social organization. Let us go forward
towards a civilization and a world which caters effectively to
man's needs. (Applause.)

I say: u2018Down
with the Golden calf, up with Social Truth.' Let us march together
in this great crusade, for ours is the Promised Age. (Long applause.)

De Tocqueville
in his Democracy
in America, 1835:

u2018In America
the principle of the sovereignty of the people is… recognized
by the customs and proclaimed by the laws; it spreads freely,
and arrives without impediment at its most remote consequences.
If there is a country in the world where the doctrine of the sovereignty
of the people can be fairly appreciated, where it can be studied
in its application to the affairs of society, and where its dangers
and advantages may be judged, that country is assuredly America.'

Curtain's going
up; the Greatest Show on Earth is on. The Candidate's in the wings
and the Chairman is ready to introduce him…

u2018Ladies and
gentlemen of this great Party, I give you the man of the hour, the
man of the people, the man who will guide our Ship of State for
the next four years through the storms and perilous waters.

Ladies and
gentlemen, I give you the next President of the United States, the
honorable…'

September
23, 2006

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute.

DIGG THIS

Greek historian
Thucydides (c. 460–400 B.C.) constantly sought historical perspective,
saying c. 410 B.C.: "History repeats itself." Indeed.

So the U.S.
War on Iraq smacks more and more of our Vietnam War revisited, or
Act II. As Iraq itself teeters on civil war between its ruling Shiite
and Sunni factions — apart from the coolish Kurds in the north —
in a U.S.-fostered Iraqi government. As Iraqi insurgents steadily
kill or maim US soldiers by the thousands and by the tens of thousands
of Iraqi forces and civilians. As some 150,000 pro-Hezbollah protesters
take to the Baghdad streets earlier this August, shouting "Death
to America" and "Death to Israel."

For its part,
Israel in historical perspective has been around for a long time.
Recall the role played by Pontius Pilate, Roman governor of Judea
two millennia ago, a man who ineptly helped expedite the crucifixion
of Jesus and boost Christianity into a major world religion — who,
as tradition has it, committed suicide when back in Rome.

My point is
that knowledge of current Middle East intrigue and violence
may not be enough to understand it fully. Fuller understanding calls
for historical context, a handle on the setting of vital events
along the way and on long-term trends. So the worldly-wise reader
anxious to grasp what’s behind Middle East politics today faces
stern self-demands for perspective to unmuddle the long-troubled
Middle — or in my word, Muddle — East.

Harvard historian
Samuel B. Huntington made a creditable push at such unmuddling with
his 1997 scholarly work The
Clash of Civilizations and the Remaking of World Order.
Now along comes a highly readable, less toney, book, at 153 pages,
including a table of references and 16 maps. It is Middle
East Realities: Understanding the Conflict by Oliver James
(PublishAmerica, Baltimore) available at bookstores like Barnes
and Noble at $19.95 a copy.

Mr. James
is a retired executive of a major international oil firm with long
experience in the Middle East, including ten years in Lebanon, eight
years in Saudi Arabia, and eight years in Belgium where he had responsibility
for the firm's business in the Middle East and Africa. He earned
advanced degrees in engineering from Rensselaer Polytechnic and
in management from M.I.T. Mr. James writes well, with his credits
including a novel set in the Middle East, Prisoners
of Circumstance.

His Middle
East Realities book goes over the histories of key players in
the Middle East, probes the genesis of today's conflicts, treats
some of its longtime myths and realities. He declares: "We
are engaged in a war against terror without clearly understanding
the enemy we face or the inspiration behind the zeal that drives
him to bring harm to us — at any cost."

At any cost?
Mr. James seeks to give the worldly-wise reader a keener grasp
of this burning issue which seems to grow more and more costly and
intrusive. He reminds us of a point made by historian Arnold Toynbee
who said civilizations tend to die by suicide, much less by murder.
Question: Is our terrorist-hounded Western Civilization itself on
such a bent?

Mr. James
traces the argument that alienation between Jew and Arab goes back
to the Old Testament. Abraham’s two sons were half-brothers. One
son was Isaac, acclaimed the father of the Jewish people, who was
the second son of Abraham, born of his aging wife, Sarah. Ishmael,
who is regarded as the patriarch of the Arab peoples, was Abraham's
first son, born of Hagar, Sarah's maidservant.

The author
sees the humble origins of the Islamic Empire with the birth of
Mohammed to a family of modest means in the city of Mecca in 570
A.D. Mohammed was orphaned as a child yet soon joined his guardian
uncle to make regular trips from Mecca to Jerusalem as part of a
caravan of merchants plying their trade between those two points
and places in between. Repeated contacts with Jews and Christians
likely impacted on the fertile mind of Mohammed who as a young man
became convinced of the existence of one all-powerful, all-merciful
God. Said to have received a vision from the angel Gabriel, he began
to preach his message of one God in Mecca.

But his message
ran afoul of the authorities in Mecca who began to persecute him.
In 622 AD Mohammed fled to Medina 200 miles to the north where he
soon headed not only a new religion but a zealous political machine
legislating law and establishing order. Thus did Mohammed begin
to conquer Arabia in the name of Islam with his successors reaching
far beyond. By 750 AD the Islamic Empire spanned from Spain in the
west to India in the east, per a map supplied by Mr. James. He reminds
us that expansion was not the whole story, that today we have a
legacy of Islamic cultural values. For example, we employ Arabic
numerals, we see that algebra and algorithm are Arabic words.

But Christian
Europe did not welcome the Islamic challenge to its hegemony, and
beginning in 1096 it launched the first of eight crusades that spanned
174 years. But none of the crusades ever reached the lasting goal
of Christian rule over Jerusalem. Worse, as the author comments:
"From the Muslim Arab viewpoint the crusades were a form of
unprovoked aggression, raw western imperialism — a Christian u2018Jihad'
in a very real sense."

The rise of
Zionism in Europe in the late 19th century is tracked. Zionism stood
for the world Jewry seeking a homeland in Palestine. A key milestone
on the road to such a homeland occurred 1917, at the height of World
War I. This was the Balfour Declaration, named after Britain's foreign
minister, Lord Arthur James Balfour. The politics of the declaration
was plain. The British government was anxious to win support for
its bloody, costly war effort from the potent Jewish community at
home and abroad. As quoted by Mr. James, the Declaration reads:

"His
Majesty's government views with favor the establishment in Palestine
of a national home for the Jewish people, and will use its best
endeavors to achieve this objective, it being clearly understood
that nothing shall be done which may prejudice the civil and religious
rights of the existing non-Jewish communities in Palestine, or the
rights and political status enjoyed by Jews in other countries."

The declaration
was endorsed by the League of Nations in 1922 and became the basis
for the later partition of Palestine occurring after WW II. But
the ethics and wisdom of Britain offering the Jews land "over
which it had neither dominion or rights" to a people dispersed
in many others countries remain in serious question for Mr. James
and many others. Islamic resentment goaded war.

The 1948–1949
War on Israel came from combined attacks by Lebanon, Syria, Jordan,
Egypt, and Iraq. Then came the 1956 Sinai Campaign, the 1967 Six-Day
War, the 1973 Yom Kippur War, and, importantly, the rise of Palestinian
leader Yasser Arafat, described here as a "freedom fighter,
a guerilla, a statesman, a leader, a terrorist, a Nobel Peace Prize
recipient, a survivor, a father figure for a displaced people ….
" So for Israel and her Arab neighbors, the author comments
that "neither side has known real peace or security in nearly
100 years of contiguity."

Is a solution
possible? Maybe. Maybe not. Oliver James notes that killing does
not eliminate terrorism. It is necessary to determine and deal with
the root cause of the discontent that leads people to kill themselves
to harm us. Tough-minded Mr. James supplies his history-laden 11
points in his program for peace, including "creation and recognition
of a Palestinian sovereign state" and "establishment of
trade, educational and cultural exchanges between Israel and Palestine."

I say that
the James point-up of trade is the thing, that it bodes well for
more than just bilateral trade. Ludwig von Mises saw trade as "social
cooperation" and "consumer sovereignty,” as inherently
friendly and peaceful. Thomas J. Watson, founder and head of IBM,
worried over the dubious results of World War I and the League of
Nations in the 1920s and 1930s. Watson was impressed by how trade
— and the freer the better — benefits workers and consumers regionally
and over the world, by how they and others could prod their respective
governments to wage peace. And so Watson widely promoted in the
1920s and 1930s his motto of "World Peace Through World Trade."

Doesn't the
Watson motto apply to today’s galling Middle East — and far beyond,
to our terror-ridden Western Civilization itself? For doesn’t the
message of Thucydides and Oliver James for historical perspective
lend strength to spreading and implementing the social-cooperation
idea of “World Peace Through World Trade”? Before it is too late?
For where is the wisdom, the foresight, the hindsight, when armed
forces — no matter whose — go on a war-is-hell rampage shooting
or bombing actual or potential customers and investors?

I close with
a quotation by Thucydides, and put it the context of not only favorable
trade but unilateral free trade: “We secure our friends not by accepting
favors but by doing them.”

August
24, 2006

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute.

Mr.
Bovard has written for The Wall Street Journal, The New York
Times, The Washington Post, Newsweek, and Playboy. One
of his books, Lost Rights (St. Martin's Press), made him a best-selling
author. He boasts that he's been denounced by the director of the
FBI, the Secretary of Agriculture, the Secretary of Housing and
Urban Development, as well as the heads of the Drug Enforcement
Administration, the U.S. International Trade Commission, the Equal
Employment Opportunity Commission, and the Federal Emergency Management
Agency (FEMA).

Libertarians
say he must be doing something right.

Well,
what of the Bush White House for the past four years? Our author
faults President Bush for braggadocio and double-talk. In his April
13, 2004, press conference, for instance, Bush puffed that "as
the greatest power on the face of the earth, we have an obligation
to help the spread of freedom." Bush hailed our troops in Iraq
defending "security for America and freedom for the world."
Freedom for the whole wide world? A big place. Does this mean, for
instance, that the U.S. could turn on dastardly Chavez in Venezuela,
another oil-producing state? Or on rank Mugabe in Zimbabwe?

Earlier,
on January 22, 2004, Bush justified his preemptive war on Iraq as
his way of forging a free society: "Free societies do not breed
terrorism. Free societies are peaceful nations." But the question
is: Will Iraq, so full of insurgents bent on kidnapping or even
beheading their adversaries, ever get to be a free society? Anything
but so far. Well, what about after January 2005?

Mr.
Bovard isn't holding his breath.

In
that regard, he quotes President Bush declaring on March 12, 2004,
"I proposed doubling the budget of the National Endowment for
Democracy to $80 million. We will focus its new work on bringing
free elections and free markets and free speech and free labor unions
to the Middle East." So Bush, says our author, sees a surge
in propaganda as a blow for freedom. Bush again: "By radio
and television, we're broadcasting a message of tolerance and truth
to millions of people. . . ."

Tolerance
and truth? On February 4, 2004, Bush gloated: "Saddam Hussein
now sits in a prison cell, and Iraqi men and women are no longer
carried to torture chambers and rape rooms." True, but along
came Abu Ghraib, a U.S. military prison in Baghdad with vile torture
photos of stacked, naked, Iraqi POWs in mock electrocutions, forced
simulation of sexual acts, cringing before leashed attack dogs,
all in gross violation of the Geneva Conventions, all televised
to shocked Muslims everywhere and to the rest of a war-weary globe.
No wonder the U.S. lacks friends in international society.

Anyway,
on May 24, 2004, Bush blamed "a few American troops who disregarded
our country and disregarded our values." Our author rightly
wonders just where was the supervision, and how far up the Pentagon
hierarchy does the blame extend.

Mr.
Bovard also wonders how come in March 2002 the White House slapped
on a 30 percent steel tariff to protect steel jobs in West Virginia,
Pennsylvania, and Ohio – all critical states in the 2004 election.
Double-talked President Bush: "An integral part of our commitment
to free trade is our commitment to enforcing trade laws to make
sure that American industries and workers compete on a level playing
field." Sure.

Our
author quotes one expert holding that the "new steel tariffs
would cost about eight American jobs [in steel-consuming industries
such as autos] for every one steel job saved." The World Trade
Organization also weighed in, charging the U.S. with violating international
trading rules. The European Union threatened retaliatory tariffs
on U.S. exports. The pressure worked, apparently. On December 4,
2003, the White House dumped the steel tariff

Perhaps
you wonder how Mr. Bovard derives his standards for his critique
of President Bush. His source is, in a word, liberty, including
its theory and application. He finds Bush, for example, fond of
holding how much the world has changed since 9/11. Our libertarian
author is unimpressed, asking over and over: What about the Constitution?
He reminds us that our Founding Fathers taught us that power is
a blunt instrument – no matter who wields it – that checks and balances
preclude the idea of a power-expedient presidency, that Article
1, Section 8, of the Constitution expressly says only Congress can
"declare War."

No
wonder our author has some nice words for a few Democrats in opposition.
He commends Sen. Robert Byrd (D-W. Va.) for opposing the war on
Iraq, Sen. Russell Feingold (D-Wis.) for opposing the Patriot Act,
and Rep. John Conyers (D-Mich.) for opposing Attorney General Ashcroft.

Yet
plainly our author is no friend of either major and most interventionistic
party, the Democrats or the GOP, or of enforcing the tyranny of
the status quo (to use Milton Friedman's phrase), or of the many
neocons in high places in both parties who, openly or otherwise,
laud the Welfare State, the New Economics, or the so-called Third
Way of Tony Blair and Bill Clinton.

So
the plight today of so many polarized Americans – split virtually
into two giant 50-50 opposing camps – who seek relief by switching
from one party to the other, reminds our author of an alcoholic
trying to solve his fix by switching from whiskey to rum.

Our
problem, as Mr. Bovard sees it, is increasingly one of unlimited
democracy, of public choice ever selling out to special interests,
of corruptive power vainly trying to undo the abuses of power, of
state spending more and more for less and less, of vice “seen too
oft,” to revert to Alexander Pope, "familiar with her face/We
first endure, then pity, then embrace."

God
save us, says James Bovard in his incisive book, from our self-imposed
"moral Dunkirk," from our self-appointed saviors, from
the White House down.

November
10, 2004

William
Peterson [send him mail],
who
studied under Mises at NYU in 1950–1969 and taught economics at
NYU, is an adjunct scholar at the Mises
Institute and contributing editor to The
Freeman.

So
America worships a demigod in our media, legislatures, textbooks
– broadcasting a one-word message, "Democracy," to
a near-deaf world. Near-deaf? Why? Well, such worship of democracy
hasn't always been shared or sought. Hear, for example, the prescient
speech of Benjamin Disraeli, a young novelist and thinker –
then a back-bench Tory M.P. but later twice becoming Britain's Prime
Minister – in the House of Commons, March 31, 1850 (Mencken,
A
New Dictionary of Quotations, Knopf, 1942, p. 484):

"If
you establish a democracy, you must in due time reap the fruits
of democracy. You will in due season have great impatience of
the public burdens, combined in due season with great increase
of public expenditure. You will in due season have wars entered
into from passion and not from reason; and you will in due season
submit to peace ignominiously sought and ignominiously obtained,
which will diminish your authority and perhaps endanger your independence.
[Per Vietnam and Iraq, Dear Reader?] You will in due season find
your property is less valuable, your freedom less complete."

Or
ruminate on this corroborative editorial in The London Times
shortly afterward on February 7, 1852 (ibid., p. 940): "Concealment,
evasion, factious combinations, the surrender of convictions to
party objects, and the systematic pursuit of expediency are things
of daily occurrence among men of the highest character, once embarked
in the contentions of political life."

So,
Dear Reader, let's seek out the political implications of Disraeli's
prescience and that London Times editorial. Note first how
earlier thinkers on democracy were like-minded. Plato, for example,
saw democracy in his Republic (c. 370 B.C., Bartlett's 15th
ed., p. 85) as "a charming form of government, full of variety
and disorder, and dispensing a kind of equality to equals and unequals
alike." Aristotle in his Rhetoric (c. 322 B.C., Mencken, op.
cit., p. 275) also censured democracy as "when put to the strain,
grows weak, and is supplanted by oligarchy." So later thinkers
such as George Bernard Shaw hit democracy in his Maxims for Revolutionists
(1903, ibid., p. 277) for substituting "election by the incompetent
many for appointment by the corrupt few." Or as economist Hans-Hermann
Hoppe at the University of Nevada-Las Vegas, who in his Democracy
– The God That Failed (Transaction, 2001, p. 96), holds
that "majorities of u2018have-nots' will relentlessly try to enrich
themselves at the expense of the u2018haves'."

Or
take account of how America's Founding Fathers themselves suspected
political democracy of mindless self-extinction for the habit of
many voters to embrace "factions" or special interests.
James Madison spoke for his peers in No. 10 of The
Federalist Papers (Mod. Lib. ed., p. 58). Here he worried
over the lures to a majority to "sacrifice the weaker party
or an obnoxious individual," adding that "such democracies
have ever been spectacles of turbulence and contention; have ever
been found incompatible with personal security or the rights of
property; and have in general been as short in their lives as they
have been violent in their deaths."

No
wonder the very word democracy is missing throughout the entire
Declaration of Independence, Constitution, and Bill of Rights. Indeed,
note how sternly anti-democratic are the first five words of the
First Amendment on matters of abridging religion, speech, press,
assembly, and petition: "Congress shall pass no law …. "
Repeat, "pass no law." So Ben Franklin, asked outside
Independence Hall what kind of state the Fathers produced, replied
with a famous proviso, "A republic, if you can keep it."
Big if. I think Old Ben was warning us:

As
political democracy grows the individual shrinks.

Yet
– voil – see how Austrian economist Ludwig von Mises
lit up an unknown yet safe and highly effective daily democracy.
In 1922 in his book Socialism
he saw it at work in our vast marketplace. See it around you today:
from the shopping mall to online buying to ordering by telephone
to getting cigarettes from a vending machine to filling up at the
gas pump by credit card to business consumers ordering supplies
for their operations. So do all these market voters vote, as a rule,
not but every other year but again and again every day. Check Socialism
(Liberty Classics, 1981, p. 11), which gives such democracy a crucially-needed
political dimension today. As Mises wrote: "When we call a
capitalist society a consumers' democracy we mean that the power
to dispose of the means of production, which belongs to the entrepreneurs
and capitalists, can only be acquired by means of the consumers'
ballot, held daily in the marketplace." Democracy? Voting daily,
hourly, or even more often than that? Exactly. Mises stood on solid
ground.

For
just what is political democracy? Well, check its Greek roots: rule
or "kratia" by the people, the "demos." But
see the mean politics of Big Government today and ask: Who rules
whom? Why do state hegemony and intervention, deficit finance and
shady politics, reign if not rage today as near givens in America
and over the democratic West, why does the free individual fade,
how come inflation (of money and credit) ever bites into the value
of currencies across the globe (in the U.S. M.D.s charged $2 for
an office visit, $3 a home visit in 1930 when I was growing up in
Jersey City (today an office visit can cost $80), when a first-class
stamp cost two cents but 37 cents now , when a N.Y.C. subway ride
cost a nickel but now $2, when I worked at the A&P for the minimum
hourly wage of 25 cents (if I now curse the very idea of a minimum
wage)? And, why does our very political majoritarianism tend to
divide or even polarize society – us vs. them, them vs. us
– so graphically on view in the late unlamented 2004 presidential
campaign?

So
I say "Three Cheers" for free capitalism, private property
rights, the Mises market democracy, all punished and deeply misunderstood
today, yet still the very fount of our wellbeing and employment.
Hope then that in the heat of current debate of what passes for
public policy, market democracy will be reborn, rethought, and reinforced.
Note its basis in equal rights (so unequal today) and a limited
state (so unlimited today). Note how it stars entrepreneurs with
their private tools of production of goods and services, how they're
ever goaded by competition to ply consumers with more for less,
how fallible executives, when exposed (Enron, Tyco, etc.), get hit
far faster by the stock market than by the courts or the Securities
and Exchange Commission. For firms are led by and, if need be, democratically
punished by their customers, by their, said Mises, "sovereign
consumers" everywhere. Note their make-or-break "orders"
(what a word) and their key price signals of "demand"
(again, what a word). So market democracy enthrones you, Mr./Ms.
Consumer, or for another metaphor, puts you in the driver's seat.

Whither
then, thanks to rabid state interventionism, our berated, underrated,
much overregulated and overtaxed, much misread and misapplied, capitalism?
Yet isn't it still, per our Founders (though capitalism as a word
had yet to be coined by Karl Marx) a royal road to social cooperation,
a vast vital network of private governments of the people, by the
people, for the people, all via much-used withdrawable individual
assent?

Withdrawable?
A key to liberty. For in a free society are countless hierarchies
of power, governances such as The New York Times, Harvard,
New York Stock Exchange, Microsoft, Southern Baptists, Salvation
Army, Wal-Mart and some 25 million other firms, farms and organizations;
yet all are totally dependent on withdrawable individual assent.
So you can switch from GM to Ford, from Yale to MIT, from Burger
King to McDonald's. And vice versa. Talk of democracy! Of your decisive
market freedom to choose.

Democracy
anyone? Yes. But which one? For isn't today's political democracy
a shield for a Pax Americana for democratizing a sinful globe, with
the focus now on the raging undemocratic Middle East? But doesn't
this serve up Jouvenel's classic riddle (74 AD): Sed quis custodiet
ipsos custodes? (But who is to guard the guards themselves?) Thomas
Paine saw the fix in 1776 in his Common
Sense as "a necessary evil."

No
wonder Bismarck likened the legislative process to the unsightly
conversion of pigs into sausages. Or per Churchill, democracy is
the least awful way to effect a peaceful change of political power.
Or per Mencken, an election amounts to an advance auction of stolen
goods. Or held Swiss thinker Felix Somary in his Democracy at
Bay (Knopf, 1952, p. 6): Political democracy blends two "fictions,"
one the idea that "an entire people can assume sovereignty,"
the other the idea of "the innate goodness of man."

So
let me, Dear Reader, juxtapose America's Political Democracy with
the Mises idea of Consumer Democracy to clarify which is which,
and ask you – with both democracies needful of repairs –
which needs the most by far?

Look.
In one democracy you vote only every other year for candidates (who
may not win) to "represent" you and many others indirectly
on myriad issues. In the other, you vote daily, often, directly
– in a sense, one on one – for specific vendors, goods,
or services, in an endless plebiscite that goes on every minute
of every day, with dollars as ballots. Yes, some get more ballots
than others. Yet Mises saw this outcome as mostly passing, as consumers
themselves vote "poor people rich and rich people poor"
(Human
Action, Yale University Press, 1949, p. 270).

So
one democracy is public, the other private. One, unequipped with
what Mises called "economic calculation," hires no profit-and-loss
bean counters and so funds failing programs and choiceless public
schools, the other, equipped with economic calculation, does hire
bean counters and lets failing firms and weak private schools fail,
as sovereign consumers withdraw their life support. One democracy
is coercive and centralized, the other voluntary and decentralized.
One runs, inadvertently, a growth-impeding win-lose zero-sum game,
the other, also inadvertently, runs a pro-growth win-win positive-sum
game. This difference, alone, sets America's future, likely including
your own.

One
democracy runs by politics and legal monopoly (such as public schools,
Social Security, Medicare, U.S. Postal Service, and the Federal
Reserve central bank). Yes, people in this democracy do vote periodically,
if unmindful of Henry David Thoreau's Civil
Disobedience of 1849. Thoreau saw "little virtue in
the action of masses of men" and voting as "a sort of
gaming." The other also votes but far more often and directly
as it runs a consumer democracy by market economics and competition.
One democracy forgets the individual, per Yale's William Graham
Sumner's famed "The Forgotten Man" public lecture in 1883,
the other remembers him/her most accountably if not beholdenly (if
imperfectly per that spam in your PC).

One
democracy seeks legal plunder and plays incumbency ruses: compromises
with principle, gerrymandering, log-rolling, grandstanding, warmongering,
free-lunch guises such as big federal "grants" (bribes?)
to states and localities ($352 billion, annualized, 2nd
qtr., 2004), the other is cleansed by competition and cost-cutting
– by demonstrated producer actions aimed at pleasing consumers,
in Milton Friedman's phrase, free to choose.

One
democracy veers to electioneering, an amoral short run, the other
to moral contracts and the longer run. One, armed with coercive
power, yields to Acton's law that power tends to corrupt and absolute
power corrupts absolutely. Yet the other, if gloriously voluntaristic,
can sometimes slip into corporate misbehavior – sly ways of
manipulating money or getting into bed with political power to win
anti-consumer import quotas, subsidies, special tax relief and other
mischief via special interests, despite President Eisenhower's 1961
farewell warning against a "military-industrial complex."

One
democracy glorifies war, including class warfare, the other glorifies
peaceful trade in a virtual global concordance on private property
rights (if widely derided as "globalization") – per
IBM's old motto of "World Peace Through World Trade."
One entered World War One, naïvely, as "The War to End
War" and "Make the World Safe for Democracy." Some
democracy! Reaping Lenin and Stalin in Russia, Hitler in Germany,
Mussolini in Italy, Franco in Spain, Tojo in Japan, Tito in Yugoslavia,
Mao in China, Peron in Argentina, Castro in Cuba, Allende in Chile,
Pol Pot in Cambodia, Chavez in Venezuela, Mugabe in Zimbabwe, with
lesser imitators throughout Asia, Africa, Central Europe, Latin
America, and the Middle East. Yet the U.S. still seeks to "democratize"
the turbulent Middle East, citing Japan and Germany as post-World
War II successes, yet remaining silent on failures such as North
Korea, Vietnam, Bosnia, Somalia, Kosovo, and Haiti (the Clinton
military action there gamely tagged as "Operation Democracy").

One
democracy rues income disparity and, like Robin Hood, "transfers"
wealth, the other, per John F. Kennedy launching a big across-the-board
tax cut in 1962, "lifts all boats." One denies itself
crucial market feedback data, or, again, what Mises called "economic
calculation," predicting in 1920 the ultimate implosion of
socialism à la the USSR, the other uses that calculation
to help allocate limited resources to their perceived optimum market
uses. One wastes capital and talent (human capital), the other saves
and invests it self-interestedly, yes. Yet, if under a moral code
and the rule of law, it does so spontaneously, harmoniously, constructively,
as Hayek abundantly demonstrated.

One
democracy tends to divide or even polarize the people and works
the dubious rule of winner-take-all, sometimes touching off revolution
or war. The other is inherently peaceful and explains the success
of the West via the Adam Smith "invisible hand" idea of
sharing self-interest in a system of "natural liberty,"
of self-help by helping others, including the poor or per his famed
line in The
Wealth of Nations (1776, Mod. Lib. ed., p. 14): "It
is not from the benevolence of the butcher, or the brewer, or the
baker that we expect our dinner, but from their regard of their
own interest." No question capitalism or market democracy is
far and away our greatest, most hopeful democracy. Yet this friendly
peace-inducing democracy is, as such, nearly unknown, invisible,
and, because it's driven by "evil" profits, frowned upon
here and abroad.

So
facing us are three challenges: Challenge One, can we free up our
market democracy from the tightening binds of preemptive heavy taxation,
regulation, and power grab, to bring it into broad public grasp,
approval, and esteem? Challenge Two, can we use America's second
democracy to widen individual freedom and help tame or relimit political
democracy la our Founding Fathers in 1776? And Challenge Three,
will we welsh on what freedom remains and let political democracy
with its latent authoritarianism go the way it did in Ancient Greece?

Surely
there's a better way, a far freer way, the way of IBM's Thomas J.
Watson and his motto of "World Peace Though World Trade,"
the Mises way of Consumer Democracy.

Call
it power to the people or, better, America's Other Democracy.

November
5, 2004

William
Peterson [send him mail],
who
studied under Mises at NYU in 1950–1969 and taught economics at
NYU, is an adjunct scholar at the Mises
Institute. Above, largely drawn from his article in the December
2003 Free
Market,
is the introduction to his book in progress, Letter
to Mr./Ms. America: Re Our Other Democracy — The Vital, Vibrant
One Coordinating Choice and Change.

~
Axel Oxenstiern (1583–1634), Chancellor of Sweden

Things
fall apart; the center cannot hold.2

~
William Butler Yeats, Nobel laureate, 1921

An Old Testament
story on the Human Condition, the Human Comedy: In the sweat
of thy face shalt thou eat bread.3

So an angry
Lord Jehovah thundered down on terrified Adam and Eve fleeing through
the Gates of Paradise, as that unrighteous pair, beguiled by the
Serpent, lured by the Forbidden Fruit, were banished from the Garden
of Eden. And from its endless bounty. So were they — as well as
you, Dear Reader, in their long line of progeny — condemned to ceaseless
scarcity, including precious life itself.

And so Adam
and Eve's Original Sin haunts you in today’s free trade-challenged
war-weary world of six billion mortal souls, with state intervention
as the universal religion given to curing but — oddly — actually
worsening overall scarcity every time. How come? Let me reply with
a question:

Well, don't
all too many of us homo sapiens worship and empower the Almighty
State to defy Moses's First Commandment, Thou shalt have no other
gods before Me, his Eighth, Thou shalt not steal, and his Tenth,
Thou shalt not covet … while defying natural law and Moses’s unsaid
if implied 11th Commandment, Thou shalt be wary of the Prince, for
he has nothing to give save what he takes away…?

Defying? Yes,
if also reaping retribution, as night follows day. Or per an ancient
couplet:

In Adam's fall,
We sinned all.

Or, briefer
still, per the title of John Milton's masterwork (1667): Paradise
Lost. Here
Milton sees the great God State, ungodlike, harming you, in war
intervention sweepingly so, saying:4

"Who overcomes
by force hath overcome but half his foe."

So the lesson
from Genesis: So was born man's daily hunger-pangs reminder of natural
law, including its other derived laws such as gravitation and here
in particular scarcity in the face of man’s urge to live. Hence
his lifelong need and search for life-sustaining bread if at the
cost of toil, time, trouble.

Trouble that
darkens, boomerangs, as man seeks an easy out, as he deals in give-ups
or sellouts to the great God State, our 21st-century Leviathan,
which lays on you — be not surprised, Dear Reader — unintended and
most unkind liens like war, inflation, high taxes, liberty lost.
So into many minds across the West comes ever anew that Grand Illusion,
a glittery New Deal ever fading into a Raw Deal, a breach of natural
law, a sorry bargain.

Well, just
what is natural law? Roman lawyer and senator Cicero, a proponent
of natural law, put it this way:5 “The
foundation of law is not opinion but nature.” Or per Jefferson in
1776 in opening the U.S. Declaration of Independence and citing
“the Laws of Nature and of Nature’s God.”

Greek philosophers
Heraclitus, Aristotle, and Plato and the Romans Seneca, Epictetus,
and Marcus Aurelius, often through the school of Stoicism with its
doctrine of duty and fitting disposition, held that man had to live
in accordance with nature and its laws to win moral freedom. Later
Aquinas, Grotius, and Spinoza in different ways saw natural law
as ground for morality and logical thinking.

Or as Murray
Rothbard, the brilliant student of Mises, in seeking the derivation
of natural rights and citing John Locke’s Civil
Government, accepted the hypothesis of natural law, saying
in his book, For a New Liberty:6

“Natural law
theory rests on the insight that we live in a world of more than
one — in fact, a vast number — of entities, and that each entity
has distinct and specific properties, a distinct ‘nature,’ which
can be investigated by man’s reason ….”

And on natural
rights, Rothbard said:7

” … the natural
rights statement of the libertarian position is to divide it into
parts, and to begin with the basic axiom of the ‘right to self-ownership.’
The right to self-ownership asserts the absolute right of each man,
by virtue of his (or her) being a human being, to ‘own’ his or her
body; that is, to control that body free of coercive interference.
Since each individual must think, learn, value, and choose his or
her ends and means in order to survive and flourish, the right of
self-ownership gives man the right to perform these vital activities
without being hampered by coercive molestation.” Rothbard thus reminds
us that the modus operandi of capitalism boils down to but three
words: private property rights, led by the right to self-ownership.

Note here that
Rothbard hits coercion twice. Yet coercion is the very means of
state intervention, the very means by which the Western individual
has been marginalized and our state has been burgeoned into Leviathan.
And burgeons still. Yet see how modern man dotes on funny if at
base unfunny Leviathan, and how he winks his eye at its rooted natural
law failing of state interventionism including organized if legal
kleptomania and military adventurism. In 1944 F.A. Hayek called
the process The
Road to Serfdom.

Anyway, much
liberty is lost, yes — but much hope, no. Hope by learning of natural
law — here, for example, its sub-law on human frailty, on a historical
political mistake (recall Rome’s “bread and circuses”), on a misbegotten
wish:

Beat scarcity
via a secular religion of statism, via worshipping a misty yet wise,
just, and compassionate State, a realized ideal. Enjoy then a bread-upon-the-waters
miracle of majoritarian democracy: Hey, let others pay. Just vote
yourself manna from heaven, and, presto, it's there. Sure.

Yet isn't political
democracy still a good idea, up to a point? Maybe — a big maybe
— but aren’t America and the West long past that point? Didn't today’s
Living Constitution in fact die at the hands of the US Supreme Court
in 1937? For the more you study Mr. Bloated Leviathan — revered
icon of Democracy Unlimited — the more you see his special interests
at work, including much of the standing government, media, and intelligentsia,
acting out a film noir, chasing a mirage of “just” — really unjust,
unwise — interventionism. See then an official Pied Piper lead astray,
however democratically, childish adults over the globe, blinding
them from economic reality. As in the People’s Republic of America.

For what is
democracy? Beyond its acclaimed miracle powers is its Greek root:
rule or autokratia by the people, the demos. But who
rules whom? Why does state hegemony seem to reign over society,
why does the free individual fade across the West, why does political
majoritarianism seduce the multitude and quash you — or, as neatly
put by satirist P. J. O'Rourke in 2002, why be against me? So I
ask: Natural law, anyone?

Whither then
today's tarred capitalism, a royal if perhaps ebbing road to social
accord and rising prosperity? And whither society duped here, there,
everywhere? Hear enticing interventionist music: “Save the World
for Democracy” (1917 and 2004), Medicare, Social Security, affordable
housing, affordable medicine, affirmative action, public [read government]
schools, “gun control,” safety nets, import protection, rent control,
freeways, farm price supports, occupational licensing, “War on Drugs,”
“job creation,” and endless other backfiring put-ons. Backfiring?
Yes, per Peterson’s Law (adopted from Mises): State intervention
tends to make things worse.

So check Leviathan
up close and what do you get: a carnival hawker of something for
nothing, a stealthy transfer artist, a rash defier of natural and
constitutional law, a lawbreaker and prevaricator extraordinary.
Or per 19th-century Frederic Bastiat: "The state is that great
fiction by which everybody tries to live at the expense of everybody
else."8

Or Jefferson
seeing in 1801 a means of avoiding war in his First Inaugural Address:
"Peace, commerce, and honest friendship with all nations, entangling
alliances with none."

Lessons unheard
or forgotten today. As our Founding Fathers look down and weep.

For didn't
they ask us, with a long indictment of George III as a case in point:
Shouldn't government be feared, watched, limited? Wouldn't they
have wondered about President George W. Bush never casting a veto
in his first three years in office and running up a budget deficit
this year of some $500 billion? Wouldn't they have seen President
Clinton as wrongheaded in holding, "You can't love your country
and hate your government"?9

Hate it perhaps,
or laugh at it, pity it — and us — oh yes. Or per Thomas Paine in
Common
Sense in 1776: The state is a "necessary evil"
Or as Jefferson wrote to E. Carrington in 1788: “The natural progress
of things is for liberty to yield and government to gain ground.”
Or per German Chancellor Otto von Bismarck: "The legislative
process is not unlike the rank conversion of pigs into sausages."
Or as Winston Churchill conceded: "Democracy is the least awful
way to get a peaceful exchange of political power."

Meanwhile,
see the law of scarcity hit you the more so because conventional
wisdom views, brazenly, the power-and-tax-hungry state as something
of a God, as the fount of our bounty, as hinted in the sly if winning
1992 Clinton-Carville campaign slogan: "It's the Economy, Stupid"?
But shouldn't Messrs. Clinton and Carville have said: "It's
the Government, Stupid"? Or better: "It's the Unlimited
Majoritarian Government, Stupid"?

Well, what
of unloved if highly productive capitalism, the economic right arm
of a free society? I say see capitalism still as super social cooperation,
as answering unmotherly Mother Nature which orders you: Make ends
meet, match income with outgo, work or perish, sending this omen
to you and your family, to giant GM and GE, to tiny farms-shops-offices,
to even NGOs: those oxymoronic "nonprofit," non-government
organizations. So each of us, all of us, high and low, young and
old, singly or organized, must face up to nature's daily dish of
scarcity. As must all national and lesser governments, none of which
is above natural law. Bringing to mind the legend of King Canute
ordering the incoming tide to stop. And getting his feet wet.

What now? The
lesson of history, natural law, and private property rights rings
out loud and clear in the West: Try liberty. Produce and trade,
save and invest, via division of labor, via free markets and free
minds, via Adam Smith's great metaphor of the Invisible Hand doing
social good, per his line in The
Wealth of Nations (1776): “It is not from the benevolence
of the butcher, or the brewer, or the baker that we expect our dinner,
but their regard to their own interest.” Or check the definition
of economics by Lionel Robbins of the London School of Economics
(1932):10

"The
science which studies human behavior as a relationship between ends
and scarce means which have alternative uses."

Alternatives.
Choices. But what of the case of choice-denying democracy, as your
fellow citizens rear up and tell you, via the state, what you must
do — e.g., enter Medicare, like it or not? So “democratic” statism
locks you, a trapped minority of one, into welfarism, monopoly politics,
naked coercion — hanging you on a cross of majoritarianism, of state-defied
natural law.

Recall then
pretty evenly divided Florida or even a 50-50 national split between
the GOP and the Democrats in the 2000 election, as Al Gore got the
majority popular vote, slimly, and as George W. Bush, aided by the
US Supreme Court, got the decisive Electoral College vote, also
slimly. Winner take all? But what, please, of the other half, the
losing half? What a way to run a railroad!

Yet note your
other key option, at hand: Perception of our Other Democracy, the
profound economic democracy of the free market, seen by F. A. Hayek
as a "marvel," by Ludwig Mises and W. H. Hutt as “consumer
sovereignty,” a 100 percent consumer voting and firmly ruling democracy,
with spontaneous minority action and representation, in tune with
natural law. Recall Mises in his Human Action:11

"The direction
of all economic affairs is in the market society a task of the entrepreneurs.
Theirs is the control of production. They are at the helm and steer
the ship. A superficial observer would believe that they are supreme.
But they are not. They are bound to obey unconditionally the captain's
orders. The captain is the consumer. Neither the entrepreneurs nor
the farmers nor the capitalists determine what has to be produced.
The consumers do that."

Isn't state
intervention then a dumb way to run an otherwise free society of
consumers and producers when they're one and the same people if
in different modes at different times? Too, doesn't interventionism
sap people as well as scarcity-thwarting capitalism — with its warts,
yes, but only on its bad actors?

Back to you,
Dear Reader, bent on choosing wisely in and out of the market, ever
after what Jefferson called "the pursuit of happiness."
Says your dismal scientist: No matter if you choose little things
such as what book to read, what to wear, or where to dine, or big
things such as what career to follow, where to live, or whom to
marry, you must ipso facto give up other options.

Feminists saying
"Have it all" are, with all due respect, wrong. Neither
they nor you nor the state can have it all. Never. Look. Even if
you decide to stay put in a given situation — to do nothing — that's
still a choice. Human action or inaction is thus ever at a cost
of options denied. Choice involves denial. Per natural law.

So behold its
hard fact of opportunity cost, a law lighting up the related law
of supply and demand on pricing in production and consumption, or
other laws tied to natural law that the state simply can’t
repeal. But how it tries, politically! Tries to fake free lunches
via spin such as "Centrism," "Middle of the Road,"
and "The Third Way."

So ignorance
of this natural-law, no-free-lunch fix tells why things go wrong,
why state intervention into peaceful private activity runs afoul,
why it is but at best a zero-sum game in contrast to the positive-sum
economic-growth game of capitalism, why it at once creates, confounds
and crowds you out, Mr. Forgotten Man/Ms. Forgotten Woman — to tap
the idea of Yale social scientist William Graham Sumner in 1883.
Or to tap the idea of economists Nobel laureate James Buchanan and
his colleague Gordon Tullock in their concept of Public Choice:
Invocation of "the public interest" by legislators, bureaucrats,
and special interests gets to hide burning yet — surprise! — unmentioned
self-interest.

So you and
the rest of West get hooked early in the 21st century to paternal
if most unsafe authoritarianism, to the Actonian law that power
tends to corrupt and absolute power corrupts absolutely. So our
patriotism-preaching but lawbreaking state is bent on, advertently
or inadvertently, breaking its natural – aside from its constitutional
– bounds. With this Smithian irony: On tbe “great chessboard
of human society,” as Adam Smith told us in The
Theory of Moral Sentiments (1759),12
“every single piece has a principle of motion of its own, altogether
different from that which the legislator might choose to impress
upon it.” With of course natural law ever having the final say.

Final? Yes,
Dear Reader, but no need to push it to the limit. Back to hope,
to grasping natural law. No untenable mindset lasts forever. I recall,
as an ex-IBM employee (pre-World War II mail clerk), an old IBM
one-word motto displayed all over the workplace: “Think.” Good idea,
for the human brain like the rest of an unexercised body can atrophy
for lack of use. So, if you will: Think natural law, communicate
it, stay tuned, and enjoy the show.

Endnotes:

1. Bartlett’s
   Familiar Quotations, 15th ed., p. 263.
2. Ibid.,
   p. 714.
3. Ibid.,
   p. 7.
4. Ibid.,
   p. 283.
5. H. L. Mencken,
   A
   New Dictionary of Quotations (Knopf, 1942, p. 655.)
6. Rothbard,
   For
   A New Liberty, Macmillan, N.Y., 1973, p. 25.
7. Ibid.,
   pp. 26–27.
8. Frdric
   Bastiat, The
   Law, translated by Dean Russell, FEE, 1998. p. ix.
9. Quoted
   by Joseph Sobran, syndicated column, April 15, 2003.
10. Bartlett,
    op. cit., p. 842.
11. Mises,
    Human
    Action, Yale, 1949, p. 270.
12. Smith, The
    Theory of Moral Sentiments, Arlington House ed., 1969,
    p. 343.

February
26, 2004

William
Peterson [send him mail],
a
student and later colleague of Mises at New York University 1950–1969,
is an adjunct scholar at the Mises Institute. Bits of his essay
are in "Discovering
Mises, A Turning Point," a chapter in a forthcoming anthology
edited by Professor Walter Block of Loyola University in New Orleans.

DIGG THIS

The
dream may not always be big but it is possible, even probable given
the right conditioning, given the right commitment. For in a free
society the spirit of enterprise, the spirit of dynamic boldness,
of business ingenuity, appears to be rather universal, across the
board — part and parcel of human nature.

Thus in one way or another the spirit of enterprise crops up in
every occupation, every craft, every profession, every walk of life,
from a plumber figuring out a new way to fit a pipe bend, to a factory
manager recasting a production layout flow, to a university student
enhancing his human capital by hitting on a new and better study
technique, to a Washington hostess coming up with an innovative
dinner table seating arrangement, to a novelist working out a fresh
plot construction and — to cite perhaps a bigger dream — to a Vietnamese
"boat person" establishing a restaurant in Los Angeles.

All these individuals must shape and reshape their plans to fit
changing conditions and invest in a demanding if not capricious
situation in an uncertain future. All of them reflect entrepreneurial
behavior — the entrepreneurial spirit in action.

Perhaps without knowing it, they are enterprisers all, at least
in degree. Shakespeare sensed this entrepreneurial spirit when he
had Hamlet observe: "Every man hath business and desire, such
as it is." So did Adam Smith sense the spirit of enterprise
when he declared in The
Wealth of Nations (1776): "In all countries
where there is tolerable Security every man of common understanding
will endeavor to employ whatever stock he can command, in procuring
either present enjoyment or future profit." Colonel Harland
Sanders, founder of Kentucky Fried Chicken, expressed his own streak
of entrepreneurship this way: "I was 66 years old. I still
had to make a living. I looked at my Social Security check of $105
and decided to franchise my chicken recipe. Folks had always, liked
my chicken."

Thus the aspiring enterpriser or entrepreneurial manager might ask
himself:

Are you ready to be an entrepreneur, to be an entrepreneurial manager
(sometimes called an "intrapreneur"), to be a success?
If so, what have you done to merit it? Have you developed a marketable
specialization? Have you developed something fresh and unique that
would be of interest at your workplace or to your customer, real
or potential? Are you fully applying and capitalizing on it? And,
just what have you done to promote your ideas?

The message here, then, is: The spirit of enterprise seems latent
if frequently dormant in human nature. It is a national as well
as an individual resource. It can be nurtured and developed. Above
all, it can be self-applied.

The
Entrepreneurial Choice

Yet enterprise is not a free good. It has a price. It is implied
in the economist’s concept of opportunity cost, the idea that whatever
man seeks he must sacrifice something to obtain it, that he must
give in order to get, deny himself the yield from the investment
of time, effort or capital in options denied, that he must engage
in the calculus of costs and benefits arising from different choices,
that, indeed, he may miscalculate — incur losses, lose his capital
and become a business mortality statistic. Yet, correct choices
can be creative, innovative, beneficial to community and entrepreneur
alike.

Yes, enterprise, success, the possible dream. So I ask: Inside and
outside the world of business, just what is it that ignites the
spark of ingenuity, of creativity, that causes the enterprisers,
whoever and wherever they are, to try something dramatic, dynamic
and bold, that enables them, frequently, to till new ground, see
new horizons, break through once-impenetrable barriers?

Now, what of entrepreneurship, the child of enterprise?

What impels entrepreneurs to scout for new market or production
possibilities, to come up with something novel, daring, risky, even
perilous in terms of losing precious time and accumulated capital?
What makes them try to spot and meet the shifting needs and demands
of the ever-fickle, at times cruelly dictatorial and always most
sovereign consumer?

Whatever the answer, the breakthroughs start in the mind.

Just how did Thomas Alva Edison come up with the idea of an electric
light (apart from literally hundreds of other patented ideas), Willis
Carrier with the concept of an air conditioner, Clarence Birdseye
with the thought of frozen food, Gail Borden with the invention
of condensed milk, Rowland Hussey Macy with the notion of a department
store, Wallace Abbott, M.D., with the idea of "dosimetric granules"
or measured-medicine pills, Gustavus Swift with a vision of "an
ice-box on wheels" to get fresh-dressed beef and pork by refrigerated
fast rail to population centers in the East, Ray Kroc with the thought
of franchised fast-food restaurants, Stephen Jobs with the concept
of a personal computer, Mary Kay Ash with the idea of "beauty
consultants" merchandising Mary Kay Cosmetics, Rocky Aoki with
the scheme of a chain of Benihana Japanese steak houses and more
recently with a line of frozen Oriental packaged food for the home?

Just what is behind the some 600,000 new firms appearing on the
American scene every year, in good times and bad (with bad times
of course raising the business mortality rate)?

Encouraging
New Ideas

In short, how does the entrepreneurial mind work? What makes it
tick? What encourages it, discourages it? How can we nurture enterprise,
productivity, creativity, foresight — entrepreneurial ideas? What
attitudes, values, customs, mores, habits, laws, institutions, traditions,
conditions, and the like give rise to this vital social asset? Just
what prods the entrepreneur to hazard markets with innovative and
frequently untried ideas, to risk failure and the loss of capital,
to overcome conscience which, as Shakespeare’s Hamlet again observed,
"does make cowards of us all"?

These questions are basic to the care and cultivation of entrepreneurship.
The questions are also basic to the character of the economy, for
the entrepreneur, according to a host of economists including Richard
Cantillon, Jean-Baptiste Say, F. Y. Edgeworth, Francis Walker, Joseph
Schumpeter, Frank Knight, Ludwig von Mises and Israel Kirzner, is
the central figure of economic activity.

Whatever the answers, clearly entrepreneurship is a function of
the mind — the conditioned mind, the imaginative mind, the disciplined
mind, the entrepreneurial mind.

Consider the entrepreneur as an individual possessed of perception
and nerve, of vision and gumption. His is, as a rule, a dual personality:

He is a perceiver and a doer. He sees and he acts. He beholds
and he grasps, even when the brass ring eludes him, i.e., when he
is wrong. Still, he remains the personification of mind over matter,
of a dream come true — even if the dream fades away, or even if
the dreamer and the doer are occasionally two different individuals,
with the doer (perhaps in the personage of a partner or a venture
capitalist) the activator of the enterprise, the realizer of the
dream. Nonetheless, as we will see, the entrepreneur, sparked by
an entrepreneurial spirit, dominated by the consumer, conditioned
by his institutional environment, makes things happen; he spurs
supply; he enriches mankind; he is an unsung hero.

Thoreau caught the spirit of enterprise when he wrote in Walden:
"If you have built castles in the air, your work need not
be lost; that is where they should be. Now put the foundations under
them. All men want, not something to do with, but something
to do, or rather something to be."

Item: Not long ago Seiko, the Japanese watchmaker, developed
a wristwatch that calls Moslems to prayer at the right hour five
times daily. Thus Seiko gently reminds Moslems to face Mecca, their
holy city in Saudi Arabia, and pray, no matter where the Moslems
may be. The time-reminder also comes as a table clock and pocket-watch.
The price of these timepieces runs around $100, and the potential
market is estimated at hundreds of millions of people. This is entrepreneurship
at work, bringing the Seiko people, their dealers and Moslems together
in far-reaching social cooperation, in mutual and peaceful advantage,
in an all-around win-win-win situation.

Item: Joseph J. Pinola, C.E.O. of his Los Angeles-based First
Interstate Bancorp, long had a vision of a nationwide banking system
under one management. The cloud over such a vision was the uniform
state-banking rule that no bank could operate outside its state
borders. But the entrepreneurial concept of Pinola was to hurdle
state borders via the holding company or affiliation route, i.e.,
to have a First Interstate Bank of California, a First Interstate
Bank of Arizona, a First Interstate Bank of Nevada, and so on. Today
First Interstate services consumers at more than 1,000 banking offices
in 14 states with more than $45 billion in assets. As entrepreneurially-minded
Joseph Pinola wrote on February 19, 1985 in First Interstate’s 1984
annual report:

There’s
a saying that gives a sage admonition: "To the blind, all
things are sudden." Hence, in our view, trying to manage
in today’s environment without any foresight of a framework
for change is pure folly. Our framework is our strategic plan,
which has a clear objective: The development of First Interstate
into a profitable, nationwide supplier of a broad range
of financial services. (Italics added.)

Item: Sears, the giant department store and mail order house
under the leadership of C.E.O. Edward R. Telling, recently moved
four-square into the financial services business. Long in the auto
and life insurance business with Allstate, Sears recently launched
Discover, a new credit card to compete with Visa and MasterCard.
Sears also bought out the Dean Witter Reynolds stock brokerage firm,
the big California-based nationwide real estate firm of Coldwell
Banker, the Greenwood Trust Company of Delaware and a bank in South
Dakota, thereby enabling Sears to set up its own financial empire
and giving commercial banks like Citicorp, BankAmerica and First
Interstate fears of powerful competition from this so-called "nonbank
bank." Sears’ move into financial markets to better serve their
customers is not without risk. Comments C.E.O. Telling, according
to Time (August 20, 1984): "Taking chances is a fact
of economic life. Business must risk to grow. Fear of what may or
may not happen is no excuse for avoiding challenges."

So we begin to see how entrepreneurship and challenge are practically
one, how entrepreneurship serves as a bridge between producers and
consumers, with consumers as the bridge-tenders, determining which
producers get to cross the bridge and in what strength — i.e., in
what share of the market.

We also see how the role of the consumer is, as noted, sovereign
— central, crucial, pivotal to the success or failure of entrepreneurship.
The entrepreneur has to satisfy King or Queen Consumer, the person
ever looking over the entrepreneur’s shoulder, ever having the final
say. The consumer applauds with profits, punishes with losses, ever
commanding: Do better, do better — or else.

The consumer, in other words, is the master, even a virtual dictator
over the entrepreneur. The consumer holds the almighty power of
the purse. He picks and chooses among competitors. He accepts some
and rejects others. He thereby has every entrepreneur by the jugular,
occasionally withholding patronage, strangling a woebegone entrepreneur
to death. Here is the way that Ludwig von Mises put the entrepreneurial
situation in Human
Action:

The direction
of all economic affairs is in the market society a task of the
entrepreneurs. Theirs is the control of production. They are at
the helix and steer the ship. A superficial observer would believe
that they are supreme. But they are not. They are bound to obey
unconditionally the captain’s orders. The captain is the consumer.
Neither the entrepreneurs nor the farmers nor the capitalists
determine what has to be produced. The consumers do that. If a
businessman does not strictly obey the orders of the public as
they are conveyed to him by the structure of market prices, he
suffers losses, he goes bankrupt, and is thus removed from his
eminent position at the helm. Other men who did better in satisfying
the demand of the consumers replace him.

So you see that this Captain Consumer — King or Queen Customer —
is rough and tough, and that the entrepreneur knows it. Entrepreneurial
ideas are fine, they may be realized, i.e., brought into being,
if approved over and over again by the sovereign consumer.
So quality or value of product or service, given the level of pricing,
is ever critical. Consumers demand it, expect it, and when it is
missing they take umbrage and may well strike back — do without
or switch support to another vendor — thereby imposing losses on
the offending entrepreneur.

Quality. Value. Worth. The most for the least. These are the simple
parameters of the marketplace. Hence the recent rise of employee
quality control circles in stores and offices, mills and factories
in Japan, North America and Western Europe and now practically around
the world. Perfection becomes the entrepreneurial goal. As father-and-son
Management Professors Michael and Timothy Mescon (respectively at
Georgia State and the University of Miami) noted in SKY Magazine,
September 1984:

Perfection.
When was the last time you observed, experienced, or participated
in an act of perfection? When was the last time you witnessed
a flawless performance, purchased a flawless product, or were
treated with flawless service? Can you recollect receiving excellent
treatment or accurate delivery in the past week, month, or year?
Perfection, flawlessness, excellence, and accuracy are words that
don’t easily come to mind. Indeed, terms like these are difficult
for many of us to vocalize. We have for all too long accepted
the mundane, promoted the average and rewarded the mediocre.

But as the Mescons further note, in our global business market peopled
by sharp, hungry, enterprising competitors, little but perfection
will do the trick. Excellence is not fantasy. Its pursuit is mandatory,
competition demands it. Relatedly, productivity improvement becomes
make-or-break. Hence perfection becomes more and more the norm.
It more and more is rewarded both by the consumer and, increasingly,
by the quality-minded, competition-attuned employer-entrepreneur.

Item: A recent IBM ad states in a bold headline: If Your
Failure Rate Is One In A Million, What Do You Tell That One Customer?
The ad continues to explore the simple point that controls all
work at IBM: zero-defect performance. Still, concludes the ad, if
an IBM product does somehow need attention, IBM stands ready, willing
and able to furnish error-free and precise service. Perfection,
even for that isolated customer, is the ideal that must be ever
borne in mind, a litany that must be reiterated to employees over
and over again. This, say the Mescons, is the way to keep the concept
of perfection at work.

Item: Motorola, the global electronics company, has charged
all of its 90,000 employees to pursue excellence, to strive for
product and service quality perfection. Through its Participative
Management Program (PMP) Motorola has forged a system of employee
economic education, including individual worker recognition, aimed
at two-way communications and work perfection. At Motorola’s Mesa,
Arizona plant, for example, PMP employees have established a Perfection
Award — recognition of achieving a 100 per cent explicit unmistakable
standard: perfection. To date more than 3,600 Perfection Awards
have been earned by Motorola employees in Mesa.

Indeed, perfection-minded Motorola does not use the word employees
or workers: They are, according to Motorola, henceforth to be known
as "associates." (Perfection, like entrepreneurship, after
all, is partly a matter of self-image and self-image is enhanced
by being an associate rather than an employee or worker.) Writes
Henry W. Bried, the firm’s PMP director:

Participative
Management at Motorola is a system of management which encompasses
a two-way exchange between and among management and our associates
(being our employees). It is structured to meet the individual
and common production objectives of industry. Since 1974, when
we first implemented it, this system is the most successful and
effective program to improve productivity in industry today.

Participative management and quality circles are variations of entrepreneurship.
They tie in with my theme of enterprise, the possible dream. Yet
perhaps more than a dream, for, again, entrepreneurship is a relatively
unexploited natural resource, embedded in human nature, a vital
strand that weaves in and out of every human psyche, or as Ludwig
Mises put it in Human Action: "In any real and living
economy, every actor is always an entrepreneur and a speculator."

Mises reminded us that man must ever cope with Adam’s curse, with
the inescapable fact of scarcity, with a stomach (or stomachs) to
fill, with the need to get a roof over his head and clothes on his
back, with his therefore having to ever entrepreneurially garner
and commit resources in every action. In a free society, man the
entrepreneur and speculator has to have a purpose in mind, shoot
at a goal, work with his fellow man in a finely-tuned network of
social cooperation.

Human
Action Embodies Entrepreneurship

Entrepreneurship,
then, is ever a matter of choice. Faced with countless alternative
courses of action, man in and out of entrepreneurship must constantly
choose, ever trade off one option for another, opting as a rather
strict rule for the most rewarding, obeying the economic "law"
of Nobel Laureate George Stigler that $2 is better than $1 or, to
put it in a less tongue-in-cheek way, more happiness is better than
less. In any event, man is always his own bottom line, his own profit
center. Profit in this sense is, again, ever psychological and motivational,
value-ridden, allowing for altruism and unselfishness, the mental
calculus of a unique individual, an independent as well as interdependent
being. Profit is the universal spur, then, behind the spirit of
enterprise. It is a force for — as conditioned by ethics, by the
absence of fraud and force — the public interest, the social good.

Enterprise is perforce dynamic. It moves with the ebb and flow of
life, of history, of technology, high and low. It swings with the
tone of politics, with the shape of political institutions. Man,
the innate enterpriser, the potential entrepreneur, realizes that
conditions change, that the world is in a whirl, that, as Heraclitus
noticed, he can never swim in the same river twice, that he lives
in an environment of change, of uncertainty as well as scarcity,
that any one action may fail its mark, that he is inescapably a
speculator. So all human action embodies elements of entrepreneurship
and speculation.

We
are all, then, entrepreneurs and speculators in one degree or another.
Nobody is immune to the opportunities and uncertainties that life
unfolds before us. Entrepreneurship is a normal human capacity.
It can be cultivated and developed. It is a possible dream.

This
article originally appeared in the November 1985 issue of The
Freeman. It was derived from a research program in entrepreneurship.

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives

DIGG THIS

Words
are the building blocks of language, the Myriad bridges between
men, the very essence of communication.

Yet words can do double-duty. They can clothe the half-truth, or
provide welcome escape hatches for promises that go astray. Words
become especially fuzzy and shadowy in the hot air of politics.
Politics, like liquor, makes people boastful, quarrelsome, and careless
with the truth. Under the strange catalytic action of politics words
are no longer simply communicators but become confusers, beguilers,
seducers.

(And revealers. Words reveal, usually inadvertently, our biases
and prejudices. For example, during the Suffragette’s Movement that
led to women’s right to vote, one staunch feminist said to another:
"Brace up, my dear. Just pray to God. She will help you.")

We live in an age of catchwords and half-truths, an age in which
men become infatuated and even seduced by words — words whose true
meaning becomes lost in reveries and fantasies. The process is old
but the speed, boosted by mass media and modern electronics, is
new. So fast are political words involuted that the Orwellian Revolution
of mass hypnosis has arrived. (Witness, for example, how quickly
"McCarthyism" was transformed into a smear word.)

Semantic subterfuge is not, however, limited to the politician.
At times, we all, I think, switch the King’s English to suit our
purposes. How many housewives are satisfied with the label "housewife"?
Not many, as befuddled census takers have found out. Recently
the Long Island Federation of Women’s Clubs recommended that housewives
be henceforth known as "homemakers." The Census Bureau
has since tried "home managers." Women’s colleges are
experimenting with "domestic economist" and "domestic
executive."

And in politics, miracle of miracles! The lobbyist is as extinct
as the dodo. In all of Washington and the state capitals there’s
not a single lobbyist to be found. Instead, there are hundreds of
"congressional liaison officials," "legislative representatives,"
and "legislative research specialists."

It’s clear, I think, that the word-juggling that the politicians
do is similar to that which we all resort to, at one time or another,
in our private affairs. But the crucial difference between political
words and ordinary words is this: political words are almost always
etched in political power. And political power is the most fearsome
power on earth — more fearsome than the atomic bomb. For, remember,
when the bomb is dropped, the decision to drop it is a political
decision.

Politics is
the struggle for office — that is, for the power of the state. Thus
we should ask ourselves: What is the state, what is government?
This is the question Washington directed to himself in his Farewell
Address. He said: "What is government? Government is not reason,
it is not eloquence — it is force! Government is like fire, a good
servant but a poor master. . . ."

The state, in other words, is the policeman’s club and the soldier’s
gun. It is a legal monopoly of force — the only legal repository
of force in society. No other institution — whether the church,
the university, the corporation, the fraternal organization — is
so empowered.

The state, with the monopoly of force, is necessary because we are
not gods but mortal and quite fallible men. The state is necessary
because evil and good coexist in men. And, since power is a corrupting
force, it follows that the state may well be able to punish the
evil in men but be quite unable to cope with the evil in itself.

This dilemma was the one faced by our Founding Fathers. Their answer
was limited government, a government of expressed and sharply delimited
powers, a government which shared the sovereignty with the states,
a government restricted by a written Constitution.

Yet nowhere in the Declaration or in the Constitution did the Fathers
say that our state was or was not intended to be what is now the
greatest semantic shibboleth of our times — a "democracy."
Quite the contrary, the Federalist
Papers made quite clear that the framers of the Constitution
were fearful of democracy — meaning majority rule by the populace
at large. And yet while the Founding Fathers had no illusions about
the people, they had no illusions about the politicians. Ours was
to be a government of laws, not of men. Said Jefferson: "On
questions of power, let no more be said of confidence in man, but
bind him down from mischief by the chains of the Constitution."

But the plasticity of words has dangerously weakened our bastion
of liberty, the Constitution. For today, the Constitution is proclaimed
a "living document." Translated into English, this means
that the Constitution has become as elastic as rubber and as watertight
as a sieve.

Consider the plasticity of political words in the case of President
Franklin D. Roosevelt, whose biography forms the basis of a current
play on Broadway. In 1932 FDR ran on a platform of economy, a balanced
budget, the preservation of the gold standard, and political integrity.
FDR promised to rid us of "bureau on bureau and commission
on commission." Then the world witnessed, in the frenzy of
what is now called the "100 days," the greatest deficit
spending and swiftest expansion of Government bureaucracy probably
in the history of the world.

In
1936, FDR declared: "In the past 34 months we have built up
new instruments of public power. In the hands of the people’s Government,
this power is wholesome and proper. But in the hands of political
puppets of an economic autocracy, such power would provide shackles
for the liberties of the people."

This is a prime example of political semantics. Supposedly democracy
purifies politics and mollifies power. Yet was not Hitler democratically
elected to office? Mussolini? Peron? And in our own country, Frank
Hague and Huey Long? And in office, how did these demagogues maintain
and expand their power? Through the enormous power of words — by
innuendos and promises, by smears and lies.

Among the easiest and most seductive of political subterfuges is
the promise that the state will "pay" for this or "pay"
for that. The state will provide "free" schools, "free"
medicine, "free" roads, "free" libraries. Free?
The profoundest lesson in the thousands of books on economics by
learned men all the way back to Aristotle adds up to this: there
is no such thing as a free lunch. It thereby follows that there
is no such thing as that old shibboleth, "Federal aid."
How can it be called "aid" if the Federal Government seizes
money in the states and then returns the money — minus a terrific
bureaucratic bite — to the states?

A similar semantic trap lies in the idea that the state can somehow
provide jobs. The state can "create" employment, we’re
told, when it builds roads, dams, parks, and now missiles and post
offices. And where does the Government get the money to "create"
employment? From taxes, including the greatest hidden tax of all,
inflation. And quite obviously, the tax money spent by the Government
cannot be spent by the taxpayer. In short, the Government provides
only as many jobs as it destroys. Worse, the Government in its discriminatory
taxes against middle and upper income groups destroys the main sources
of capital — capital which not only could have provided jobs but
greater economic strength vis–visthe Soviets.

So this is the never-never world of politics with its strange upside-down
language. We fight to make the world safe for democracy only to
find it unsafe and in the hands of "the dictatorship of the
proletariat." We promise the mothers and fathers of America
"again and again" not to send our boys to fight in foreign
wars but off they go before the next year is out. We seek to prevent
Procter and Gamble from merging with Clorox Bleach on the grounds
of monopoly but look the other way when the CIO merges with the
AFL. We send out troops when the "civil rights" of nine
schoolchildren are threatened but we smile when literally millions
of workers are forced to join unions against their will. We plead
for economy in 1957 and go all-out for spending in 1958. We tell
the citizen to exercise restraint in incurring debt and we raise
our own debt limit by $10 billion. We reclaim land and irrigate
farmland with vast valley projects and when the surpluses become
too great we put the farms in the Soil Bank and pay farmers not
to farm. We worship freedom but pay with our freedom to buy security.

And we wrap the whole thing in a package called "the middle
of the road." It’s all like George Orwell’s Ministry of Truth
in the novel, 1984:
War is Peace, Freedom is Slavery, Ignorance is Strength.

This
article originally appeared in the September 22, 1958, issue of
Human Events. It was based upon remarks that Dr. Peterson
made earlier that year before the Women’s Republican Committee of
One Hundred of New York.

William
Peterson [send him mail]
is an adjunct scholar at the Ludwig von Mises Institute and the
2005 Schlarbaum Laureate.

William
H. Peterson Archives